U.S.A.:WORDS FROM NICK SCHEELE: Ford's Focus is on Europe
All-new model not heading for U.S.
November 20, 2003
BY JAMIE BUTTERS
FREE PRESS BUSINESS WRITER
Ford Motor Co. has no plans to bring an all-new Focus to North America in the foreseeable future, president and chief operating officer Nick Scheele told the Free Press this week.
Ford is rolling out an all-new Focus for Europe next year, which will also provide the basic underpinnings for Mazda and Volvo small-car models. Suppliers and analysts had once expected that European Focus to be brought to North America in 2005. Later, they believed it had been pushed back to 2007. Now they are finding that nothing more than minor freshenings are planned until at least 2010.
Scheele said no plans for an all-new Focus have been seriously discussed since he came to North America in 2001. A complete overhaul isn't necessary, he said, with quality dramatically improved, accolades rolling in, and millions of dollars in state incentives to help make Wayne Stamping and Assembly the sole source of all Focus models in North America. The plant consolidation is set to be announced today.
"We think we've got a great product for North America. We see no need to change it," he said.
When businesses spend money on new products -- called capital expenditures -- it is a bit of a gamble. Automakers bet hundreds of millions of dollars, even a billion, that a new model will generate big profits.
But choosing not to place that bet has risks, too. And some outside experts say Ford is taking a chance that it won't get left behind in a very competitive part of the market.
Excluding a handful of the smallest and cheapest models, J.D. Power and Associates calls the premium compact-car segment a brutally competitive one that accounts for 13.5 percent of the U.S. light-vehicle market. (It accounts for one-third of sales in Europe, where it is considered a midsize car, Scheele said.) The main reason is that Toyota Motor Corp. and Honda Motor Co. have maintained an unrelenting pace of full redesigns every five years, said Tom Libby, an economist with J.D. Power and Associates in Troy.
"The leaders in that segment are refreshed every five years," he said, referring to the Honda Civic and Toyota Corolla. "A 10-year product life cycle in that segment is not fully competitive.
With a newer model, automakers can avoid incentives and generate more revenue with each car.
The Civic sells for about $16,000 and the Corolla about $15,500, according to J.D. Power's analysis of actual transaction prices. The Focus typically sells for $13,500 to $14,000, while the Chevrolet Cavalier, which hasn't been redesigned since 1995, has sold for $12,000 to $13,000.
Scheele said 10 years is still a typical life span for a platform, or basic structure. And it is worth noting that one automaker's face-lift can be nearly as substantial as another's redesign.
But the idea that Ford is delaying the redesign to save cash -- which Scheele dismisses -- strikes some as a typically Detroit form of suicide.
In a February report that outraged some within Ford, UBS Warburg analyst Saul Rubin questioned the wisdom of delaying the new Focus from 2005 to 2007, as was then thought to be the case.
"It leads us to believe that Ford feels it can let the Focus sit in the marketplace for longer without significant damage," he wrote. "With this among the most competitive of segments, it appears to us there is a high risk that an aging model is likely to suffer."
With the Ford Futura, Five Hundred and scores of other vehicles being introduced across eight brands around the world in the next few years -- and credit-rating agencies demanding that Ford maintain massive cash reserves -- the company has to choose carefully where to spend its money.
Scheele and other Ford executives are also not in a hurry to redesign the Focus because it is finally getting credit for fixing quality problems that sullied the car's U.S. introduction in fall 1999.
With its ample headroom, sporty driving dynamics and a stylish design that even General Motors Corp. CEO Rick Wagoner says has aged well, the Focus has long been a favorite compact car within the industry.
But owners have been another story.
The first two model years the Focus was sold in the United States, Ford held 10 safety recalls. Wednesday, Ford said it will replace a part in the fuel system of 671,000 models because it can cause the engine to stall.
Ford made the mistake of treating the U.S. Focus as if it were a simple carry-over of the European model that had been on the market for two years, Scheele and other executives said.
But it really wasn't that simple. Many major components, such as the engine and transmission, had to be different.
Without enough engineering resources to manage the transition, recalls and defects plagued the model's first two years in the States, and poor results from owner surveys kept the model off of Consumer Reports' annual "recommended buy" list.
Until this year, when it posted a third consecutive year of better-than average quality to earn a spot on the coveted list.
Under quality chief Louise Goeser, Ford initiated hundreds of major "black-belt" projects to address defects such as noisy brakes, flaking paint and squeaks and rattles in the sunroof.
Since the 2000 model, complaints after three months in service are down 31 percent and warranty costs down 51 percent, said Goeser, who points to the Focus' improvement as indicative of the progress throughout the world's second-largest automaker. "The Focus is an example, but it's widespread" progress, she said.
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.....