GM to announce closing of Oshawa plants Monday

[83 5.0]

https://www.cp24.com/news/oshawa-gm-plant-to-close-affecting-thousands-of-jobs-1.4191957

General Motors Canada is expected to announce that it is closing all operations in Oshawa, affecting approximately 2,500 jobs.

Multiple sources told CTV News that the announcement about the closure is expected to happen on Monday morning.

The move would affect approximately 2,500 unionized positions and 300 salaried employees.

More to come...

I know they had this proposal a few years ago, will see if this is just a slow news day or not.

[5.4MarkVIII]

merry christmas

[trickflow-jay]

where were the Libtards when they renegotiated NATFA 2.0?????......WE need leaders not lambs.

[Stephen06GT]

I just read this. Terrible news.

[Gabe]

Fawk, that’s terrible news

[ZR]

Will affect one member of my family and and handful of peeps I know.
Fuck.

[Gabe]

When I was in school, they estimated 1GM union job directly affected/ created 10 other jobs. That was everything from tier1/2 supplier jobs, transportation etc, but also local jobs at restaurants/ attractions etc that can do well because there are people in the community making good money

[ZR]

All the auto mfg grants, bail outs and loans have amounted to interim jobs you, me and everyone else bought n paid for but with zero long term stability for Ontario jobs.

[mavrrrick]

Wow.... big kick in the nuts for workers and city of Oshawa!!!
Trump pulling it back to make America great again?

Sent from my iPhone using Tapatalk

[needboost]

A friend of mine works for Ceva on the GM plant property, she told me they just signed so kind of contract extension to do with one of the plants at her work. The news is saying they are closing down Oshawa plants but they are not saying when...

[mavrrrick]

I hope our government makes them pay back every penny from the bailout if they have not already!!! If they close, I personally will never by a GM product again!!!

[mavrrrick]

^^^ I usually like to get kissed before I get FUCKED!!!^^^

[trickflow-jay]

$5 Billion loaned SHOULD have been contingent on the plant going for at least a 50 yr guarantee....
u know like that dolt Harris giving the 407 away for 99 yrs!!!!

the govt members are criminals in suits...the LOT of them!

[RedSN]

A friend of mine works for Ceva on the GM plant property, she told me they just signed so kind of contract extension to do with one of the plants at her work. The news is saying they are closing down Oshawa plants but they are not saying when...
Whole leaked announcement sounded fishy to me. Guess we'll know more details this morning.
In the meantime .... EVERYBODY is talking about GM.

[Scrape]

https://ca.yahoo.com/finance/news/gm-cut-car-production-north-america-halt-models-132847204--finance.html

(https://ca.yahoo.com/finance/news/gm-cut-car-production-north-america-halt-models-132847204--finance.html) DETROIT/WASHINGTON (Reuters) - General Motors Co will cut car production, stop building several slow-selling models, and slash its North American workforce, its biggest restructuring in North America since its bankruptcy a decade ago.
GM plans to halt production next year at three assembly plants - Lordstown, Ohio, Hamtramck, Michigan, and Oshawa, Ontario. The company also plans to stop building several models now assembled at those plants, including the Chevrolet Cruze, the Cadillac CT6 and the Buick LaCrosse.
GM said it will shift more investment to electric and autonomous vehicles.
The issue will be addressed in talks with the United Auto Workers union next year. GM Chief Executive Officer Mary Barra made calls early on Monday to disclose the plan.
"We are right sizing capacity for the realities of the marketplace" CEO Mary Barra said, adding that the cuts prompted by auto industry changes.
GM shares were last up 2.2 percent at $36.72 before being halted.
Cost pressures on GM and other automakers and suppliers have increased as demand waned for traditional sedans. The company has said tariffs on imported steel, imposed earlier this year by the Trump administration, have cost it $1 billion.
A Canadian union, Unifor, which represents most unionized auto workers in Canada, said Sunday it was informed by GM that there would be no product allocated to the plant in Oshawa, about 37 miles (60 km) from Toronto, after December 2019.
GM employs about 2,500 union staff in Oshawa, which produces both the Chevrolet Impala and Cadillac XTS sedans. It also completes final assembly of the stronger-selling Silverado and Sierra pickup trucks, shipped from Indiana.
GM has begun what is expected to be a long and expensive transition to a new business model that embraces electrified and automated vehicles, many of which will be shared rather than owned.
The No. 1 U.S. automaker signaled the latest belt-tightening in late October when it offered buyouts to 50,000 salaried employees in North America, with the aim of reducing headcount by 18,000. It plans to trim executive ranks by 25 percent, the source said.
With U.S. car sales lagging, several car plants have fallen to just one shift, including its Hamtramck and Lordstown, assembly plant.
A rule of thumb for the automotive industry is that if a plant is running below 80 percent of production capacity, it is losing money. GM has several plants running well below that. Consultancy LMC estimates that Lordstown will operate at just 31 percent of production capacity in 2018.
Rivals Ford Motor Co and Fiat Chrysler Automobiles NV have both curtailed U.S. car production. Ford said in April it planned to stop building nearly all cars in North America.
SLUMPING U.S. SEDAN SALES
An industrywide slowdown in passenger car sales started to pick up steam in 2017.
The shift by U.S. consumer preferences have been away from passenger cars to larger, more comfortable SUVs and pickup trucks has been swift and severe, leaving automakers scrambling to readjust.
As recently as 2012, passenger cars made up more than 50 percent of all U.S. new vehicle sales. Through the first nine months of 2018, that had fallen to a little over 31 percent.
More than 16 months ago, the UAW confirmed that it was discussing with GM the potential threat to plants and jobs from slumping U.S. sedan sales.
While industry-wide passenger car sales were down 13.2 percent through the first nine months of the year, pickup truck and SUV sales rose 8.3 percent. As well as being roomier, the fuel economy on SUVs and crossovers has improved significantly.
Sales of Cruze, built at Lordstown, fell 27 percent through September 2018.
Impala, which is built at Oshawa and Hamtramck, was down 13 percent.
Buick LaCrosse and Cadillac CT6, which are built at Hamtramck, were down 14 percent and 11 percent, respectively.


(https://ca.yahoo.com/finance/news/gm-cut-car-production-north-america-halt-models-132847204--finance.html)

[Laffs]

Recession part 2, the recession strikes back.

[mavrrrick]

Man...this sucks large....This is the thanks we get for bailing them out.

[RedSN]

Recession part 2, the recession strikes back.
technically, it's part 5

[Laffs]

technically, it's part 5

Ok, so Revenge of the Recession?

[92redragtop]

Man...this sucks large....This is the thanks we get for bailing them out.

Bailouts just extended the inevitable if demand is down for cars versus other vehicle types. You could argue we could have taken another approach by taking a non-bailout hit with bankruptcy related mass plant closings back in 2008-2010, let the jobs disappear, swell the unemployment ranks for 10-20 (or 30) years, and then let the free market sort it out. We would have been 10 years into that structural overhaul by now if the bailout option hadn't been chosen.

[92redragtop]

Wow.... big kick in the nuts for workers and city of Oshawa!!!
Trump pulling it back to make America great again?

Sent from my iPhone using Tapatalk

Looks like 2 large plants there are taking the hit too.

[5.4MarkVIII]

Was listening to the Shapiro/ Harper interview last week and they talked about the bailout. Harper said it wasn’t a good idea knowing it would be a temporary bandaid to keep the jobs but when the US offered the money our hand were tied either pay or watch the jobs leave (as 92redragtop said). Not sure that would have been the best move at the time. Jobs kept equals buying power back into the economy and with this closing like others the trickle down will be large.

