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The expected length of this Case Analysis is 3 pages, 1-inch all-around margins, single-spaced and Times New Roman 12-point font. CASES CASE 34 :: FORD: AN AUTO COMPANY IN TRANSITION C277 * This case study was prepared by Professor Pauline Assenza of Western Connecticut State University; Professor Helaine J. Korn of Baruch College, City University of New York; Professor Naga Lakshmi Damaraju of the Sonoma State University; and Professor Alan B. Eisner of Pace University. The purpose of the case is to stimulate class discussion rather than to illustrate effective or ineffective handling of a business situation. Copyright © 2019 Alan B. Eisner. In January 2019, the Ford Motor Company celebrated as the F-Series line of pickups became the top-selling trucks in the United States for the 42nd consecutive year. This line of trucks also marked 37 years as the best-selling vehi- cle in the United States overall. In 2018, the F-Series, which included the Super Duty and the F-150 Raptor, sold 909,330 vehicles—just 30,181 units short of the all-time re- cord set in 2004.1 Jim Farley, Ford executive vice president and president, Global Markets, pointed to the F-Series as a “juggernaut” that “leads the world in sales, capability, and smart technology, setting the bar others follow.”2 But would truck sales alone help the increasingly depressed auto mar- ket, where the overall industry had already seen a drop in sales of 2.6 percent in the first months of 2019? This was the biggest decline since the recession of 2009, and there appeared to be no relief in sight.3 Something would have to change. Bold leadership was needed. The ability to anticipate customers’ needs was crucial to any company’s long-term success, but it was especially im- portant in the capital-intensive, consumer-driven, globally competitive automobile industry. As the major players from Asia, Europe, and the United States jockeyed for position in the sales of traditional trucks and cars, smaller, more inno- vative companies such as Tesla, Elio Motors,4 and start-up Faraday Futures were creating concept cars that addressed consumers’ interests in alternative fuels, low operational costs, and self-driving autonomous designs that promised to leave the passenger free to use in-transit time for other more productive pursuits. The auto industry was going through a “significant secular change” that was hard to predict. The trend seemed to be going toward less car ownership and, as the industry became more niche focused, rapid technological changes meant it was essential to be able to refresh the product portfolio rapidly in order to maintain market share.5 Responding to this trend, Mark Fields, CEO of Ford from 2014 to 2017, had said Ford would be using innovation “not only to create advanced new vehicles but also to help change the way the world moves by solving today’s growing global transportation challenges.”6 Self-driving cars were reported to be coming as early as 2019 to the global road- ways; and Ford Motor Company had made a commitment to this business, testing its fleet of 100 autonomous cars in Florida, Pennsylvania, and Michigan.7 But in 2019 Ford was still at least two years away from releasing a long-range electric vehicle while General Motors (GM) had already brought the Bolt to market. Given the increasing disruption in the industry, and the obligation to return value to understandably concerned inves- tors, Ford had some significant decisions to make, one of which was selecting the right leader for this business. Executive Chairman Bill Ford had said “this is a time of un- precedented change. And a time of great change, in my mind, requires a transformational leader.”8 Ford was feeling pres- sure from investors, who had seen the stock price steadily decline from a high of over 17.50 in 2014 to a low of under 10.00 in 2017. In 2017, Ford had asked Fields to resign and promoted Jim Hackett to the CEO position. Hackett, previ- ously head of Ford Smart Mobility LLC—a subsidiary of Ford formed to accelerate the company’s plans to design, build, grow, and invest in emerging mobility services such as autonomous vehicles—believed in the need for transformation. Hackett had said “breakthrough technologies are transform- ing nearly every aspect of the vehicles we build and how people use them, demanding a rethink of how we design transportation systems.”9 But Hackett was Ford’s third CEO in five years. Why was this job so difficult? Fields had gotten the CEO job in July 2014 after the re- tirement of Alan Mulally, widely hailed as one of the “five most significant corporate leaders of the last decade,” and architect of Ford’s eight-year turnaround from the brink of bankruptcy in 2006.10 It was Mulally who had created the