Ford Motor Company issued a surprise executive shake-up announcement Friday that Joe Hinrichs is retiring and Jim Farley is moving into the chief operating officer role, a significant development as the two have both been viewed as potential successors to CEO Jim Hackett.

“Jim Farley is exactly what Ford needs in these challenging times," said Jon Gabrielsen, a market economist who advises automakers and auto suppliers. "He is very strategically minded and not afraid to take bold actions quickly when the situation requires it.”

Farley will report directly to Jim Hackett, who took the helm at Ford in May 2017 and has said repeatedly in public that he came out of retirement to take the role at the request of executive chairman Bill Ford, and he doesn't plan a long stay at the Dearborn automaker.

Hinrichs, 53, a well-respected industry veteran, retires after 19 years at Ford. He oversaw manufacturing and played a key role in building strong UAW relationships that contributed to smooth contract negotiations.

On Tuesday, the 2019 earnings report spotlighted major problems with the 2020 Ford Explorer launch — a key factor that Ford executives blamed for disappointing financial outcomes. The company also pointed to unexpected warranty costs.

"It is no surprise that after the dismal quarterly earnings report came out that something had to give," said Michelle Krebs, executive analyst at Autotrader. "The launch of the new Explorer was disastrous, and Joe Hinrichs, who was in charge of manufacturing, among other things, took the fall for it. Meantime, Jim Farley won the credit for turning around Europe, so he was rewarded and looks as if he is set up to replace Jim Hackett, whenever he steps down."

However, Hackett said during a conference call with reporters that he did not blame Hinrichs for the Explorer debacle. "This really is not tied to that at all. I want to make that really clear. We're all accountable for that performance."

These, he said, are simply changing times. And Farley is seen as the man to move things forward.

'Go time'

"Now it’s 'go' time, Execution," Farley told reporters Friday "I'm really excited to lead a team to bring Ford's vision to life."

Hackett said of Farley, "I see Jim as a partner … so we can move swiftly."

In its morning news release, Ford said:

Farley will be responsible for all global markets and automotive operations, Ford Smart Mobility and autonomous vehicles

Hau Thai-Tang, 53, takes on an expanded role in delivering products, services and experiences for Ford customers. He will continue to lead product development and purchasing, while adding responsibilities for enterprise product line management and connectivity

The release said, "The changes come as Ford is moving with urgency to fully integrate and accelerate its transformation into a higher-growth, higher-margin business by leveraging smart, connected vehicles and services. Since 2017, Ford has made important progress in transforming the company in the face of sweeping technological change and disruption in the auto industry while working to improve the fitness of its base business — restructuring operations, invigorating the product portfolio and reducing bureaucracy."

More:Ford profit-sharing checks: UAW hourly workers to get $6,600

More:A man who can build a car by hand leads Ford into future; 'He’s just never afraid'

More:Ford dealership gets 40 orders for Mustang Mach-E in one night

Hackett said in prepared remarks: "Jim Farley is the right person to take on this important new role. Jim’s passion for great vehicles and his intense drive for results are well known. He also has developed into a transformational leader with the imagination and foresight to help lead Ford into the future."

Farley, 57, joined Ford in 2007 as global head of marketing and sales and went on to lead Lincoln, Ford South America, Ford of Europe and all Ford global markets, the news release noted.

Since April 2019, Ford noted in the release that "Farley has led Ford’s New Businesses, Technology & Strategy team, helping the company determine how to capitalize on the powerful forces reshaping the industry — such as software platforms, connectivity, AI, automation and new forms of propulsion."

Ford said it's looking to Farley to improve financials specifically.

Farley will continue leading Ford Smart Mobility, Ford’s AV LLC and Ford’s partnership with Argo AI, the release said.

“I’m thrilled and humbled by the opportunity to work with Jim Hackett and the entire Ford team to advance our vision to design increasingly intelligent vehicles and connect them to the world around us, all to make life better for our customers and communities,” Farley said in prepared remarks. “Ford is blessed with great people and an incredible brand, and together we will build a very bright future.”

Meanwhile, Hackett said in prepared remarks that “Hau will be the primary architect as we bring together the vehicle architecture and software stack to create products, services and experiences our customers will love. We are moving forward with an integrated approach to vehicles and connected services, all anchored in an obsession for the customer, great design and a commitment to strong returns."

More:Ford names Joe Hinrichs, Jim Farley to new top leadership roles

Hackett praised Hinrichs for his leadership.

"Joe was instrumental to Ford’s ability to survive the Great Recession a decade ago without bankruptcy or taxpayer bailout, and successfully headed Ford’s operations in Asia Pacific and North America," Hackett said in prepared remarks. "Most recently, Joe oversaw our global portfolio of iconic vehicles, helped forge a long-term, mutually beneficial relationship with the UAW and was regularly sought out as an authority and promoter of smart global trade."

Internally, sources at Ford say, the news is a body blow. Even Hackett told reporters during the conference call that the seasoned veteran, often called a steady hand at the company, is "beloved."

“Joe Hinrichs’ phenomenal operational skills will be a hard vacuum to fill at a time when Ford faces so many operational challenges," Gabrielsen said.

Hackett expressed little concern about loss of manufacturing expertise with Hinrichs' departure, telling reporters, "We have a very deep bench. I’m really confident we won’t miss a beat."

When asked by the Associated Press whether the costs and controversy surrounding the defective Ford Focus, Fiesta dual-clutch transmissions — which in 2019 included costly warranty expansion and class-action litigation affecting nearly 2 million consumers — played a role in Hinrichs' departure, Hackett said no. Hinrichs' only role in the issue with the transmissions, referred to internally as the DPS6, was trying to find strategies to address the problems, Hackett said.

DPS6 issues "really happened before this regime was in place. Joe wasn’t in the role he had," Hackett told reporters. And all the "fixes" taken by the Ford team, "Joe was quite active in driving that."

More:Ford workers break their silence on faulty transmissions: 'Everybody knew'

More:Ford extends warranty on Focus and Fiesta clutches; will reimburse customers for repair

Farley and Hinrichs moved into top lieutenant roles in April 2019. Hinrichs guided automotive manufacturing and operations globally, while Farley led automotive 2.0 and the future that includes driverless vehicles and big data.

At the time, John McElroy, a longtime industry observer and host of "Autoline After Hours," said, "The race is on for who’s going to replace Jim Hackett. It’s clearly down to Hinrichs and Farley."

Hackett told reporters on Friday he has no immediate plans to retire from his CEO role, saying he wants to be part of the new "momentum" that takes Ford into the future.

All changes will be effective March 1.

Ford missed Wall Street targets for full-year and fourth quarter this week.

Contact Phoebe Wall Howard: 313-222-6512 orphoward@freepress.com.Follow her on Twitter@phoebesaid. Read more on Ford and sign up for our autos newsletter.