I pretty much said when the buyout happed that I would not be supporting GM or chrysler. So far I have not.

[Gr8Stang]

Gotta love GM, they sure know how to get cash and then screw those that gave it to them. Bail out loans and/or government handouts to keep them here, and then flushing the toilet on their common stock by declaring bankruptcy during the great recession. I'll never buy one of their products nor own their stock. Crooks!

[hammerhead]

interesting times - I wonder if electric vehicles will make a difference when a size comparison is made - families can't buy what they consider sedans today they are just not big enough for families - most if not all electric cars are too small as well for families - the real scary part is shifting all future jobs out of the country (USA) GM looks to be moving away from customer sales much like CAT pulled out of trucking when the government posed heavy restrictions on diesel emissions. This is not new news GM has mentioned the scenario in the past. I find it all confusing as a consumer as to what to do for future transportation. Investing 50,000 100,000 $ in a gas powered vehicle may be a huge wasted investment if fuel suddenly becomes unavailable or driving becomes so expensive you opted for shared or public transportation...never would of thought like this 20yrs ago.

[RedSN]

....if fuel suddenly becomes unavailable or driving becomes so expensive you opted for shared or public transportation...never would of thought like this 20yrs ago.
what about 40 years ago?

[hammerhead]

what about 40 years ago?

40 years ago I was 16, but in my 20's I was dumping 20 $'s a day into a trans am with a 455 in it...lol - never ever thought I would consider a day without gasoline - I used 20 yrs as an example of how quickly things are changing 2030 is only 10 years away I'm sure by then transportation and source of income will be greatly different - currency maybe a thing of he past by then...who knows but it makes decision making very indecisive and difficult (for me anyway lol) - I was reading articles between 2005 and 2010 that all the advancements in todays auto's ie. auto braking - lane sensing - gps - and all the other idiot sensors for drivers, were being developed for flying cars and they would be available by 2020 - conceivably this could happen by 2030 (flying cars). My thoughts on driving becoming too expensive (it's always been that way) but - for the last 25 yrs I've been in the trucking industry and the trend with governments seems to me seems to move towards reducing the number of trucks on the road - this could also trend with cars. With the increasing cost of insurance, the cost old and new infrastructure, and the possible depletion of jobs and income infrastructure will be difficult to maintain as it always is currently supported with taxes (100 year underground water pipes in Toronto one example) - I don't think the government will ever say you cant drive, but they may make very difficult to afford it if you want a personal vehicle.... the amount of cars in the world is staggering - a few months ago I was reading stats on ev's - ev's make up 1 percent of all the vehicles on the road - to say that the pressure of 1 percent is hurting your manufacturing business seems like a lot of bull to me it's bigger than that, I would think - maybe I think too much...lol

[G-ForceJunkie]

Pretty upsetting news. Not too surprising given manufacturing has been leaving Ontario for years, but this is a big blow.

[83 5.0]

The USMCA was supposed to implement a $16 usd minimum wage for Mexican auto workers, unless we want to work for $3-5 per hour, its too little too late. The karma I hope that bites the auto makers shifting to Mexico, is their workers are under paid and won't be able to afford what they make. I guess Henry Ford realised this with the $5 a day worker.
The only laughable moment in all this is listening to Jerry Diaz telling GM they aren't taking their plant away. So 1970 Jerry.

[trickflow-jay]

Jerry has some bravado but it the end its wasted air.....nothing will be saved they are gone...the real shame is our govt not protecting it with the USMC

GM had a advantageous postion against european and asian manufacturers as they had no tariffs
and they still shafted Canada.Thats fine its their marbles and they are taking them....our politicians are the real problem here
call it ineptitude whatever they dropped the ball.

i definitely could see property values falling in the SWAH
i guess another manufacturer could come in replace it but thats wishful thinking
you could build condos and what not on the property ...

[RedSN]

i guess another manufacturer could come in replace it but thats wishful thinking
you could build condos and what not on the property ...
Or like when Molson’s left Barrie, a new ‘industry’ took shop.
And now it’s even legal!

[83 5.0]

Some stats:

Mexico with about 130 million people. new car sales barely a 1 million units.

https://www.statista.com/statistics/454325/car-sales-in-mexico/

Canada with approximately 35 million people, new car sales over 2 million units

https://www150.statcan.gc.ca/t1/tbl1/en/tv.action?pid=2010000201

Would make sense to increase the standard of living for Mexicans to help your bottom line.

[83 5.0]

Or like when Molson’s left Barrie, a new ‘industry’ took shop.
And now it’s even legal!

I think its an empty field now, the growers were just a little ahead of the curve before legalization

[1quikgt]

Jerry has some bravado but it the end its wasted air.....nothing will be saved they are gone...the real shame is our govt not protecting it with the USMC

GM had a advantageous postion against european and asian manufacturers as they had no tariffs
and they still shafted Canada.Thats fine its their marbles and they are taking them....our politicians are the real problem here
call it ineptitude whatever they dropped the ball.

i definitely could see property values falling in the SWAH
i guess another manufacturer could come in replace it but thats wishful thinking
you could build condos and what not on the property ...

The Shwa will be fine. Most of the people living there are commuters to downtown TO. Same with most of Durham.

[92redragtop]

The USMCA was supposed to implement a $16 usd minimum wage for Mexican auto workers, unless we want to work for $3-5 per hour, its too little too late. The karma I hope that bites the auto makers shifting to Mexico, is their workers are under paid and won't be able to afford what they make. I guess Henry Ford realised this with the $5 a day worker.
The only laughable moment in all this is listening to Jerry Diaz telling GM they aren't taking their plant away. So 1970 Jerry.

Nothing really changed from NAFTA to USMCA - mostly just a name change. Any limits that moved slightly did not affect Canada since we were already doing "better" relative to the "new" targets/thresholds (other than the small % increase in dairy access).

[83 5.0]

I have been working out in Calgary since last Wednesday. Trudeau and Morneau have been out here in the last week speaking their empty words that they seem to do so well. Protestors met them both and are Albertans angry, they feel the feds because of their carbon climate agenda, and that the Liberals don't have many seats in the west, haven't wanted to help the oil patch.
It is estimated there are any where from 50,000 to 100,000 jobs lost out here.
The local media feels GM's 2500 jobs has gotten far more attention because the Liberals have more to lose in Ontario.
Downtown Calgary has a 25% vacancy rate and they are thinking of converting office space to apartments.
There is a lot of uncertainty out there.

[5.4MarkVIII]

according to an article I read this am this was not a surprise to any body, and not just in terms of, we know the state and cost of manufacturing. GM announced to its employees a couple months ago that is needed to reduce work force and would be offering voluntary buyout packages for a whole bunch and if they didn't have enough people accept they would follow up with layoffs,

they needed a reduction of 14000, they made 17000 offers hopping for at least 8000 volunteers, but only 2250 people accepted the offers.

and now everyone acts like they had no idea it was coming and GM just springs this right before Christmas because EVIL CORPERATION.

[Laffs]

The only laughable moment in all this is listening to Jerry Diaz telling GM they aren't taking their plant away

To me this is the issue with Unions now in a nutshell. Nothing but strong arm tactics and fist pumping. This is like telling your neighbor they can park in your garage while your on vacation and when you return they say sorry I'm parking here forever and there's nothing you can do about it. The plant isn't Unifor's, it's GM's.