vision that drove Ford’s revitalization—“ONE Ford.” The ONE Ford message was intended to communicate consis- tency across all departments, all segments of the company, requiring people to work together as one team, with one plan, and one goal: “an exciting viable Ford delivering prof- itable growth for all.”11 Mulally worked to create a culture of accountability and collaboration across the company. His vision was to leverage Ford’s unique automotive knowl- edge and assets to build cars and trucks that people wanted and valued, and he managed to arrange the financing neces- sary to pay for it all. The 2009 economic downturn that caused a financial catastrophe for U.S. automakers trapped General Motors and Chrysler in emergency government loans, but Ford was able to avoid bankruptcy because of Mulally’s actions. Mulally had groomed Mark Fields as his successor since 2012, instilling confidence among the company’s stakehold- ers that Ford would be able to continue to be profitable CASE 34 FORD: AN AUTO COMPANY IN TRANSITION* Strategic Management: Text and Cases C278 CASE 34 :: FORD: AN AUTO COMPANY IN TRANSITION Henry Ford of “democratizing technology,”—not just mak- ing products for people who could afford luxury vehicles, but using technology to solve problems of mobility and access, and providing not only products but also transporta- tion services that made people’s lives better.12 So, although Ford would always sell cars and trucks, it was also making big bets in autonomous technology (self-driving cars), elec- tric vehicles, and other transportation services such as urban mobility solutions via ride-sharing, bike-sharing, and customized interior vehicle experiences serving multiple customer needs. In 2019, CEO Hackett was sustaining this vision while migrating from a production line focus on multiple vehicle types to one where each team was dedicated to a specific product line and expected to “understand every small detail of the underlying product and customers they serve.”13 This was no longer ONE Ford. Under Hackett, Ford was plan- ning to execute in four strategic areas: • Develop a winning portfolio that provides products customers want in the markets where we know we can win. • Make propulsion choices that create clean-running cars without sacrificing power, style, and performance by creating an entire portfolio of electric vehicles. • Build a viable autonomous vehicle business by bring- ing components of autonomous technology together, designing products such as ride-hailing and delivery services that are centered on the needs of humans, providing solutions for city leaders and transportation planners, as well as vehicle owners. • Create a set of mobility experiences that encourages freedom of movement—orchestrating millions of con- nections across a digital network accessible to all, equipping our vehicles with software and services that connect to the smart world around them, and address- ing the problems of congested cities and roads. This vision of a seismic shift in personal transportation was fully supported and even driven by Ford’s executive chairman Bill Ford, who had championed the concept of increased mobility back when the only things to invest in were “parking and municipal ticketing solutions.”14 Now, in 2019, Bill Ford was supporting the company’s movement beyond selling vehicles to investing heavily in mobility ser- vices. As the initial architect of this shift, Bill Ford predicted the company could make increased profit margins on new services, more than double what it had traditionally made selling cars and trucks, but the ultimate goal, beyond mak- ing money, was to improve people’s lives. In doing so, Bill Ford would be protecting his great-grandfather’s legacy.15 History of the Ford Motor Company At the beginning of 2019, Ford Motor Company, based in Dearborn, Michigan, had about 199,000 employees and 61 plants worldwide. It manufactured or distributed the once Mulally stepped down. Even with this preparation, CEO Fields had faced an industry affected by general eco- nomic conditions over which he had little control and a changing technological and sociocultural environment where consumer preferences were difficult to predict. And rivals were coming from unexpected directions. Fields had to be able to anticipate and address numerous challenges as he tried to position the company for continued success. Ultimately, Fields was not able to do so. Attempts at repositioning Ford had been under way for many years. In the 1990s, former CEO Jacques Nasser had emphasized acquisitions to reshape Ford, but day-to-day business activities were ignored in the process. When Nasser left in October 2001, Bill Ford, great-grandson of company founder Henry Ford, took over and emphasized innovation as a core strategy