Ford Motor Co. announced Tuesday that Chief Executive Officer Jim Hackett will retire from the company he has led since May 2017, and Chief Operating Officer Jim Farley is taking the helm.
Farley, 58, assumes his new role as CEO on October 1. He was also elected to the company's board of directors.
While industry observers anticipated a change of leadership this year, the pivot on Tuesday caught some by surprise.
"I said we ought to do it now, the wind in our sails is really starting to pick up," Hackett, 65, said in a conference call with reporters. "Jim's [Farley] grasp of products is legendary."
Ford has struggled under Hackett's leadership with product launch problems involving the Ford Explorer, the Lincoln Aviator and the Police Interceptor, issuing frequent apologies after sales and earnings reports, and seeing a steady drop in stock value that predates the pandemic.
In the first three months of 2020, Ford reported a $2 billion earnings loss. A week ago, the company reported a $1.9 billion earnings loss for the second quarter, which was better than Wall Street predicted. But the company has sustained criticism for emerging from 2019 without healthier financials.
The economic crisis caused by the pandemic hit Ford two years into an $11 billion restructuring that Hackett drew up to navigate the company out of a long slump.
Hackett, a former chief executive of Steelcase, an office furniture manufacturer that is much smaller and less complex, was named to the top job at Ford as the company's business was slumping under his predecessor, Mark Fields.
Hackett promised to revitalize Ford's operations and steer the company toward vehicles that would generate profits -- pickups and sport-utility vehicles -- and invest in emerging technologies like electric and self-driving vehicles. He also pulled Ford out of passenger-car segments in North America.
"Under Hackett," the company said in a statement, "Ford moved aggressively into the new era of smart vehicles and drove a deeper focus on customers' wants and needs. At the same time, Ford improved the fitness of the base business -- restructuring operations, invigorating the product portfolio and reducing bureaucracy."
"I knew I would test the patience of our stakeholders," Hackett said Tuesday. "I was OK with this because I had done this once before. ... We had to reduce bureaucracy."
The company is starting to introduce some of the models developed under Hackett, including a redesigned F-150 pickup and a new series of SUVs under its dormant Bronco brand. The Mustang Mach E, an electric SUV styled to resemble the storied sports car, has generated lots of buzz and is set to go into production later this year.
"We have lots of work ahead of us to complete our mission, but thanks to Jim [Hackett], we are a very different company today than we were three years ago," Executive Chairman Bill Ford Jr. said in a conference call to discuss the leadership change.
Ford said Farley is "intensely competitive" and the company has watched the former Toyota executive "develop into a transformational leader" at Ford over the past decade.
"Jim [Farley] is a car guy through and through," he said.
Ford, the great grandson of founder Henry Ford, said the board briefly discussed looking outside for a CEO, but was inspired by Farley's leadership and felt the company is moving in the right direction. "We talked about it and we did throw some names around," he said on a conference call Tuesday. "Every time we did that, we always felt that Jim Farley rose to the top."
Farley, who was at Toyota when he was tapped by former CEO Alan Mulally in 2007 as head of global marketing and sales, was named chief operating officer at Ford in a management shakeup in February.
Now his top priority is execution of product launches and expanding an affordable lineup for consumers, Farley told reporters on a conference call Tuesday.
The company noted key periods in Farley's background:
• He joined Ford in 2007 as global head of marketing and sales.
• He went on to lead Lincoln, Ford South America, Ford of Europe and all Ford global markets in successive roles.
• In April 2019, he was tapped to lead Ford's New Businesses, Technology & Strategy team, helping the company determine how to capitalize on forces reshaping the industry -- such as software platforms, connectivity, artificial intelligence, automation and new forms of propulsion.
Hackett, who will continue as "a special advisor to Ford through March of 2021, said the time is right to pass the mantle of leadership to Jim Farley," Ford said.
"My goal when I took on the CEO role was to prepare Ford to win in the future," Hackett said in a statement. "The hardest thing for a proud, long-lived company to do is change to meet the challenges of the world it's entering rather than the world it has known. I'm very proud of how far we have come in creating a modern Ford and I am very optimistic about the future."
Information for this article was contributed by Phoebe Wall Howard of Detroit Free Press, by Neal E. Boudette of The New York Times, by Tom Krisher of The Associated Press and by Keith Naughton of Bloomberg News.