Instead of digging in and demanding they bend to you will, maybe crack in to those deep Unifor coffers and try to come up with money and a plan with the gov to subsidize a retool that would allow them to build the new E-technology that GM says it's doubling down on.

[hammerhead]

To me this is the issue with Unions now in a nutshell. Nothing but strong arm tactics and fist pumping. This is like telling your neighbor they can park in your garage while your on vacation and when you return they say sorry I'm parking here forever and there's nothing you can do about it. The plant isn't Unifor's, it's GM's.

Instead of digging in and demanding they bend to you will, maybe crack in to those deep Unifor coffers and try to come up with money and a plan with the gov to subsidize a retool that would allow them to build the new E-technology that GM says it's doubling down on.

all business's no matter want to trim bottom line - labour is always at the top of the list - second in Ontario will be Hydro rates - government taxes and unions aren't friendly to business it's simple math just see what labour conditions are like in other countries - I agree with 100 percent I use to work in union environment I don't find union and high taxes very constructive in todays society of constant and quick change - for every action is an opposite and sometimes greater reaction - I know many will disagree - but capitalism may be at its peak in North America and the whole system needs a big adjustment.... I'm surprised it took this long!

[hammerhead]

^^^^^ yes I agree it doesn't sit well with common people who struggle and see guys buzzing around the world in private jets asking for hand outs, to pay their employee's 35$ an hour on the backs of others making less...they would have been gone a long time ago if it wasn't for bailouts that started with maguinty..

[hammerhead]

You can't blame GM for asking/taking the money. Why say no to free money.

Likewise getting bent over exec's living large while grunts get paid less.

Want to get paid more, improve yourself through skills/experience/cunning.

As long as the playing field is even for all players, let the market sort it out.

Government intervention used our tax dollars to prop up a company failing due to not properly servicing the market. Government regulations tried to control/steer/hinder the market.

totally agree government intervenes on too many levels - push comes to shove - getting paid more is totally up to the individual not the person handing out the doe many people have lost sight of that (again could be because of government intervention) we all know there here to save us all....yah my ass! lol

[92redragtop]

You can't blame GM for asking/taking the money. Why say no to free money.

Likewise getting bent over exec's living large while grunts get paid less.

Want to get paid more, improve yourself through skills/experience/cunning.

As long as the playing field is even for all players, let the market sort it out.

Government intervention used our tax dollars to prop up a company failing due to not properly servicing the market. Government regulations tried to control/steer/hinder the market.

Yup, cannot blame the one receiving the money - only the one giving it out voluntarily.

GM has been cash flow negative all year in 2018 so the job buyout offers, etc are no surprise and neither is this news. It's funny that some folks who previously self identified as conservatives in philosophy would be against GM's decision which is free market oriented (regardless of what they were "given" in the past).

[92redragtop]

I listened to this podcast a couple weeks ago (prior to the GM announcement but it talks to foundational issues core to the GM decision) and they cover publicly available information/news releases from earlier in the year and last year in the discussion. Pretty basic/common topics if you follow the business and market news cycle but if you don't, it's a good listen. I've looked at Ford's stock to buy in the past but did not as it appeared to be a value trap (and it was based on performance over the past few years - not sure if the "new" vision will help it out of that). I also included the transcript below.

The second podcast presents a view from the side of a potential disruptor versus the disrupted (auto companies) in terms of long term strategy and structural market/consumer changes.

You can listen here or read below (I would recommend reading/listening to the Ford one first):

Can an Industrial Giant Become a Tech Darling? with Ford Motor Company C.E.O. Jim Hackett

http://freakonomics.com/podcast/ford/

Lyft's John Zimmer At The HIBT Summit:

https://one.npr.org/?sharedMediaId=671560892:671592888

<iframe src="https://www.npr.org/player/embed/671560892/671592888" width="100%" height="290" frameborder="0" scrolling="no" title="NPR embedded audio player"></iframe>

[92redragtop]

Can an Industrial Giant Become a Tech Darling? (Ep. 357)
November 7, 2018 @ 11:00pm
by Stephen J. Dubner
Produced by Greg Rosalsky

