Ford CEO says he regrets not tackling a major problem breaking down his brand

Recalls and the Ford Motor Company  (F)  have become pretty synonymous with each other.

According to data from the National Highway Traffic Safety Administration, the most recalls issued by any automaker in 2023 was Ford, with 58 recalls affecting more than 6.1 million vehicles.

With recalls announced every so often, quality control is a big issue for Ford CEO Jim Farley, and he admits it is something that keeps him up.

Ford CEO Jim Farley pats a Ford F-150 Lightning truck. Bill Pugliano/Getty Images

During a recent speech at the Wolfe Research Global Auto Conference in New York, Farley broke with emotion and admitted fault when he said that the Detroit Big Three automaker would be better off if he was dead-set on resolving issues with vehicle quality control and other operations problems when he took control as the brand’s CEO in 2020.

When talking about specific aspects he changed at the company, he admitted that he wished he had “the same laser-focus” when it came to Ford’s industrial system.

“The capability atrophy in engineering, supply chain and manufacturing at Ford — [Ford CFO John Lawler] and I talk about this every day — needed a much more fundamental reset than I had realized,” Farley told attendees at the conference. “I think we all have regrets, and that’s a big one for me. It’s a humbling thing.”

Line workers assemble Ford Motor Company’s Ford Bronco on the line at their Michigan Assembly Plant in Wayne, Michigan. JEFF KOWALSKY/Getty Images

During the Q4 2022 earnings call in February 2023, Ford CFO John Lawler said that the company was not working as productively as it needed to, noting that inefficiencies with how the automaker sourced materials for, designed and built its cars gave it an $8 billion cost disadvantage compared with its contemporaries. Additionally, Farley blamed issues at the industrial level for a $2 billion loss in 2022.

“To say I’m frustrated is an understatement because the year could have been so much more for us at Ford,” Farley said during the Q4 2022 earnings call. “We have deeply entrenched issues in our industrial system that have proven tough to root out. Candidly, the strength of our products and revenue has masked this dysfunctionality for a long time.”

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The Ford CEO said that one way the automaker is working to fix its quality issues is by adding another layer of accountability. Farley noted in his statements that when he took over as CEO at Ford, he noticed that a majority of managers at the industrial level received full bonuses even when Ford had a bad year in recalls — which is one key thing he changed.

“You have to set up a culture shift — a performance reward system where every engineering manager, purchasing component manager and plant manager is fully accountable for the quality and cost of their work,” he said.

With those changes, Farley said that there is 10% increase in initial quality.

However, Ford is still having a bit of recall trouble. Recently, the blue oval issued a major recall of 1.9 million units of its popular Explorer SUV and the Explorer-based Police Interceptor Utility over A-pillar trim that can fall off while the vehicle is in motion.