to reshape Ford. In an attempt to stem the downward slide at Ford, and perhaps to jump- start a turnaround, Bill Ford recruited industry outsider Alan Mulally, who was elected president and chief execu- tive officer of Ford on September 5, 2006. Mulally, former head of commercial airplanes at Boeing, was expected to steer the struggling automaker out of the problems of fall- ing market share and financial losses. Mulally created his vision of ONE Ford to reshape the company and in 2009 finally achieved profitability. Mulally was able to sustain this success past the initial stages of his tenure, and main- tained profitability up until his retirement in June 2014. CEO Mark Fields took over, but challenging global con- ditions meant 2014 year-end profit saw a 56 percent drop from 2013—meaning Fields had work to do. In 2015, Fields continued the focus on ONE Ford, highlighting the idea that Ford could achieve profitable growth for all. By suc- cessfully launching 16 new global products, opening the last of 10 new plants to support growth in Asia Pacific, and see- ing profitable global business unit performance in every region except South America, Ford had the most profitable year ever in 2015, and 2016 was just slightly lower, and the second best ever. But in 2016 CEO Mark Fields decided to restructure, creating a new focus and expanding the company’s scope from vehicles to “mobility,” through business model innova- tion. In the 2016 income statement, there appeared an “Other” revenue item for the first time, representing the newly operational Ford Smart Mobility LLC, a subsidiary formed to design, build, grow, and invest in emerging mobil- ity services. Designed to compete like a start-up company, Ford Smart Mobility LLC was planning to focus solely on mobility services, and collaborate with start-ups and tech companies as needed to pursue opportunities. Jim Hackett was chosen to head up this new division. Hackett, formerly the CEO of Steelcase, a Michigan furniture company, had been credited with developing that business into a global leader, transitioning it from a traditional furniture manufac- turer into an industry innovator. CEO Fields reminded investors of the company’s long- term legacy, pointing to a history going back to founder Strategic Management: Text and Cases CASE 34 :: FORD: AN AUTO COMPANY IN TRANSITION C279 average age of light vehicles on U.S. roads was over 12 years, with domestic nameplate vehicles 3.6 years older than foreign ones.19 Partly due to this, replacement demand was forecasted to stay fairly f lat. Any increase in sales would be aided by an improvement in the general economic situation, reduced gasoline prices, and lower interest rates for car loans. However, sales in U.S. markets had not be- longed only to U.S. manufacturers for some time. In the United States, Ford’s market share had dropped over time—from almost 25 percent in 1999 to 14.4 percent in 2018,20 with major blows to market share in the light-vehicle segment. Going into 2019, Ford claimed the third spot in the U.S. market, just behind Toyota (see Exhibit 1). Originally dominated by the “Big 3” Detroit-based car companies—Ford, General Motors, and Fiat/Chrysler— competition in the United States had intensified since the 1980s, when Japanese carmakers began gaining a foothold in the market. To counter the problem of being viewed as foreign, Japanese companies Nissan, Toyota, and Honda had set up production facilities in the United States and thus gained acceptance from American consumers. Produc- tion quality and lean production were judged to be the ma- jor weapons that Japanese carmakers used to gain an advantage over American carmakers. Starting in 2003, be- cause of innovative production processes that yielded better quality for American consumers, Toyota vehicles had un- questionably become “a better value proposition” than Detroit’s products.21 Back in 1999, Ford Motor Company had been in good shape, having attained a U.S. market share of 24.8 percent, and had seen profits reach a remarkable $7.2 billion ($5.86 per share) with pre-tax income of $11 billion. At that time people even speculated that Ford would soon overtake General Motors as the world’s number-one automobile manufacturer.22 But soon Toyota, through its innovative technology, management philosophy of continuous im- provement, and cost arbitrage due to its presence in multi- ple geographic locations, was threatening to overtake GM and Ford. In addition, unfortunately, the profits at Ford in 1999 had come at the expense of not investing in Ford’s future. Jacques Nasser, the CEO at that time, had focused on cor- porate acquisition and diversification rather than new vehi- cle development. By the time Chairman Bill Ford had stepped in and fired Nasser in 2001, Ford