The Ford Motor Company is ditching its legacy sedans, doubling down on trucks, and trying to steer its stock price out of a long skid. But C.E.O. Jim Hackett has even bigger plans: to turn a century-old automaker into the nucleus of a “transportation operating system.” Is Hackett just whistling past the graveyard, or does he see what others can’t?
Stephen DUBNER: Okay, if I’m looking at your résumé, I’m not seeing C.E.O. of an auto firm.
Jim HACKETT: Oh God, you and me both.
And yet: he is.
HACKETT: I’m Jim Hackett, president and C.E.O. of Ford Motor Company.
DUBNER: I have to ask, how’d you get to our studio today?
HACKETT: A Lincoln Navigator.
DUBNER: When’s the last time you rode in a vehicle that wasn’t made by the Ford Motor Company?
HACKETT: Probably a year before I was the C.E.O. I actually had three other vehicles in my garage when I was on the board, and I got rid of all of them.
Hackett became C.E.O. of Ford in May 2017.
NBC 4: We begin with a big shakeup at Ford. Mark Fields is out and Jim Hackett is in.
NBC 4: I mean, look, let’s face it, Jim Hackett wasn’t on anybody’s radar when it came to automotive succession here at Ford.
One reason Jim Hackett wasn’t on anyone’s radar is that he’s not what they call “a car guy.” In Detroit, the world is pretty much divided into “car guys” and everybody else. Hackett is a 63-year-old Ohio native who started out in sales and management at Procter and Gamble; then worked for many years at the Michigan furniture company Steelcase, including 19 years as C.E.O.; and after that, he was interim athletic director at the University of Michigan, his alma mater, where he hired the football coach Jim Harbaugh. He did join the board of directors of Ford in 2013, while he was still at Steelcase. But, like we said: not an obvious candidate for C.E.O. of one of America’s Big Three automakers.
However, as it is often said: desperate times call for desperate measures. And the old-line auto industry definitely has an air of desperation about it. Consider the challenges. Decades of foreign competition; the rise of ride-share services and autonomous vehicles; environmental concerns and the rise of electric vehicles, especially the ones made by Tesla; the rise of urbanization, with all that bothersome walking and biking and public transportation; the steep decline in car ownership among young people specifically and, more generally, the fact that we seem to have passed “peak motorization,” as one transportation scholar puts it. So, yeah, welcome to the Ford Motor Company, Jim Hackett!
Most C.E.O.’s we’ve interviewed for our “Secret Life of a C.E.O.” series told us about their challenges and dramatic turnaround efforts long after the fact. Like Indra Nooyi of PepsiCo:
Indra NOOYI: [From “‘I Wasn’t Stupid Enough to Say This Could Be Done Overnight’”] A few months after I became C.E.O., there was a financial collapse. The retail environment changed, the U.S. market slowed down. So one had to learn in a hurry how to run this company through extreme periods of adversity. And there’s no book you can read.
But Jim Hackett and Ford aren’t reminiscing about tough times. They’re in the middle of it, right now.
CNBC: What wrong with Ford, what’s going on in Dearborn?
NBC 4: We’re now learning more from analysts who believe the turnaround is about to get very painful.
Bloomberg: They did close under $9 a share for the first time in six years; what’s going on with Ford?
What’s going on is … a lot. Hackett recently announced a huge restructuring plan, hoping to cut $25 billion in costs; this includes a lot of layoffs and a realignment of how Ford does business in Europe, South America, and China. Hackett also announced that Ford will cut way back on making cars.
NBC 4: Adios to the Fiesta, Focus, Fusion, and Taurus.
FOX BUSINESS: Ford says it’s going to focus on SUVs and trucks.
Hackett said at the time that Ford would, “focus on products and markets where we know how to win.” What will those products and markets be? Hackett, for all his old-school credentials, has long been enamored with the Silicon Valley growth mindset. Over the past decade, Ford’s research-and-development spending has nearly doubled, and Hackett shows no sign of slowing it down. This has led one industry analyst to say Ford is “burning a lot of cash in a lot of places”; another argued that Hackett will, “keep bleating buzzwords like ‘fitness’ and ‘mobility’ without any … real plan to remake the Blue Oval.” It’s recently been reported that Ford is considering some sort of merger with VW, the German automaker that’s got its own mountain of troubles.
If you had to make a bet on the future of Ford: well, the people who do make bets — stock-market investors — they’ve been pretty decisive:
BLOOMBERG: They did close under $9 a share for the first time in six years.
So how does Jim Hackett plan to turn things around?
HACKETT: It’s beyond vehicles to transportation, and actually a transportation operating system.
A “transportation operating system” sounds an awful lot like something a pure technology company might talk about. This leads to several questions. Can a traditional manufacturing company like Ford really turn itself into a modern tech company? What makes Ford think they can succeed, when the companies whose turf they’re invading — Amazon and Google and Uber — are already so good at what they do? And what, exactly, is Ford good at these days? Finally: will Hackett’s vision for Ford turn out to be a brilliant repositioning or a desperate grab for relevance?
HACKETT: Well, there is a long answer to that.
* * *
Ford C.E.O. Jim Hackett was visiting New York in late September, when we sat down with him in our studio.
DUBNER: Okay, so the late Gerald Ford, the 38th president of the United States, was a great athlete and played center on the Michigan football team.
HACKETT: And an all-American as well.
DUBNER: And all-American, M.V.P. of the team, they won two national championships. You also played center for Michigan and are now the president of Ford. Tell me that’s just a coincidence. Come on.
HACKETT: That’s hard, isn’t it?
DUBNER: That sounds like conspiracy to me.
HACKETT: Yeah, and there’s a history there, quickly, with President Ford, because he was sitting in office when I played at Michigan. He loved the team, so he landed Marine One on the practice field, came and talked to the team, went to the training table with us. X-years later, when I’m running Steelcase in West Michigan, there happens to be a portrait of that evening. Someone brings it in, and it’s he and I sitting together. And so I became very close to him after he was president. I would talk to him often. Always before the Ohio State game, I would call him. And the one Ford story I love to tell is that when he was negotiating arms agreements with Brezhnev in Helsinki, they stop the negotiations so he can find out what the score of the Michigan-Ohio State game is.
DUBNER: Okay, so this is a parallel out of nowhere, but I think it’s appropriate. One of the reasons that football has become dangerous — on some dimensions, and less on others — the helmet was invented to prevent skull fracture, and it’s done a great job at that. Unfortunately, the helmet is such a good protector that it began to be used as a weapon.
Interestingly, with auto travel, cars have gotten so much safer over the generations, highways have gotten safer, etc. I don’t know if drivers have gotten any better, that’s hard to prove — and yet the last numbers I saw, somewhere in the neighborhood of 35,000 traffic deaths a year in the U.S., more than a million a year globally. It’s funny, when you talk to people, people are worried about terrorism. They’re worried about murder. But if you ask people how many people they know who’ve been connected with one of those things, very few have; whereas auto fatalities, we all know someone.
So I’m curious: you’ve taken over Ford Motor Company fairly recently and this is a way of transportation that totally changed the way that we live our lives — in many positive ways and some negative ways. So what I’d like to ask you is: consider for just a moment all the positives of auto travel to date, and all the negatives, and where you see the industry at the moment, and what are the big problems or what are the big challenges to address?
HACKETT: Well, only with you would I make a connection of football with that question, but like what happened in football, if we studied the mass of the players over that period: mass equals force, right? So the size of the players and your wise observation that they could move faster and not knock themselves out caused the brain to take 100 percent of the concussive shock. So all the design now in the future is about trying to push that outwards, and then change the techniques. Mass found its way in automobiles, too.

[92redragtop]

So the earliest one’s 1903 — 115 years, Ford is — Henry worked on an electric vehicle with Thomas Edison. He was a foreman in Edison’s factory. And the early models are really light, very small because they’re trying to use bicycle components and things like that. And then, as we’ve seen in history, as the mass gets bigger, mass production allows stamping tools to take really large sheets of metal and, for a fraction of the cost if you had to do this by hand, you get to have them wrapped around those skeletal structures. What’s cool about its is that the drive to get the vehicle more fuel-efficient means we’ve got to get rid of all that weight. In trying to do that, we actually are making the structures safer for crashes. And then, of course, this isn’t a reach prediction, but we won’t have crashes in the future.
DUBNER: Because of autonomous vehicles and software?
HACKETT: And sensing, and a third thing we’ll talk about, which is the cloud. A system that’s mediating the interactions of these objects. So, we have in computing, there’s packets that move really quickly. At an atomic level, they could run into each other and do harm, but they’re mediated in a way at the speed of light. So we can do this with the design of transportation.
At the 2018 Consumer Electronics Show, or C.E.S., Hackett and other Ford executives unveiled several components of what Hackett calls “The Living Street” and Ford’s vision of a “transportation operating system.”
HACKETT: Now, the power of artificial intelligence, the rise of certain autonomous, that are all going to be connected, for the first time in a century, we have mobility technology that won’t just incrementally improve the old system, but it can completely disrupt it. So a total redesign of the surface transportation system with humans and community at the center.
But he began by addressing the question that a lot of people had to be thinking:
HACKETT: You might wonder why a furniture guy would be asked to run an automotive company.
We did wonder, and we asked him.
DUBNER: So Steelcase was regarded as a great company to work for, which, I’m guessing, you had a little something to do with. And you were regarded as — the Wall Street Journal called you,“a pioneer of the open office,” and it really did change the way that we began to think about how an office should look and feel and work. So first of all, persuade me that the notion of the open office wasn’t just a commercial idea to encourage every company in America and the world to redo their offices so that you could sell more furniture. And there’s nothing wrong with that.
HACKETT: No, no, no. I’m going to endorse that notion, but I was not the father of it. By the time I came in as C.E.O. in the late 80’s, Herman Miller, Inc. was really the early purveyor of the open office, and it came from Germany. And the real movement really started here in New York. As the rents went up, it allowed you to get more density. That was really the underlying thing.
If I want to take credit for a movement, it was shifting the amount of space that you actually devoted to cubicles, and moving that to teams. So I call that “The shift between I and we.” But to make team spaces really cool and attractive, we had to do some unique things that weren’t being done. And I want to give credit here, I buy this really cool little company in Palo Alto called IDEO.
DUBNER: And they’re like a design consultancy? How would you describe them?
HACKETT: Yeah, that’s fair, and David Kelley, its founder, is noted for architecting the mouse with Steve Jobs in its first product. So Jobs hires IDEO to do design work from outside of Apple, forever. So right until when Steve passes away, he’s using IDEO.
I meet them and I start learning about the nature of a way work might be different watching how they work. I want to tell you, I was right about that. It actually changed the way teams work. And there’s another hour on that whole thing, but it leads to an important conclusion, which is that Steelcase needs to see itself beyond furniture and be about work. And if there’s anything that enticed Bill Ford about me, it was the notion that the company, almost as long-lived as Ford, finds a higher purpose that makes its market now bigger.
Bill FORD: I’ve known Jim a long time personally.
And that is Bill Ford, chairman of the Ford Motor Company, announcing Hackett’s appointment.
FORD: And we’ve always clicked in terms of thinking about the future. But make no mistake: he’s not just a futurist, he’s a very good operating executive.
Bill Ford said that Hackett had shown himself to be a “transformational leader” at Steelcase, that he’d made the company more profitable by seeking out a higher purpose.
HACKETT: I’m saying the same thing about Ford. I think our higher purpose is that the smart vehicle and the smart world have an interaction in the future that’s much bigger than it was in the past.
DUBNER: So as Steelcase is to being beyond more than work, even though it’s making office furniture, Ford is beyond transportation, being a mobility company, tech, etc.?
HACKETT: It’s beyond vehicles to transportation, and actually a transportation operating system that we can talk about.
Hackett’s involvement in the Ford overhaul began a few years ago, when he was just a Ford board member.
HACKETT: And it’s really straightforward. I’m on the board. I’m in Palo Alto with a meeting with the board and Bill, and we’re trying to get ourselves around the question of: how can we manage the core business and this emerging thing in parallel?
This “emerging thing” would come to be known as Ford Smart Mobility, a unit meant to boost the company’s role in ride-sharing and autonomous vehicles.
HACKETT: And I tell the C.E.O. Mark Fields — I have a great relationship with him — I say, “You know, you ought to get somebody to help you manage the emerging business. Your job is too big. You need to do this.”
DUBNER: And he said, “How about you, Jim?”
HACKETT: Within half a day, Bill came and said, “That’s a great idea, why don’t you do it?” And I thought, “Eh, I ran a company. I don’t want to run a company.” So it’s like two guys playing office. He goes, “Well, just be chairman and you can hire a C.E.O.” And as I look back on that, I was naive, because I couldn’t go in there and help invent it without running it. Then running it led to — I had nothing to do with Mark’s situation, I wasn’t in the boardroom anymore. I wasn’t reporting to them. So Mark’s evolution out surprised me.
DUBNER: You business guys and your business-speak. His “evolution out.” He was fired, right?
ABC-7: The Dearborn automaker parting ways with C.E.O. Mark Fields.
CNBC: If you look at shares of Ford since Mark Fields took over in July 2014, it’s down 36 percent!
HACKETT: Yeah. But he was ahead on a bunch of ideas and I would have loved the reverse role, could I mentor him — I was the old guy — could I teach him what we’re talking about. I mean, I miss having him right now with some of the issues that I’m facing, he really had mastery of.
DUBNER: Well, let me ask you a central question here, and I guess this speaks to your ascension as C.E.O. as well, because we tend to attribute failure and success often to individuals or to single events, when in fact the world is much more complicated, plainly.
HACKETT: That’s for sure.

