Why the firing of Ford’s CEO is a wake-up call for Washington

The recent firing of Ford Motor Company CEO Mark Fields is a wake-up call being ignored by Congress and the White House. After heading the 9th most profitable U.S. company and serving as chair of the U.S. China Business Council, Fields knows the problems facing large manufacturers and warned specific steps were needed from Washington. But his calls for action have been sidestepped by lawmakers as Wall Street rewards shinier toys — with far fewer assets on their ledger sheets — with larger market valuations.  

As part of a Kogod School of Business survey of national business leaders, I asked Fields for one policy item he recommended the president pursue to help companies like Ford grow the American economy. His answer surprised even some auto industry experts. Fields didn’t call for tax breaks or regulatory rollbacks. He didn’t make government incentives to hire workers his number one request from Washington. Instead, he called on the White House to tackle an issue most corporate leaders and policymakers avoid discussing publicly lest they offend key trading partners: currency manipulation.

{mosads}Market access is essential for U.S. automakers wanting to keep pace with foreign competitors. When major economies — notably China and Japan — manipulate currencies to keep their products cheaper, it doesn’t matter how quickly American manufacturers innovate if the domestic manufacturer’s price simply can’t be beat.

Fields was a 28-year Ford veteran when he replaced Alan Mulally as CEO in 2014. With Henry Ford’s heirs controlling 40 percent of shareholder voting rights, Chairman Bill Ford lauded Fields’ vision for the future and promised the full backing of the board. Company employees responded with standing ovations.

Largely glowing global media coverage described Fields as a “turnaround” agent for Ford — in not just in the U.S. but throughout the Americas, Europe, and Asia. And despite numerous challenges facing the American automaker, Fields delivered on key metrics, maintaining large profit margins throughout his tenure as CEO. All the while, he kept pushing Washington in both subtle and overt ways to fight currency manipulation.

Combatting the currency problem was a promise made repeatedly by candidate Trump. But President Trump did a complete 180 on his vows. In the meantime, Congress has largely left it to the executive branch to tackle such a thorny issue.

While President Trump backtracked on his promises, media reports say it was the concession Fields made to the White House to downsize state of the art factory plans in Mexico that undermined the board’s confidence in his commitment to innovation. 

Despite having a healthy balance sheet and robust sales, Ford’s stock fell 38 percent under Fields. Investors are flocking to glitzier options like Tesla, with that company’s stock value jumping 48 percent in just twelve months. Despite 22 times the sales of Tesla in 2016, 62 factories worldwide and $27.5 billion cash on hand, Fields couldn’t convince Wall Street his was the better investment. Tesla shot past the nation’s second largest automaker in April for total market value. Seriously? Yes — very seriously if you are Ford.

Of course, neither Congress nor the Trump White House can control the whims of Wall Street investors. But when stock price becomes a clear statement about the need for American companies to better position for the future, lawmakers can and should take note when debating policy priorities.

Does a lower overall corporate tax rate deserve a higher priority than targeted research and development incentives? Should there be more immediate focus on a bipartisan workforce development package emphasizing higher tech skills? And, now, who will lead on currency manipulation? 

No matter how adeptly major American companies adopt the latest technologies and pivot for future sales, barriers to selling products overseas prevent the kind of growth demanded by investors. Fields was fired because he was an innovator who was unable to innovate fast enough for Wall Street.

He was a global leader who couldn’t control larger global forces to level the playing field for American manufacturers. He was a lifelong company man who couldn’t keep the company board satisfied when Trump took aim at U.S. businesses like Ford to curry favor with a weary American workforce.

The market has spoken with the dismissal of Mark Fields from Ford. But for the sake of the broader American economy, Congress and the White House need to do a better job listening not to the whims of Wall Street, but to the calls from leaders like Fields to focus on policy fundamentals that can truly grow American jobs.

Rebecca Cooper is an executive in residence at the Kogod School of Business at American University and author of the upcoming report “Washington & The Way Forward: Implementing the Voters’ Agenda.” She created and anchored the weekly news show “Washington Business Report” and prior to that worked on the Senate Finance Committee and at the U.S. Department of State.

The views expressed by contributors are their own and are not the views of The Hill.