was seeing decline in both market share and profitability. By 2005, market share had dropped to 18.6 percent and Ford had skidded out of control, losing $1.6 billion (pre-tax) in North American profits. It was obvious Ford needed a change in order to adapt and survive. Since taking the CEO position in 2001, Bill Ford had tried several times to find a qualified succes- sor, claiming that to undertake major changes in Ford’s dys- functional culture, an outsider might be more qualified than even the most proficient auto industry insider.23 In 2006, Alan Mulally was selected as the new CEO and was expected to accomplish “nothing less than automotive brands Ford and Lincoln across six continents, and provided financial services via Ford Motor Credit. It was also aggressively pursuing emerging opportunities with investments in electrification, autonomous vehicles, and consumer mobility. It was the only company in the industry where the company name still honored the vision and innovative legacy of its founder, Henry Ford. American engineer and industrial icon Henry Ford had been a true innovator. He did not invent the automobile or the assembly line, but through his ability to recognize op- portunities, articulate a vision, and inspire others to join him in fulfilling that vision, he was responsible for making significant changes in the trajectory of the automobile industry and even in the history of manufacturing in America. Starting with the invention of the self-propelled Quadricycle in 1896, Ford had developed other vehicles— primarily racing cars—which attracted a series of interested investors. In 1903, 12 investors backed him in the creation of a company to build and sell horseless carriages, and Ford Motor Company was born. Starting with the Model A, the company had produced a series of successful vehicles, but in 1908 Henry Ford wanted to create a better, cheaper “motorcar for the great multitude.”16 Working with a group of hand-picked em- ployees, he designed the Model T. The design was so suc- cessful, and demand so great that Ford decided to investigate methods for increasing production and lower- ing costs. Borrowing concepts from other industries, by 1913 Ford had developed a moving assembly line for auto- mobile manufacture. Although the work was so demand- ing that it created high employee turnover, the production process was significantly more efficient, reducing chassis assembly time from 12 ½ hours to 2 hours 40 minutes. In 1904, Ford expanded into Canada, and by 1925 Ford had assembly plants in Europe, Argentina, South Africa, and Australia. By the end of 1919, Ford was producing 50 per- cent of all the cars in the United States, and the assembly line disruption in the industry had led to the demise of most of Ford’s rivals.17 The Automotive Industry and Ford Leadership Changes The automotive industry in the United States had always been a highly competitive, cyclical business. By 2019 there was a wide variety of product offerings from a growing number of manufacturers, including the electric car lineup from Tesla Motors, self-styled as “not just an automaker, but also a technology and design company with a focus on energy innovation.”18 The total number of cars and trucks sold to retail buyers, or “industry demand,” varied substan- tially from year to year depending on general economic situ- ations, the cost of purchasing and operating cars and trucks, and the availability of credit and fuel. Because cars and trucks were durable items, consumers could wait to replace them and, based on the most recent report, the Strategic Management: Text and Cases C280 CASE 34 :: FORD: AN AUTO COMPANY IN TRANSITION Mulally had set three priorities—first, to determine the brands Ford would offer; second to be “best in class for all its vehicles”; and third to make sure that those vehicles would be accepted and adapt[able] by consumers around the globe: “If a model was developed for the U.S. market, it needed to be adaptable to car buyers in other countries.”27 Mulally said that the “real opportunity going forward is to integrate and leverage our Ford assets around the world” and decide on the best mix of brands in the company’s port- folio.28 The “best mix of brands” was addressed going into 2011. Brands such as Jaguar, Land Rover, Aston Martin, and Volvo were all sold off, and the Mercury brand was discontinued. Ford also had an equity interest in Mazda Motor Corporation, which it reduced substantially in 2010, retaining only a 3.5 percent share of ownership; it was finally sold off in 2015. This left the company with only the Ford and Lincoln brands, but the Lincoln offerings had struggled against Cadillac and other rivals for the luxury car market. In 2014, thanks to Mulally’s vision and perseverance, Ford maintained its