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DUBNER: Here you are, the older guy, as you said, coming in to the company, taking over when Mark Fields was put out. And you mentioned earlier that the big concern for the Ford Motor Company and Bill Ford was how to balance the core business — making vehicles — and the emerging business, which is this smart mobility, cloud-based, etc. My big question for you is: what made all of you think that Ford needed to be in that emerging business?
HACKETT: Well, there is a long answer to that, but I’ll tell you. The way you’ve got to think about competitive sets is: the nature of what makes a business win over time is not unlike any other kinds of system — the way our bodies win in the battles they have, or the way a football team wins, or the way a market moves. I’m a student of this, complexity theory, and what that tells you is that over time, you have to mutate and evolve, because the nature of random things is going to cause more things that come at you.
So let’s just be specific: in the auto industry, it’s the randomness of climate conflict. It’s a real science thing. We’re in support of meeting a really high standard. So this starts to birth Tesla and then you put a rocket scientist, truly, in charge of that, who has a computer background, understands design really well, and he starts to question the model of the way a vehicle’s ordered and built. So he’s got a lot of that right. And it’s just one. And then he gets copied and then all of a sudden there’s a company called Lucid Motors that Chinese companies put a lot of money behind. We looked at it. These are people that are redesigning the car business.
So the board sits there and sees this happen over and over again in other industries. You don’t want to be the one that does that. So the story I tell is: let’s play Kodak for a moment. And what you have to start with: the board is smart. They’re not dummies. They have the patent for digital photography.
DUBNER: They made one of the first digital cameras, right? They were there.
HACKETT: I know a board member who was there and the issue is: you make more money on chemicals and paper than you do this new idea. So if you’re just doing pure investment comparison, stay with the old.
So what a guy like me, having gone through this in another company, Steelcase, I’m trained now to look at that problem differently, and I frankly didn’t get to talk about that much in the boardroom, but maybe Bill picked that up. Now I’ve got to prove — I’m very confident here — but I have to prove to a lot of people that we can make the core business really profitable. We’re working on that and the disruption shouldn’t scare us at all because we can lead in some areas there. So when I’m done, no date on that, but I want to make sure we’re on the right track in both of those areas.
DUBNER: Before we get into the specifics, let me just, not challenge, but question the premise a little bit more, because if you look at business history, you just look at legacy firms generally, you see that technology and time are really tough on companies. Most companies don’t stick around for too long and when the technology changes enough, many companies try to adapt with the changes and very few do well.
G.E. is a really interesting example on a number of dimensions, they went very broad and so on. What makes you think that, with that substantial history, Ford is special, or that any legacy automaker is special and can adapt and add on the technologies that are so strong and powerful, but not get beat by the companies that are tech firms and telecom firms and so on?
HACKETT: Yeah. You’ve grabbed the essence of the challenge. The affirmation is: they did it before, we just forget.
DUBNER: What do you mean?
HACKETT: Well, we didn’t always have computing, in the way a factory was run. We didn’t have — the telephone wasn’t, I don’t think, in 1903, highly pervasive, right? So think of people being paid in the factory out of a paddy wagon with real cash instead of direct deposit.
So, actually, I have a theory about this, and I’ve not written, but talked to other C.E.O.’s and I get support. The notion is that over time, you have to think about the business over phases. You can say “past” but let’s hold that off. You think about “now” and “far” and I’m going to sneak a word in, “near.” “Now, near, far.” Now what separates those time spans, because we could just make up: what’s the future? Is it a year? Is it 25 years?
What I’ve bought into, it’s science-derived. In other words, what makes the increments grow in time is Moore’s Law. Reed Hastings is on a Charlie Rose interview, and Charlie says, “Reed, what do the people in Palo Alto know that everyone else doesn’t know?” And he said, “Moore’s Law.” And Charlie goes, “Well, I know what Moore’s law is.” And he goes, “Yeah, but Charlie, you don’t understand. We’re designing for the next iteration now.” That changed me, a number of years ago. So Moore’s Law only swallows you up when you don’t think about it. So imagine we’re in meetings right now where people are talking about technology and the vehicle and they go, “Jim, can’t afford it, it’s too expensive, people won’t pay for it.” Well, I know from my friend David Kelley that Steve Jobs would say, “I want it in now because I know the price is going to be one-tenth very quickly.” So he forced the design to adopt the next iteration.
And then, of course, in Apple’s case they made money right away. Ford’s got to find a way to make money faster on that kind of theory. So, in parallel, you’re not just trying to make the product adaptive, you’re thinking the business model is going to be under attack because the economic principles have totally changed over that time.
DUBNER: So what you’re describing now are the real economics, but added to your challenge, running a company like Ford, is stock market psychology — which is a whole other realm. It’s based on economics to some degree but then the market has its own ideas.

