Ford Motor executives have made it clear: no stock buybacks or plans to spin off the commercial vehicle operations, Ford Pro, anytime soon. In response to shareholder questions during the company’s annual meeting on Thursday, Executive Chair Bill Ford and CEO Jim Farley laid out their reasons behind these decisions.
Starting with the buybacks, Bill Ford shared some insight into why the company won’t be following the typical trend. “We’ve done buybacks during my tenure here, and they typically have not worked,” he said. For cyclical companies like Ford, he explained, buybacks tend to happen when things are going well. But when the down cycle hits, companies often regret not having that cash on hand to weather the storm. So, for now, it looks like stock buybacks are off the table.
Turning to another hot topic: the future of Ford Pro, the company’s profitable commercial vehicle segment. Farley also weighed in, saying that the idea of spinning off this part of the business is not on the agenda. “Pro is so integrated in the company and relies on the benefits of Ford industrially that separating it would have a lot of risks,” Farley said. It’s clear that Ford believes keeping Ford Pro within the fold of the larger company is key to maintaining the operational synergy that has made it successful.
Both executives seemed to agree that the current strategy is the way forward, with an emphasis on preserving Ford’s integrated business model. They’re looking to avoid making decisions that might look good on paper in the short term but could cause long-term problems if market conditions change.
So, while some investors may have hoped for stock buybacks or a new approach to the commercial vehicle business, Ford executives have made it clear that they prefer to stick to the strategy that’s worked for them, for now. Whether or not that decision will prove wise as the market evolves remains to be seen, but for the moment, shareholders can rest assured that Ford’s leadership is focused on maintaining stability.