position. Ford had introduced 24 vehi- cles around the world, but although still profitable, net in- come was down $4 billion from 2013. Even though Ford maintained its number two position in Europe, behind Volkswagen, major losses had occurred in that sector, pri- marily due to Russian economic instabilities. South America had also seen losses due to currency devaluation and undoing a strongly entrenched management system put into place by Henry Ford II almost 40 years ago”—a system of regional fiefdoms around the world that had sapped the company’s ability to compete in a global industry, a system that Chairman Bill Ford could not or would not unwind by himself.24 Mulally set his own priorities for fixing Ford: Ford needed to pay more attention to cutting costs and trans- forming the way it did business than to traditional measure- ments such as market share.25 The vision was to have a smaller and more profitable Ford. The overall strategy was to use restructuring as a tool to obtain operating profitabil- ity at lower volume and create a mix of products that better appealed to the market. By 2011, Ford had closed or sold a quarter of its plants and cut its global workforce by more than a third. It also slashed labor and healthcare costs, plowing the money back into the design of some well-received new products, like the Ford Fusion sedan and Ford Edge crossover. This put Ford in a better position to compete, especially taking into con- sideration that General Motors and Chrysler had filed for bankruptcy in 2009, and Toyota had recently announced a major recall of its vehicles for “unintended acceleration” problems.26 Ford’s sales grew at double the rate of the rest of the industry in 2010, but entering 2011 its rivals’ prob- lems seemed to be in the rearview mirror, and General Motors, especially, was on the rebound. Subaru Corporation 3.94\% Volkswagen Group (excluding Lamborghini) 3.69\% Market share Toyota Motor Corporation 14.63\% Ford Motor Company 14.44\% FCA/Chrysler Group 12.98\% Nissan Motor Company/ Mitsubishi 9.35\% General Motors 17.02\% Honda Motor Company 9.1\% Hyundai-Kia 7.42\% Tesla 1.15\% Mazda 1.74\% BMW Group 2.06\% Daimler 2.06\% EXHIBIT 1 Sales and Share of U.S. Total Market by Manufacturer, 2018 Source: statista.com Strategic Management: Text and Cases CASE 34 :: FORD: AN AUTO COMPANY IN TRANSITION C281 Starting in 2016, CEO Fields had begun restructuring, and the cash f low ref lected this (see Exhibit 4). The forecast for 2017 had projected total automotive operat- ing cash f low remaining positive through 2018, with the overall cash balance expected to stay at or above the company’s minimum target of $20 billion.31 This did not happen. However, Ford had made good use of cash in the past, most recently acquiring the iconic Michigan Central Station in Detroit’s historic Corktown neighborhood. Chairman Bill Ford planned to transform this former railroad station into the centerpiece of a vibrant new campus “where Ford and its partners will work on autonomous and electric vehicle busi- nesses, and design solutions for a transportation operating system that makes mobility convenient and accessible.”32 changing government rules. In addition, Ford’s push into Asia-Pacific, specifically China, was behind schedule. North American sales, while still strong, had resulted in op- erating margin reductions due to recalls and costs associ- ated with the relaunch of the F-150. The one bright spot was in financial services. Ford Motor Credit, the financing company that loans people money to buy new cars, saw its best results since 2011.29 Going into 2015 the financials, especially the balance sheet, appeared strong and because of this the company was able to reinstate and subsequently boost the dividend to shareholders, rewarding those investors who had stayed the course. However, this did not last. From 2016 into 2019, the financials began to falter. CEO Hackett admitted 2018 was a “disappointing year.”30 (see Exhibits 2 and 3.) For the years ended December 31,   2016 2017 2018 Revenues Automotive $141,546 $145,653 $148,294 Ford Credit 10,253 11,113 12,018 Mobility 1 10 26 Total revenues 151,800 156,776 160,338 Costs and expenses Cost of sales 126,195 131,321 136,269 Selling, administrative, and other expenses 10,972 11,527 11,403 Ford Credit interest, operating, and other expenses 8,847 9,047 9,463 Total costs and expenses 146,014 151,895 157,135 Interest expense on Automotive debt 894 1,133 1,171 Interest expense on Other debt 57 57 57 Other income/(loss), net 169 3,267 2,247 Equity in net income of affiliated companies 1,780 1,201 123 Income before income taxes 6,784 8,159 4,345 Provision for/(Benefit from) income taxes 2,184 402 650 Net income 4,600 7,757 3,695 Less: Income/(Loss) attributable to noncontrolling