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Ford Europe is bleeding red ink, and market share continues to fall. Profits may be four years away, says CEO Nick Scheele.
Nick Scheele is a year into the toughest assignment of his career. A 34-year Ford Motor Co. veteran, born within a stone's throw of the company's British headquarters in Brentwood, Essex, Scheele made his corporate reputation running Ford's Mexican operations and his media name as the man who artfully steered Jaguar around Dearborn's political potholes. Now, he's trying to make Ford Europe pay
Created in 1967 by Henry Ford II to streamline Ford's disparate European manufacturing operations, Ford Europe quickly became the most prof itable European manufacturing company of the postwar era By 1978 it accounted for 40 percent of Ford Motor Co.'s worldwide profits.
As Ford's North American operations bled white in the early 1980s, losing $7 billion between 1979 and 1982 alone, it was Ford Europe's river of gold - $1 billion a year - that kept the company afloat.
But as fireworks flashed in the sky above the automaker's European headquarters in Cologne last August to celebrate the company's 75th year in Germany, those glory days seemed a long time ago. Ford Europe has lost $1.2 billion since 1991, losing some $200 million in 1999 on a turnover of $21 billion even as the European industry basked in record sales. Ford's European market share has been slipping since 1995, and the slide is gathering worrying momentum. Internal forecasts suggest Ford will finish this year with just 8.3 percent of the European market, five full percentage points down on 1997.
Falling sales mean Ford Europe's bottom line has also been hammered by poor plant capacity utilization - barely 71 percent last year. And Ford's traditional strength in Britain, where it has been market leader for 21 years, is now a liability. That's because the U.K government's refusal to join Europe's single currency, the euro, means the company is being hit hard by the strength of the British pound. About 28 percent of Ford Europe's cost last year came out of Britain, compared with about 12 percent for GM.
"That means they have a cost advantage relative to us of $1.2 billion," says Scheele bluntly, in a recent Automotive Industries interview...