TCC'S DAILY EDITION: August 13, 2003
Ford's Leach Out In Europe
Leach, 46, took over Ford Europe a year ago after running the unit's product development and motorsports for two years. Prior to his European responsibilities, he was head of worldwide design and product programs at Ford's Mazda Motor Corp. unit in Japan. The loss is viewed as especially troublesome for Ford, because the company, struggling to break even on its global auto operations this year and amidst a highly scrutinized turnaround plan under chairman and CEO Bill Ford, has repeatedly said it is basing its comeback strategy on the apparent turnaround of Ford Europe.
Ford has spent the last four years driving down costs, making factories more flexible and closing unneeded production lines in Europe. Ford has reduced costs in Europe by $1.3 billion since 2000, while raising productivity and quality. The European unit earned $35 million last year after a profit of $266 million. The second quarter loss, though, wipes out years of progress. Merrill Lynchs's Casesa asked rhetorically in a recent research note: "If it didn't work in Europe, why should it work for the whole company?"
When the second quarter loss came to light, Bill Ford sent his top cost-cutter, David Thursfield, back to Europe. Thursfield is chairman of Ford of Europe, but moved to Ford headquarters in Dearborn, Mich., last year to oversee global purchasing and procurement for the whole company and specifically to run billions in costs out of Ford's system. Thursfield and Ford chief operating officer Nick Scheele have been portrayed as the right team of managers to help Bill Ford because of their work in Europe. As head of Ford Europe before and after Leach's appointment, though, Thursfield bears the weight of responsibility for the collapse despite Leach's ouster. "The Ford of Europe team remains committed to improving our financial results and to delivering outstanding products," said Thursfield, who says he must cut $2.5 billion in costs this year, up from the previously announced $500 million. Ford vehicle sales outside of its Premium Auto Group were down 5.4 percent in the second quarter from a year ago and profit margins collapsed under the weight of heavy discounting and a strengthening euro. For managed to increase market share in Europe in the first half of this year to 9 percent, versus 8.8 percent for the first half of last year. But, like in North America, at the high price of generous consumer rebates that eat up profits. —Jim Burt
Ford Earnings Drop, Beat Estimates by Joseph Szczesny (7/28/2003)
Number two’s recovery still in progress as European sales plummet.
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DAILY IN DEPTH
Roscommon Dealer McNamara a Ford Achiever
Scott E. McNamara’s three Ford-Lincoln Mercury dealerships are located in small towns in central Michigan, about halfway between the Greater Detroit area and Traverse City – which is why I took the time to stop and interview Scott on the way up to the Management Briefing Seminars last week. Ford’s president and COO, Nicholas V. Scheele, and product creation vice-president, Chris Theodore were among the speakers at the seminars but, after all, dealers big and small are the automakers’ primary customers. And Ford dealers have been around longer than any other U.S. automakers because Ford, at 100, is older than GM (95) and Chrysler (79).
But at age 35, McNamara is on a roll. He just added the Lincoln franchise in Roscommon, a town of 1,000 residents, as a reward for renovating a Ford-Mercury store he acquired twelve years ago that was on the rocks. McNamara left a job as manager at Matthew Hargraves Chevrolet in Royal Oak, Mich., to buy the Roscommon store in 1992. His sales have grown steadily, as have his employee count (now up to 82) and his number of stores. He added a Ford-Mercury dealership in Gladwin three years ago and a Ford-Mercury store in Grayling last December. He’s on track to selling a record 1500 new and used units this year in the flagship Roscommon dealership, and says his ultimate goal is to build a central Michigan chain of seven or eight Ford dealerships, helped by Ford Credit as needed.
Trucks are 80 to 85 percent of his business, and he waited eagerly for the first 2004 F-150 to reach his Roscommon store. “I drove it at the dealer preview, and it’s great,” he declared. “It’ll help me outsell the Chevrolet dealer here and stay above averages in customer satisfaction and penetration, that’s for sure.” The Roscommon store, serving about 20,000 residents in Roscommon County, boasts an 83 percent CSI “fully satisfied” average and an over-achieving 120 percent sales pace above the Detroit regional average.
A dedicated optimist, who’s opening a Rotunda quick-lube facility in September, and invested about $500,000 in the Roscommon dealership expansion and updating, McNamara says he feels confident about Ford’s future as winner of the President’s Award three years in a row and a Blue Oval honoree to boot. Ford now respects the small dealers who, after all, are its ambassadors as well as its front-line customers, says McNamara. As Ford’s youngest dealer, McNamara has weathered the storms which clouded Ford dealer relations during the “Dealer Collection” and retrenchment period of the late 1990s. “Ford helped me grow, and I’m deeply appreciative to them and Ford Credit,” he says. “They have a lot of cool products in the pipeline, and I’m happy to be part of the Ford story down the road.”
Scheele, who drove a Lincoln Aviator up to Traverse City from Dearborn’s Glass House HQ, didn’t stop to chat with Scott McNamara. But if he had, he would have seen and heard first-hand why those who so flippantly write off the Big Three should first take the time to drop by the McNamaras who sell F-150s, Silverados, and Rams in town like Roscommon, Gladwin, and Grayling, USA. —Mac Gordon
FROM THE SOURCE headlines from the latest press releases
TheUniroyal(R) Giant Tire, the world's largest tire and one of the nation's most recognizable roadside icons, is undergoing a $1 million renovation. For nearly 40 years, visitors and locals driving into Detroit from Metro Airport have been welcomed by the 80-foot-tall Uniroyal tire. Uniroyal announced today that it is investing close to $1 million to renovate the Giant Tire as its contribution to Detroit's I-94 corridor revitalization effort.
|AMER AXLE & MANU||AXL||30.20||+0.63|
|BALLARD PWR SYS||BLDP||12.447||+0.109|
|FORD MOTOR CO||F||10.73||+0.02|
|HONDA MOTOR CO||HMC||20.16||+0.27|
|UNIT AUTO GRP||UAG||23.10||+1.26|
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