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So, I’ve read, and tell me if I’m wrong, I’ve read that one thing that led to Mark Fields’s firing from Ford was when Tesla, which makes many, many fewer cars than Ford does, beat it in market cap.
HACKETT: I never was in a discussion where that was cited. But let me just cite, I know about myself in this regard. There’s a fair amount of stress around: does Jim Hackett get that the market’s got to be rewarded for these great ideas? And I totally do. Because I did it once before, first of all. And the question is: is the design of the business such that there’s a patience factor here and you get rewarded? So let’s talk about Amazon’s profitability in its history. I mean, it took a while. Let’s talk about Apple. If you look at Apple’s stock price when Steve came back —
DUBNER: Took a long time.
HACKETT: Yeah, and what they want, which those two guys gave, which I know I’ve got to, is believable momentum. They could show the compounding of the number of customers, they could show the case of add-on revenue, they could show the case of users being delighted with products.
DUBNER: They’re also due — because their products were new though, I’m curious whether they get a novelty premium that you don’t get.
HACKETT: Fair. I think that happened with the automotive competitor.
DUBNER: So we should say, as we speak, Ford Motor market cap is about $37 billion and Tesla’s market cap is about $53 billion, which I’m guessing as the C.E.O. of Ford, whether you’re going to say it or not, is a little frustrating, perhaps?
HACKETT: We make a new vehicle every four seconds.
DUBNER: There goes another.
HACKETT: You get to observe — in their business model, they’re trying to get 20,000 of them — or whatever the number was built — in a quarter or something.
DUBNER: But if you were doing the business case: let’s say you’re teaching Harvard Business School right now and the case that you want to study is Ford Motor Company versus Tesla for the moment. And we know what Ford does, what they represent, how they make their money. And we know what Tesla does. And we try to project it into the future and see what the stock price is really all about. Make the best case that Ford is undervalued right now.
HACKETT: And I really believe this. You’re not supposed to, as a C.E.O., speculate on stock price, so all I can say is: I’m really optimistic about the price-earnings ratio that understates the real value. First of all, we’ve got an industrial price-earnings ratio of six or seven, something like that.
A company’s price-to-earnings ratio is a key metric used by investors to assess how the company’s share price relates to its true value.
HACKETT: And I asked Ginni Rometty today what theirs was at I.B.M. and I think she said 11 or 12, and we were discussing Microsoft’s probably in the 20’s, right? Now these three companies, all of them are actually dealing with bits and cloud structures and data, right? But one’s in the 20’s, the other one’s in the sixes. So the case I would make is that we have as much data in the future coming from vehicles, or from users in those vehicles, or from cities talking to those vehicles, as the other competitors that you and I would be talking about that have monetizable attraction.
Now, I talk to lots of investors and they go, “Got it. Boom. Thumbs up, Jim. Go for it. Can you just prove to us that you’ve got that working?” And what you and I just agreed when we saw some of the early tech startups, they could go to market with investors only seeing a fraction of what they were going to become, and that caused belief.
I mean, who am I speaking to, right? I think that’s unfair for industrial companies at 115 years old. We have a lot of talented people. We can generate returns on that invested capital. My belief is: we have 100 million people in vehicles today, that are sitting in Ford blue-oval vehicles. That’s the case for monetizing opportunity versus an upstart who maybe has, I don’t know, what, they got 120,000 or 200,000 vehicles in place now. Just compare the two stacks: which one would you like to have the data from?

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DUBNER: I hear you entirely. But I also think, “Well, who are the companies that have been good at monetizing customer data?” And we can name them. There’s Facebook, there’s Google, etc. And have they already mastered or owned that market? So what makes you think that Ford can monetize that in any significant way, enough to invest in developing that whole scenario?
HACKETT: Well, first of all, we already know as a proxy that those really wonderful firms you talk about, like Facebook — we’re a great customer of Facebook, they love us. Google loves us, because Ford’s a big advertiser. So we talk to these folks all the time. But they don’t own the healthcare data market. They are not controlling aviation data today. They may be doing flight reservations. I mean, we can find proxies where there’s data and they don’t own it. Now let’s let that just be an argument that says they’re not everywhere. They’re very powerful.
The issue in the vehicle, see, is: we already know and have data on our customers. By the way, we protect this securely; they trust us. We know what people make. How do we know that? It’s because they borrow money from us. And when you ask somebody what they make, we know where they work; we know if they’re married. We know how long they’ve lived in their house, because these are all on the credit applications. We’ve never ever been challenged on how we use that. And that’s the leverage we’ve got here with the data.
DUBNER: So the question I have is whether Ford necessarily has, not only a big role in that, but a big opportunity to monetize. So at the C.E.S. presentation, you rolled out a couple components of “The Living Street.” One is called the Transportation Mobility Cloud.
Marcy KLEVORN: Our Transportation Mobility Cloud, or T.M.C., will support the rapid development of services and applications that will enable people to move more efficiently and have access to smart, connected transportation.
DUBNER: Another was called C-V2X.
Don BUTLER: C-V2X, or Cellular Vehicle-to-Everything technology, has the potential to enable a city’s various components and applications to share information with each other, from vehicle to pedestrians and bicyclists, to the whole infrastructure, enabling collision-avoidance safety systems, traffic signal prioritization, and much more.
DUBNER: And one of the examples that your team gave was on the C-V2X component. They described a scenario in which a vehicle, “without requiring a network, can communicate when a driver needs help. Maybe he has diabetes and is going into shock … C-V2X can coordinate the response, the system can recognize the driver’s distress, send a signal to emergency responders … The vehicle can even send medical records for drivers who have opted in for that.”
So when I read that, why is this wonderful-sounding, but very-complicated-to-me-sounding solution — having the vehicle diagnose a medical emergency, for instance, rather than, say, a wearable medical device, which I’m wearing. My smartwatch is that now. And I saw a variety of examples of that in your vision whereby it seems like Ford is describing itself as a major player in this reimagining of the public square, the public space. I don’t understand what you bring to it that makes you think that you can be a big player in that space beyond the transportation component.
HACKETT: You mentioned the diabetic thing. I’ll give you a real one that’s working right now. The Los Angeles Police Department drives Ford Explorers. We have a high market share of police vehicles. In an application, that is one of our tests, they have this terribly sad story where an officer is on a mission, gets in a wreck. And the airbag knocks him out, so he dies. They can’t find him because they’re radioing him. I don’t know why they didn’t have G.P.S. or something like that, that positioned him.
What we’ve invented with them is that, every time the airbag goes off, it’s communicating its location. And now we have a team sitting inside L.A.P.D. right now, working on a dozen other ideas that we get monetized for because of the data they’re willing to share that helps build a response system for them. So that’s in use — like a person in their vehicle to the cloud.
The promise of the diabetic is: in India, this is really extreme, you can’t get an ambulance in to somebody that’s in trouble. The traffic’s too congested. The theory here is the vehicles give priority to that. So they’ll know where to go. So if you’ve been in an environment where the siren’s on, you go, “Do I go right or left?” The command will be the way air traffic is. They just tell a plane, if it’s on a collision course, they just go up or down, they don’t tell them to turn right or left. Our commands will tell you go right or left, and everybody’s moving the same way, and it knows what the oncoming traffic is doing. The simple transactions are Ford’s reducing the friction in somebody’s life.
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Just a decade ago, Ford Motor Company was the most stable of the Big Three U.S. automakers. General Motors and Chrysler both declared bankruptcy during the financial crisis and received a government bailout; Ford didn’t, although, under then-C.E.O. Alan Mulally, it did accept some federal assistance. From both a financial and business perspective, Ford seemed to be in relatively good shape. But that’s no longer the case. Despite a strong economy and stock market, Ford has been struggling, even more than the other U.S. automakers, as evidence by its battered share price.
Ford is still the king of pickup truck sales, but Moody’s Investor Service, in a recent downgrade of Ford, cited “erosion in the company’s global business position and the challenges it will face implementing its Fitness Redesign program.” “Fitness Redesign” is Ford’s way of saying it’s downsizing and restructuring — a fate that Chrysler and G.M. had forced upon them during their bankruptcies. But which Ford, paradoxically, was able to avoid — until now. One big part of Ford’s restructuring has been Jim Hackett’s recent decision to phase out nearly all Ford sedans currently on sale in North America.
NBC 4: Ford has decided to get out of the car game except for its iconic Mustang.
FOX BUSINESS: Ford says it’s going to focus on S.U.V.’s and trucks.
HACKETT: So the sedan, as a platform, you’d be shocked at how the sales have dropped off globally for everybody.

