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Q&A: Ford's Nick Scheele

by Paul A. Eisenstein 3/10/2003

Ford’s COO on war talk, luxury skirmishes and aluminum.

He is the quintessential Englishman, refined, dapper and incredibly affable. Yet “Sir” Nick Scheele’s velvet glove conceals an iron fist. He proved that a decade ago when he hammered the long-troubled Jaguar back into shape. And now, as chief operating officer of Ford Motor Co., he’s working hard to reverse the $6.4 billion in losses the automaker has rolled up over the last two years. Knighted for his work at Jaguar, Scheele now makes his home in suburban Detroit, though he’s as likely as not to be found on a Ford corporate jet, racing from one corner to another of the company’s global empire. TheCarConnection’s publisher, Paul A. Eisenstein, caught up with Scheele recently during a preview of the new Jaguar sedan. During a series of discussions, the Ford COO covered topics ranging from the potential impact of an Iraqi war to the increasingly tough battle for dominance of the global luxury market.

TCC: We’ve heard war jitters blamed, at least in part, for the recent slowdown in car sales. Do you agree? And if so, what can a company like Ford do to respond?

SCHEELE: During the first Gulf War, everything just stopped. We can only hope we’re all a little more mature now. But we’re definitely seeing a slowdown. Unless something happens quickly, it could paralyze the market. But you can only do exactly what you’ve been doing. We have contingency plans, but we don’t know how things are going to go. Frankly, we don’t have a clue.

TCC: There are those who feel a war could cause big problems with oil – prices and supply. And that, they believe, could negatively impact SUV sales.

SCHEELE: This would not be what we worry about. Frankly, SUV (sales) are still going gangbusters. But I wouldn’t disguise the need to move to more car-like vehicles.

As to pressure to cut fuel consumption, the only technology we know of available today that would give us a 30 percent CO2 reduction without huge cost penalties is the diesel.

TCC: There’s been a lot of concern about the status of the Ford Revitalization Plan you unveiled last January.

SCHEELE: Ford in total, this year is starting to look good. Europe is going to struggle, but we are getting the products we need. Latin America operated in the black for the fourth quarter and we believe we can (continue). In the U.S., the F-150 is probably the biggest launch in our history and that’s looking very solid. Then we move into a lot of new products.”

TCC: That new F-Series, you’ve said, has a lot more cost built into it than you’d have liked. How are you dealing with that issue on the pickups and other new products?

SCHEELE: There’s a wave of cost coming at us. We’ve elected to get the product right and then deal with the cost. With the F-Series, we’ll get most of it out…after the launch.

TCC: There was a time when products like the F-Series, selling in 500,000, even 1 million unit increments, were the norm. Now they’re the exception, and lower-volume, even niche products, are becoming the norm. How will Ford deal with this?

SCHEELE: The days when we can sell out one, two, even three plants with a single passenger car are over. Now we have to be very innovative in our design, and highly flexible in our manufacturing. We’ll be under continuing, unrelenting cost pressure…even as we have to deliver more derivatives. That drives more commonality, but not where the customer sees it.

TCC: Let’s turn to some of your luxury brands, Lincoln in particular. There were some aggressive expansion plans with a lot of new models. But suddenly, it seems like you’ve scrapped them.

SCHEELE: We’ve had a problem with Lincoln. A year ago, we were going to take Lincoln global, and we had no Mercury in our plans. But Lincoln without Mercury is non-supportable. End of story, because you didn’t have a (workable) distribution plan. We canned the Lincoln plan to focus on Mercury. We have to get more Mercury products out there. None of the current Mercury vehicles were in the plan a year ago. We stepped back from Lincoln and asked ourselves what would make sense. (North American product development director) Chris Theodore has come up with a barnburner of a plan.

TCC: And it is?

SCHEELE: We don’t talk about future product, but the start of it is that you will see some things based on the Navicross (crossover vehicle) concept and the Continental (luxury sedan) concept. Increasingly, it’s obvious that Lincoln embraces the Town Car, but also smaller, more sophisticated cars with all-wheel and rear-wheel-drive, cars with V-8s, and also crossovers and SUVs.

TCC: Back to Mercury, there’s been concern that its products still look like little more than rebadged Ford models.

SCHEELE: There has not been enough differentiation, and you’re going to see more going forward. That’s essential because we’re pulling Mercury back from the morgue.

TCC: You mentioned Lincoln’s plans to go global. That has changed?

SCHEELE: We decided Lincoln would not be global. The economics just couldn’t happen to support that.

TCC: You mentioned earlier that there’s a need to shift from traditional truck-like SUVs to more car-based crossovers. Does that mean crossovers will go away?

SCHEELE: I think we’ll see SUVs and crossovers co-existing for quite some time. The entire segment you’ll see going from 25 percent (of total U.S. sales) to almost 35 percent. But virtually all of that we be crossovers.

TCC: You surprised everyone at last year’s Paris Motor Show by revealing Jaguar would lose about $500 million in 2002, largely due to problems launching the new XJ. And that forced an unexpected four-month delay in the roll-out. Was that a difficult decision?

SCHEELE: It was a very bitter decision. But we had to get it right. You risk messing around with your flagship at your own peril. The XJ is the Jaguar flagship for the 21st cntury, and it has got to be right.

TCC: Now that you’ve got production going, any thoughts about the use of aluminum elsewhere at Ford?

SCHEELE: It moves aluminum into a deployable mass production technology where heretofore it had never been. We now have a volume, deployable technology. But I’m not yet sure where we’ll be willing to use it yet…in mass production any time soon.

My first car was a 67 Mustang Coupe, 2nd one was a 67 Cougar XR-7, 3rd one was a 66 Mustang Coupe. Why did I get rid of these cars for ? I know why, because I'm stupid, stupid, stupid.

My next Ford.....
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