Ford Plans New European Strategy – International Pages – Brief Article

Ford Plans New European Strategy – International Pages – Brief Article – Statistical Data Included

A Ford Motor Co. executive outlined plans for its European recovery, saying that its regional operations would break even this year, regain market share and return to profitability in 2002. The forecast came as the company’s European unit introduced four of nine new vehicles to be launched this year, and announced plans to build a sleek new roadster with a design firm known for its contracts with Ferrari and Lamborghini.

Speaking at the 71st International Auto Show in Geneva, Ford vice president for product development Martin Leach said the world’s second-biggest automaker could improve its European market share by up to 1 percentage point this year.

Ford’s share of the market fell to below 8 percent last year from 12.1 percent in 1994. To make matters worse, the carmaker lost $1.13 billion last year on European sales of $28.7 billion compared to a profit of $50 million from European operations in 1999. Analysts have faulted the company for failing to renew its lineup of cars fast enough. Ford, which had significant manufacturing operations in England, was also hit by a stronger pound, which made its vehicles relatively more expensive on the continent.

Similar problems in the European market plagued Ford rival General Motors Corp. Standard & Poor’s warned of possible credit downgrades for both companies saying that their problems go well beyond the current economic slowdown.

To reach its turnaround goals, the company has launched a five-year recovery plan aimed at introducing 45 new products, including separate vehicles and engines, by 2005. The company also aims to cut costs by 10 percent by 2004. Among its cost-cutting steps, Ford will no longer build cars at its factory in Dagenham, East London.

Ford is expecting to cut costs at its European operations by $2.25 billion, following the completion of its turnaround strategy in the region, the Financial Times reported. The paper quoted Ford Europe chairman Nick Scheele as saying fixed costs would be reduced by $1.25 billion — more than 20 percent — while variable costs can be expected to fall by about $1 billion over the course of the restructuring.

Scheele said fixed costs would fall following the end of car assembly at its Dagenham plant, east of London, which is being turned into a global center for diesel engines.

Ford Europe chief executive David Thursfield said the carmaker could improve unit costs by using excess capacity in areas such as body-stamping. Ford’s Japanese alliance partner Mazda said it plans to assemble cars in Europe at a Ford factory, further reducing fixed costs per car, he said.

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