AUSTRIA: Ford considers European operations 'czar' who would also run PAG
Ford is considering naming a European ‘czar’ to oversee both Ford of Europe and Premier Automotive Group, Automotive News Europe reported.
Stunned by mounting losses at Ford of Europe, top executives in Dearborn want closer cooperation between Ford of Europe and PAG, particularly in purchasing and parts sharing, Ford sources said last week in Graz, Austria.
Sources say Ford of Europe president Martin Leach and PAG chairman and CEO Mark Fields would be top candidates to run “Ford in Europe.” Such a reorganisation, if approved, could happen in September or October.
Meanwhile, Ford international operations president David Thursfield, who is still also Ford of Europe chairman, will now spend nearly all his time at Ford’s European headquarters in Cologne, Germany, trying to stem the losses.
“Nobody is panicking here,” said a Ford official in Cologne, who added Thursfield already spends much of his time in Germany. “We’re not taking any drastic action.”
Ford cost cutting, which includes boosting purchasing efficiencies by working closely with suppliers, is having the desired effect, and Ford is not discounting prices to preserve long-term brand value, the official said.
Ford of Europe lost $US525 million (€458 million) in the second quarter, compared with a loss of $18 million a year ago. PAG improved its performance with a profit of $166 million, up from a loss of $122 million a year ago.
Ford officials blamed the losses on lower net pricing, an unfavourable product mix, lower industry volume and dealer stock reductions. But they are puzzled why their European operations, once the model for corporate efficiency, are struggling.
Said one: “We’ve got the best products in a generation and we’ve still got problems. What in the world is going on? Are we organised right?”
Ford could face more problems before the situation improves.
“Historically the third quarter is weak for them even if they make a good product,” said John Lawson, analyst for SmithBarney in London. “It’s difficult to see how they can recover from a big loss in the second quarter in the third quarter.”
With the new Focus C-Max, Ford has been a late arrival in Europe’s key compact minivan segment, Automotive News Europe noted.
Stunned by losses, Ford considers overseer for European operations
By BRADFORD WERNLE | Automotive News Europe
LONDON -- Stunned at the size of second quarter losses in Europe, Ford Motor Co. is considering naming an executive to oversee both Ford of Europe and Premier Automotive Group.
Top brass in Dearborn want closer cooperation between the two business units, particularly in purchasing and parts sharing, Ford sources said last week. PAG consists of Ford's Europe-based premium brands - Sweden's Volvo and Jaguar, Land Rover and Aston Martin of England.
Sources say Ford of Europe President Martin Leach, PAG Chairman Mark Fields and even David Thursfield, Ford International Operations president, would be candidates to run "Ford in Europe." If the reorganization is approved, a European czar would probably be named in September or October.
Thursfield is already focusing heavily on Europe. Sources say he now will spend nearly all his time at Ford's European headquarters in Cologne, Germany, rather than in Dearborn. Thursfield, who is credited with leading a turnaround in Europe, still holds the title of Ford of Europe chairman.
"Nobody is panicking here," says a Ford spokesman in Cologne, who adds that Thursfield already spends a lot of time in Germany. "We're not taking any drastic action."
He says Ford's cost cutting, including an effort to reduce purchasing costs by working closely with suppliers, is having the desired effect. And Ford is avoiding price discounting to preserve long-term brand value, the spokesman says.
Ford of Europe lost $525 million in the second quarter of 2003, compared with a loss of $18 million a year ago. PAG improved its performance with a profit of $166 million, up from a loss of $122 million a year ago.
Company officials blame the Ford of Europe loss on lower net pricing, an unfavorable product mix, lower industry volume and dealer stock reductions.
Ford of Europe's revenues rose 6 percent to $5.2 billion in the second quarter, compared with $4.9 billion in the year-ago quarter.
Ford brand market share in Western Europe declined from 9.1 percent in the first half of 2002 to 9 percent during the same period in 2003.
Ford's problems in Europe could get worse.
"Historically the third quarter is weak for them, even if they make a good product," says John Lawson, an analyst at SmithBarney in London. "It's difficult to see how they can recover from a big second quarter loss in the third quarter. They have to work on the cost side."
Thursfield and Ford COO Nick Scheele were promoted to top jobs in Dearborn based on their performance at Ford of Europe. Their biggest move was to close Ford's Dagenham, England, plant along with two smaller plants. Those moves increased Ford's capacity utilization from around 75 percent to near 100 percent.
But Ford has struggled to keep up the pace as competitors have offered large discounts in Europe's brutally competitive market.
Ford has been a follower rather than a leader in key segments such as compact minivans. Ford's new C-Max is one of the last to arrive. Key products such as the Mondeo, which is positioned in a declining segment, have not lived up to sales expectations.
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