interests 11 26 18 Net income attributable to Ford Motor Company $ 4,589 $ 7,731 $ 3,677 EARNINGS PER SHARE ATTRIBUTABLE TO FORD MOTOR COMPANY COMMON AND CLASS B STOCK Basic income $ 1.16 $ 1.94 $0.93 Diluted income 1.15 1.93 0.92 Note: Figures in millions, except per-share amounts; year-end December 31. Source: Annual Report. Ford Motor Company, December 31, 2018. EXHIBIT 2 Ford Motor Company and Subsidiaries: Consolidated Income Statement Strategic Management: Text and Cases C282 CASE 34 :: FORD: AN AUTO COMPANY IN TRANSITION December 31, 2017 December 31, 2018 ASSETS Cash and cash equivalents $ 18,492 $ 16,718 Marketable securities 20,435 17,233 Ford Credit finance receivables, net 52,210 54,353 Trade and other receivables, less allowances of $412 and $94 10,599 11,195 Inventories 11,176 11,220 Other assets 3,889 3,930 Total current assets 116,801 114,649 Ford Credit finance receivables, net 56,182 55,544 Net investment in operating leases 28,235 29,119 Net property 35,327 36,178 Equity in net assets of affiliated companies 3,085 2,709 Deferred income taxes 10,762 10,412 Other assets 8,104 7,929 Total assets $258,496 $256,540 LIABILITIES Payables $ 23,282 $ 21,520 Other liabilities and deferred revenue 19,697 20,556 Automotive debt payable within one year 3,356 2,314 Ford Credit debt payable within one year 48,265 51,179 Total current liabilities 94,600 95,569 Other liabilities and deferred revenue 24,711 23,588 Automotive long-term debt 12,575 11,233 Ford Credit long-term debt 89,492 88,887 Other long-term debt 599 600 Deferred income taxes 815 597 Total liabilities 222,792 220,474 Redeemable noncontrolling interest 98 100 EQUITY Common Stock, par value $.01 per share (4,000 million shares issued of 6 billion authorized) 40 40 Class B Stock, par value $.01 per share (71 million shares issued of 530 million authorized) 1 1 Capital in excess of par value of stock 21,843 22,006 Retained earnings 21,906 22,668 Accumulated other comprehensive income/(loss) (Note 21) (6,959) (7,366) Treasury stock (1,253) (1,417) Total equity attributable to Ford Motor Company 35,578 35,932 Equity attributable to non-controlling interests 28 34 Total equity 35,606 35,966 Total liabilities and equity $258,496 $256,540 EXHIBIT 3 Ford Motor Company and Subsidiaries: Sector Balance Sheets Note: Figures in millions. Source: Annual Report. Ford Motor Company, December 31, 2018. Strategic Management: Text and Cases CASE 34 :: FORD: AN AUTO COMPANY IN TRANSITION C283 For the years ended December 31, 2016 2017 2018 Cash flows from operating activities Net income $ 4,600 $ 7,757 $ 3,695 Depreciation and tooling amortization 9,023 9,122 9,280 Other amortization (306) (669) (972) Provision for credit and insurance losses 672 717 609 Pension and other postretirement employee benefits (“OPEB”) expense/(income) 2,667 (608) 400 Equity investment (earnings)/losses in excess of dividends received (178) 240 206 Foreign currency adjustments 283 (403) 529 Net (gain)/loss on changes in investments in affiliates (139) (7) (42) Stock compensation 210 246 191 Net change in wholesale and other receivables (1,449) (836) (2,408) Provision for deferred income taxes 1,473 (350) (197) Decrease/(Increase) in accounts receivable and other assets (2,855) (2,297) (2,239) Decrease/(Increase) in inventory (803) (970) (828) Increase/(Decrease) in accounts payable and accrued and other liabilities 6,595 6,089 6,781 Other 57 65 17 Net cash provided by/(used in) operating activities 19,850 18,096 15,022 Cash flows from investing activities Capital spending (6,992) (7,049) (7,785) Acquisitions of finance receivables and operating leases (56,007) (59,354) (62,924) Collections of finance receivables and operating leases 38,834 44,641 50,880 Purchases of marketable and other securities (31,428) (27,567) (17,140) Sales and maturities of marketable and other securities 29,354 29,898 20,527 Settlements of derivatives 825 100 358 Other 112 (29) (177) Net cash provided by/(used in) investing activities (25,302) (19,360) (16,261) Cash flows from financing activities Cash dividends (3,376) (2,584) (2,905) Purchases of common stock (145) (131) (164) Net changes in short-term debt 3,864 1,229 (2,819) Proceeds from issuance of long-term debt 45,961 45,801 50,130 Principal payments on long-term debt (38,797) (40,770) (44,172) Other (107) (151) (192) Net cash provided by/(used in) financing activities 7,400 3,394 (122) Effect of exchange rate changes on cash, cash equivalents, and restricted cash (265) 489 (370) Net increase/(decrease) in cash, cash equivalents, and restricted cash $ 1,683 $ 2,619 $ (1,731) Cash, cash equivalents, and restricted cash at January 1 $ 14,336 $ 16,019 $ 18,638 Net increase/(decrease) in cash, cash equivalents, and restricted cash 1,683 2,619 (1,731) Cash, cash equivalents, …