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Old 07-20-2003, 06:52   #1 (permalink)
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U.S.:Ford draws line in the sand over its British luxury brands

By Daniel Howes / The Detroit News

DEARBORN --Quietly, they're turning the screws on Ford Motor Co.'s British luxury brands.

It's about time, too. In a historic move, Jaguar cars and Land Rover sport utility vehicles will be built under the same roof, this one being Jaguar's resurrected Halewood plant in the gritty Merseyside outside Liverpool.

The decision is an intentional swat at the recalcitrant unions manning the assembly lines inside Land Rover's Solihull plant -- the same guys who needed two ballots to agree to stop smoking on the line, remove pens from pockets and mute blaring radios.

But this reordering of Britain's motoring status quo is more than an announcement that the next-generation Land Rover Freelander SUV will be built alongside the Jaguar X-Type. This is a major step in Dearborn's campaign to end the posturing about what PAG's British brands will be someday and demand results.

Or suffer the consequences.

"It makes good efficiency and product logic to have the premium high-volume products in one plant," PAG Chairman Mark Fields told me. "Solihull has really not made necessary progress. It's a wakeup call."

And an overdue one. Even as Fields pressures the car giants of the English Midlands, back in Dearborn, Vice Chairman Allan Gilmour is overseeing a study of Ford's European operations and business strategy by looking at the product and marketing overlaps and synergies between blue-oval vehicles and the PAG.

The reason is simple: Ford of Europe has its strongest lineup in years, but it still loses money -- despite a rationalized dealer network in Germany, continued market leadership in Britain and top-quality honors for its Focus compact.

A year ago, the complaint at Ford-Europe headquarters in Cologne was that the PAG's financial performance was obscuring evidence of the blue oval's turnaround in Europe. Yet just this week, we learned that the PAG's earnings totaled $166 million while Ford-Europe lost $525 million.

Where, exactly, is Ford's turnaround in Europe, ostensibly led by Chief Operating Officer Nick Scheele during his latest overseas tour? By the looks of things, I'd say it's somewhere close to the Jaguar turnaround he's credited with -- that is, not yet there.

The myth of Sir Nick and the magic he is supposed to have wrought is, alas, growing with each passing quarter. Back in Dearborn, the evidence is clear that things are not turning out as billed -- or spun.

The Jaguar-Land Rover move is only one manifestation. Another is the recognition that Ford's aspirations for Jaguar were too aggressive. Now Fields, a cool realist, sees Jag becoming a "credible alternative" to Audi, BMW and Mercedes-Benz.

"There's no shame in being a niche player," he said.

Take his thinking to its logical conclusion, couple it with Europe's declining population and Gilmour's strategic reappraisal and you can see a future for Ford in Europe that may not look much like what many expected a few years ago.

Pouring billions into new cars and minivans for Europeans is a losing proposition if it never flows to Dearborn's bottom line. With China booming, India heating up and, yes, the U.S. market likely to grow larger and wealthier for decades, a radical new idea may be coming for Ford on the other side of the pond.
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