TORONTO — Ford Motor is about half finished redesigning most of its major processes under CEO Jim Hackett's "fitness" plan, said Joe Hinrichs, the automaker's president of global operations.
Hinrichs said the changes are "much more dramatic and deeper" than those Ford undertook during the 2008-09 financial crisis.
"That was a massive restructuring to shrink and cut and reset the business, close 16 plants in North America, all the things that we did," Hinrichs told an audience last week at the Automotive News Canada Congress here, referring to changes a decade ago. "But we didn't redesign each of our major processes, most of them. Now we're redesigning almost every major process that we have, so that's a big deal."
Hinrichs said Ford is "probably 40-50 percent" of the way through overhauling how the company does business, from developing products and designing vehicles to managing costs with suppliers.
Ford's executives have been tasked with re-evaluating every aspect of the business to make it quicker and more cost-efficient, Hinrichs said.
In October 2017, Hackett laid out a $14 billion cost-cutting plan to boost Ford's financial "fitness." Last April, that target nearly doubled to $25.5 billion.
The overhaul includes plans to ax sedans from the company's North American lineup and reduce its global salaried work force.
Last month Ford said it will shed thousands of jobs at its European operations in a bid to return its business in the region to profitability in a broad restructuring that may include shutting down production plants.
But the moves have done little so far to satisfy investors who see Ford as being too slow to adapt to the massive changes sweeping through the auto industry. Since late August, Ford shares have traded at less than $10, a level the stock had largely traded above since emerging from the financial crisis in 2010.
Hinrichs said some on Wall Street are taking a wait-and-see approach on Ford, and those investors will not be satisfied until they see the company go through a downturn without "dramatic cash burn" and losses. He said the financial benefits of Ford's restructuring will become apparent between 2021 and 2023.
"A lot of it also has to do with the operational performance of the business," Hinrichs said. "Is it getting better or not? We have to demonstrate that our operating performance is getting better for people to feel more comfortable that we have our arms around the challenges."