Ford of Europe's president resigns
Operation lost $774 million in first half of '03
By Mark Truby / The Detroit News
DEARBORN -- With pressure mounting over deep financial losses, the president and chief operating officer of Ford Motor Co.'s European operations has abruptly resigned, the company said Tuesday.
The departure of Martin Leach, 46, is the latest sign of distress at Ford of Europe, which has lost $774 million in the first six months of 2003.
Just last year, Ford of Europe had been touted as the model for Ford's corporate-wide turnaround plan. Now it appears to be the company's most glaring problem.
While Ford officials stressed that Leach left voluntarily, he was under tremendous scrutiny from his superiors in Dearborn.
Last month, Chairman and CEO Bill Ford dispatched executive vice president David Thursfield to Ford of Europe's Cologne, Germany, headquarters to fix the problems.
Thursfield ran Ford of Europe until August 2002 when he was brought to Dearborn to run the automaker's global purchasing and international operations. He still holds the title of chairman of Ford of Europe.
Spokesman Neil Golightly said Leach informed the company a few days ago that he planned to leave.
"He was not pushed out," Golightly said. "It came as a surprise."
Ford officials said they were unaware if Leach accepted another job. The company expects to name a replacement in the coming weeks. Thursfield will oversee day-to-day operations in the interim.
Prudential auto analyst Michael Bruynesteyn said the departure of Leach is a sign that the company's European turnaround has "lost its way."
"The Aug. 12 departure of Ford Europe's top executive highlights that Europe has not recovered as planned, so it will likely continue to drag on the overall results," he wrote in a note.
"It's the greatest turnaround that never happened," echoed UBS Warburg's Saul Rubin.
Publicly, Ford says it's sticking to its strategy in Europe. Company officials privately acknowledge that Thursfield is going back to the drawing board in search of new cost reduction and operating efficiencies.
The most likely scenario involves greater integration between Ford of Europe and Ford's collection of European luxury brands -- which include Jaguar, Land Rover, Volvo and Aston Martin.
Thursfield, a taciturn, cigar-wielding Brit, was once considered a good bet to eventually replace Scheele as president of Ford. He owed much of his reputation as a rising star, though, to the belief that he had turned around Ford of Europe.
The pressure is now squarely on his shoulders to revive the troubled unit.
Within Ford, Leach was known as a top-notch product specialist but had little experience overseeing day-to-day operations such as marketing and manufacturing.
Thursfield and Ford President Nick Scheele, who mapped out what Ford called the "European transformation strategy" in 2000, expressed full confidence that Leach could complete the turnaround plan.
In the past three years, Ford of Europe has tightened its belt, cutting 2,000 jobs, eliminating 600,000 units of capacity by closing three plants, ending car production in the United Kingdom and spinning off its transmission operations into joint ventures with German partners. Key plants were reconfigured to be flexible enough to turn out multiple models.
The turnaround plan, though, lost all momentum this year. While Ford's unit sales, revenues and market share are up this year in Europe, the company blames falling net prices, an unfavorable product mix and lower industry sales for wider losses.
"Morale is not good right now at Ford of Europe," said Stephen Girsky, an auto industry analyst with Morgan Stanley. "The market is weak. Now your chief operating officer leaves. They have their share of problems."
While Ford of Europe's new product line has been well-received by critics, Ford has struggled to win new buyers from competitors. Ford of Europe's market share remains at 9 percent -- up slightly from last year but well below historical levels.
In 1994, Ford of Europe grabbed 12.1 percent of the market, then lost share in each of the next six years.
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My next Ford.....