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It’s worth noting that just a couple decades ago, Ford’s Taurus was the best-selling car in America. But consumer preferences have changed; the price of gas is relatively low; and there may be something of an arms race among consumers, who feel that S.U.V.’s and trucks are safer — especially when you’re on the road with so many other S.U.V.’s and trucks.
HACKETT: Yeah, well, definitely. I know with women buyers, they prefer the height, they just see better. It’s a function of seeing where you’re driving and the car’s relative position. But the other thing is: in the past, you would have to hedge if fuel prices went up, and the vehicles have gotten so fuel-efficient. Our F-150 — I give Alan Mulally a lot of credit for this, he aluminized the body of it.
DUBNER: Right, very controversial at the time. We should say that he was an airplane guy.
HACKETT: He was an airplane guy; he knew aluminum; he knew riveting; it was a really hard problem to rivet the panels. We have a lot of patents on that. But guess what: the vehicles — so this is a hard way to understand, but in the CAFE standards that are calculated for the world’s fleet, or in this case U.S. fleet, the vehicle that made the most progress in making it better is the F-150. Now it’s not as fuel-efficient as a smaller vehicle, but in contributing to global climate, it’s less of a problem.
DUBNER: But what about the profit margin; trucks and S.U.V.’s versus sedans?
HACKETT: Well, the reason you make more on them is because your price point’s higher.
DUBNER: Really? Pickup — I thought pickup trucks are cheap. We don’t have any pickup trucks in New York City, as you’ve seen.
HACKETT: So that’s the issue. But come with me to Texas.
DUBNER: No, no, no, I understand, I’ve seen the numbers.
HACKETT: I’m driving a King Ranch, which is the nickname of a luxury F-150. And I mean the leather seats and the ride —
DUBNER: That could run over the whole Ohio State defensive line, I guessing. Not that you would do that.
HACKETT: And the cool thing is: that frame — I don’t mean the physical frame of a vehicle but the idea of people sitting in vehicles like that — there’s another series below that called Ranger and it’s much smaller and it’s global and it’s very profitable. And we’re working on other ideas in that category, because people love these things.
This is the part of the Ford reboot story that you may find confusing. Which many investors seem to find confusing — or, to be fair, concerning. On the one hand, Ford talks about remaking itself as a technology firm, with their “Living Street” model and their “transportation operating system.” Earlier, you heard Hackett comparing Ford’s price-to-earnings ratio to those of I.B.M. and Microsoft, which are actual tech firms. So that’s the forward-looking part of the reboot mission.
On the other hand, Ford’s increasingly heavy reliance on truck and S.U.V. sales has more than a little throwback feel to it — especially in how the company markets itself. Jim Hackett says Ford is eager to collaborate with the Silicon Valley heavyweights in order to get a piece of their pie. But one TV ad in a new campaign called “Built Ford Proud” opens by mocking Silicon Valley. The actor Bryan Cranston, looking very Elon Musk-y or maybe Steve Jobs-y, takes the stage in front of a backdrop labeled “Future Talk.”
FORD AD: Thank you. Now let’s get started.
But then Cranston, switching out of that character, confides to the viewer …
FORD AD: The future isn’t created in a keynote address.
What does create the future?
FORD AD: Building does. Building like we have for the last 115 years. And building for the next century. Building cars. New technology. And transforming cities.
And by now Cranston is barreling through the desert in a Ford pickup truck, windows down, engine roaring.
FORD AD: So let the other guys keep dreaming about the future. We’ll be the ones building it.
The ad ends up looking like pretty much every other pickup truck ad you’ve ever seen. It doesn’t seem like the most convincing way to declare that Ford is the company that’s working on what Hackett calls “a total redesign of the surface transportation system.” By the way, these promises of new technology and transformed cities all happen atop an orchestral version of the Rolling Stones song “Paint It Black,” which came out more than a half century ago.

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DUBNER: So one of the big changes in the world, but especially for your industry, is the oncoming autonomous vehicle scenario, which is incredibly exciting, and will probably have a lot of effects that many people can’t quite imagine yet, pro and con. But it strikes me that Ford is a little bit late to the starting line. And I’m curious to know, again, what makes you think that you’re going to do well in that realm?
HACKETT: I actually think it’s a myth that we’re behind. So robotics is not new; of course, they’ve been in the factories for years. Mark Fields deserves credit here. He decided that to get there faster, he was going to invest in a group of people who wanted to leave some of the notable firms working on it: Google, Uber, some others. They came to us and said, “We want to do our own startup.” So we’ve created that. It’s called Argo A.I. It’s in Pittsburgh, near Carnegie Mellon, of course.
DUBNER: Pittsburgh’s become the capital of autonomous vehicle research.
HACKETT: Yeah. And we’re the sucking sound there, because this is the who’s-who from that alumni. The guy leading our company was the number-two guy at Google working on Waymo, which, I give lots of credit to Google. I think they’ve done a great job. We believe we’re behind them, but the velocity of the vehicle’s learning’s ahead because we have people that worked there. So we’ve taken a different tact with the design of the software.
Just a quick lesson for the listeners. It’s only three years old that neural networks actually found their way into A.I. So, before that, robotics were making progress, but this is the breakthrough.
DUBNER: So let me ask you this. You recently led a team of Ford executives making a big presentation at the 2018 C.E.S., Consumer Electronics Show. And it is a huge multi-dimensional vision of how what I think of as an auto company is creating a large ecosystem that includes all different kinds of inputs. And I want to know, is that the kind of presentation you make at C.E.S. because it’s kind of good for business to invite those technology firms who come to come and play in your sandbox? Or is this a real part of your business model?
HACKETT: Yeah, I mean — and I did that in January of this year, and I’m really happy I did it because I was trying to get out the three parts of the technology evolution, which is: the nature of propulsion’s changing — to electric and hybrids. There will be gas, hybrids, and electric. There’s a robotic system. Let me give you the three letters: it’s called S.D.S., Self-Driving System is what they’re called. They’re trying to get away from autonomy and have it be labeled this way.
DUBNER: Because “autonomous” is a little too scary?
HACKETT: I think so. It’s not human-centered. It’s making the vehicle the celebrant, and we want the people inside. The third technology is this cloud structure.
DUBNER: Which you call the Transportation Mobility Cloud.
HACKETT: That’s our phrase. But all we really trying to do is orchestrate these three technologies to have an advantage for customers. The mere fact that 70 percent of the world’s population is going to be in city centers by 2050. It means we’ll be paralyzed. So I’m in New York this week, when the U.N.’s going on, and you can’t get around with the rain. President Clinton told me that he had to stay in town last night because he couldn’t get out to his home.
So we got to choreograph the system so that you reduce all this friction. The study after study that’s done about what causes jams and things like that show that a fallacy is: if you add more highway capacity, you get more throughput. The opposite happens. So there’s a famous story in China where there’s a month-long traffic jam on their biggest superhighway. Can you imagine getting in a car and you can’t get out of it for a month? So Chinese government and other places are dealing with it.

