BHP, Ford show the way in Trump’s new world

Big changes are ahead, but BHP and Ford have already shown how to thrive in the Trump era.

Executives from BHP Billiton Geoff Healy, from left, Andrew Mackenzie, and Jack Nasser stand in the lobby of Trump Tower in New York, before meeting with President-elect Donald Trump. Picture: AP.

Ford’s global chief executive Mark Fields is showing how you deal with incoming President Donald Trump. But one of his Ford predecessors, current BHP chairman Jacques Nasser, is also showing how global companies must adapt to the new US environment. The Ford and BHP examples of the new strategies required are important for all companies and nations.

First, let’s look at BHP. To have the chairman, CEO and legal Counsel of The Big Australian meet with an incoming US president has no precedent. But like Ford, BHP has shown it wants to invest in the US (via oil and gas and copper) and clearly Donald Trump has shown the welcome mat, explaining the future tax delights that are ahead.

That’s where BHP’s looming big cash flows from Australian iron ore and coal are going to be invested because BHP is a long-term bull on the oil and copper prices. Australia is going to have to work a lot harder to avoid a massive investment exodus of the monumental profits soon to be announced by miners.

BHP is a company that in recent years has been totally transformed. It concentrates on major projects and is now much more productive. And it has cash at the ready. Like Ford it will be a major player in Trump’s new world.

But the example of Ford is even more relevant to the wider Australian business scene. Every chief executive in Australia and indeed around the world needs to look closely at how Ford’s global CEO Mark Fields is transforming the company.

He is not only recognising that the strategies of his brilliant predecessor (Alan Mulally) will not work in the next decade given the rate of change, but, like BHP he also understands that the Trump Presidency requires a totally different approaches by global businesses.

Fields caught my eye last month when he flew to Australia to join Federal industry minister Greg Hunt, and Hunt’s Victorian counterpart, to announce that Ford would make a major investment in global motor design in Australia. By contrast Toyota’s global CEO can’t wait to rid himself of his investment in our country---no Toyotas will be designed in Australia.

Maybe designing in Australia makes sense in any circumstance but if “Trumpism” spreads to countries like Australia — as is possible --- then it will make a lot more sense.

And in the US Fields understands that making cars is Mexico is in danger of backfiring and causing big US tariffs. A Ford plant that was planned for Mexico will be built in the US. I don’t think the General Motors world CEO has yet woken up to what has happened in the US but we will see.

That Australian visit by Fields caused me to look at his wider strategy, which has major relevance to Australian companies.

For generations Ford has been in the piston engine car business — ‘one Ford’ as Alan Mulally often branded the company. Fields has created a second Ford and it’s a strategy too few Australian companies have embraced. Fields’ second Ford involves the company becoming a transportation-services provider.

According to US press reports the second Ford will include “accelerating development of autonomous self-driving vehicles; transforming the customer experience; investing in transportation services such as ride-sharing, bike-sharing and laser sensors; expanding Ford’s Silicon Valley office; connectivity; analytics and “extracting value from data.”

The company is also promising to make its headquarters in Dearborn, Michigan, more like the creative tech playgrounds found at the Silicon Valley campuses of Google and Apple. If he does that Fields will be Donald Trump’s pin-up boy.

In my world, back a decade or so ago the inability of newspapers to capture the new way of advertising jobs, real estate and cars meant others took market. I fear our retailers are in danger of a similar development as Amazon plans to come to town. Many retailers don’t understand they are in the selling business, not the bricks and mortar shop business.

What makes Fields doubly interesting is that two years back he worked out he had the wrong strategy for Ford and changed his mind. That’s not easy for a CEO but it’s a reversal that many Australian CEOs will have to face.

Two years ago, Fields and Ford were working on autonomous driving scenarios but Fields made it clear that he did not want Ford to be first to the finish line with truly self-driving cars. He just wanted Ford to be a successful provider of affordable self-driving cars. In other words he would go with the flow. That’s the strategy so many CEOs around the world have embraced. It’s easy, comfortable and does not risk bonuses.

Now Fields wants Ford to get ahead of megatrends and lead the industry toward the rollout of a fully self-piloted vehicle by 2025.

Over the holidays I was reading about Cobb and Co and its Leviathan horse drawn coach that could take 60 people long distances. Cobb and Co thought it was in the horse and cart business and not the people movement business.

Fields is determined Ford will not go the way of Cobb and Co, which was superseded by railways and cars. I am afraid in the next decade many companies, including Australian leaders, will become locked into a Cobb and Co style fate.

But both BHP and Ford are showing there is an exciting world out there.