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You’ve done a piece with Sidewalk Labs about smart cities. But I’m saying something different. I’m saying it feels utopian to talk about a smart city. Let’s start down the ladder and just get the transportation system to be smart. Let’s just coordinate mass transit, micro transit and your vehicles, and then the Uber-Lyft combinations, around what’s really going on in the lives of people.
And the opportunity here is enormous to change the way your life is in a city, because that system gives you the permission and the force of having what you want, when you want it. And you go, “How does it do that?” We took off 45 minutes earlier to come to you today, so I’m adding to the congestion. If I actually knew when I needed to be here, and the city mediated that, it would take all the people who are trying to get ahead out. Now that’s the traffic thing. Another quick one is parking. You lose more fuel efficiency trying to find a spot.
DUBNER: And then there’s just the real-estate question of parking.
HACKETT: I actually think a cool thing is the origami of parking, because the way lines are designed and parking lots that we’re going to be able to park really weird ways because the vehicles will negotiate their packing.
DUBNER: Well, and theoretically, with autonomous — or whatever we’re calling it, S.D.S. — we don’t need to hang on to our cars anymore, right? If you’re summoning the next one, to some degree.
HACKETT: Well, we’ve taken away the street from the people. Where’s your favorite city you like to visit? I mean, New York is one of mine. But when I go to Paris and the way the food spills out, the vehicles kind of destroy that. So we’ve painted a picture: there’s more green space, there’s more human interaction with the streets. How’s that happen? It’s because of this transportation mobility cloud, smart cars.
DUBNER: Before you go, I do want to ask you: in a recent interview you said that Ford has lost about a billion dollars in profits from metals tariffs, so a) just confirm for me I heard you right, and b) tell me if that’s true or if it’s even half-true, what are you doing about it?
HACKETT: Well, the number’s true if — the way I did the model in my head, and I should have been clear about this — you add the time the tariffs have started through next year. But still, it’s a billion dollars, and this is a really interesting thing. In my lifetime running another company, I never thought about trade. I never worried about it. So, now the C.E.O.’s time is tied up in something that they didn’t have to worry about. It needs to be updated because what happened is: those were emerging countries that are now. And the deficit’s got bigger and bigger.

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So I think the administration has momentum from other administrations who likewise wanted to address it. All I’ve been asking for is that if you go in and you attack this problem, the winning state is a state of equilibrium, not a constant fight. A trade war will take away — these are stats that maybe you’ve read. The tax cut benefit to our citizens right now is going to get wiped out by this current inflation on what they’re calling the Walmart effect. So the goods that people are buying in stores have now been hit. So two-thirds of the tax benefit could be actually wiped out if we don’t get this fixed.
DUBNER: And as the C.E.O. of a car company, the uncertainty, I would imagine, can be very difficult, because we all know it’s hard to make even a personal decision when there’s that much uncertainty. So let me just really, finally, ask you the final question. When you look forward, do you see less uncertainty than I do? Do you see a clear path toward what Ford can actually accomplish based on these rather large dreams that involve everything from cloud computing to telecom in cars and so on?
HACKETT: Well, this gives you insight into me. My dad never had a bad day and he had a lot of challenges. But the optimism when he got up every day, that’s the way I was raised; as opposed to someone who heard, “Life’s going to hell in a handbasket.” I never heard that.
So I told a story to one of my colleagues today that said, “Why do you think there was a milkman in the day?” And, well, it was because we couldn’t refrigerate milk in our homes, so then they could get it to you because it had to be fresh. And then what happened was we had refrigerators, and to get scale, they moved the dairy farms further away. Then they started adding chemicals to them so they didn’t spoil, beyond homogenization. And today the average distance from farm to market’s 1,500 miles.
So the world’s looking at that and saying, “Was that the best design for humans?” What I’m optimistic about, based on the way we’ve talked today, is the transportation system caused some of that. It now can actually go backwards, so that you can have produce very close. You can send these objects of intelligence on missions for you. You can know where anybody you love is at any given time, if they want to tell you. And we can kind of know that now? But what you’re going to be able to know is going to be incredible. And in a way that I think is safe and helping humanity. So we can make Ford a really cool futuristic company in just building and making cars and selling them. We have a lot of great ideas there.
Whether these ideas are truly great, whether Ford will buck the trends of history and reinvent itself as a firm for the middle of the 21st century — I have no idea. Thanks to Jim Hackett, though, for taking the time to explain his vision for the Blue Oval.

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End of Transcript.

[hammerhead]

at least their still making the Mustang for "car guys" while catering "to all the rest" - just don't make it autonomous...! or I will be syphoning jet fuel at the airport for my fox! Accepting unwanted carburetors! Free pickup!

[92redragtop]

Speaking for myself, being a former leftie, my knee jerk reaction leans left. With some reflection my attitude swings back to free market attitude.

I'm more offended by the wasted taxpayer dollars achieving nothing but squandering our money. Government/union lies and ineptitude

I'm a fiscal conservative/capitalist (with a conscience) by nature and by self-selected education (Ivey MBA).

[92redragtop]

at least their still making the Mustang for "car guys" while catering "to all the rest" - just don't make it autonomous...! or I will be syphoning jet fuel at the airport for my fox! Accepting unwanted carburetors! Free pickup!

The countdown clock may be ticking for the Mustang when you listen to their 10, 20, 30 year strategic plans. All it will take is a few short years of down sales and it's gone (or go electric/hybrid).

[hammerhead]

The countdown clock may be ticking for the Mustang when you listen to their 10, 20, 30 year strategic plans. All it will take is a few short years of down sales and it's gone (or go electric/hybrid).

I think so - sales appear to be low now compared to pre 2008 - that could change with fewer options - the rest of our lives will be interesting - hopefully race track wont be autonomous...lol

[92redragtop]

I think so - sales appear to be low now compared to pre 2008 - that could change with fewer options - the rest of our lives will be interesting - hopefully race track wont be autonomous...lol

Attendance at all types of motor-based racing events are down globally from what I've read and so is the corresponding sponsorship $ (if the money goes then the teams go and attendance continues to drop - it a perpetuating cycle to zero) so that could go away as well with upcoming Millenial/post-Millenial (Z, etc) generations depending on their interest in these types of sports....and Moore's Law is accelerating the clock.

[hammerhead]

Attendance at all types of motor-based racing events are down globally from what I've read and so is the corresponding sponsorship $ (if the money goes then the teams go and attendance continues to drop - it a perpetuating cycle to zero) so that could go away as well with upcoming Millenial/post-Millenial (Z, etc) generations depending on their interest in these types of sports....and Moore's Law is accelerating the clock.

I'm not too interested in spectating my interest lies in participation...there may be a future in owning a track..!

[92redragtop]

I'm not too interested in spectating my interest lies in participation...there may be a future in owning a track..!

I'm not sure the tracks could survive without spectator revenue at events through the year.

[Stephen06GT]

I think so - sales appear to be low now compared to pre 2008 - that could change with fewer options - the rest of our lives will be interesting - hopefully race track wont be autonomous...lol

There already is an autonomous racing series. They race in conjunction with the Formula E.