John Fleming: "One Ford" remain the goal.
While General Motors consider a possible, partial spinoff of its European Opel subsidiary, Ford Motor Co. is, if anything, drawing its Continental operations even closer.
But Ford of Europe is feeling – and sharing – the pain of the automotive downturn, which started in the U.S., and is now growing steadily worse overseas. As a result, FoE is being forced to rethink its ambitious product development program, acknowledged the subsidiary’s top executive, during an interview with TheDetroitBureau.com.
“The current situation is adding an even credibility to Alan (Mullaly, the Ford CEO’s) vision of One Ford, explained John Fleming, head of Ford of Europe, referring to the program designed to integrate the automaker’s traditionally independent design and engineering operations. “That becomes even more important in the current climate,” continued Fleming, adding that there is no interest in spinning off a stake in Ford of Europe, as GM has suggested it could do with Opel to raise some much-needed capital.
If anything, Ford’s North American and European operations are quickly becoming even more closely synched. The TransitConnect, the first European product to cross the Atlantic, is just going on sale in the States, with the much-anticipated Fiesta subcompact to lead a new small car assault.
If anything, critics have faulted Ford for taking so long to put the One Ford plan into action. It will have taken three years by the time Fiesta makes the jump, in 2010, though future joint products will come more quickly, promised Fleming. Part of the problem, he noted, is that Ford’s product programs, in the U.S. and Europe, were traditionally out of sync, and it would have cost $100s of millions to get them lined-up.
“It’s been a compromise we’ve been able to see through,” said the British-born executive. “It’s a better business decision to stay together” on the timing of future products.
Fleming suggested that Europe will also play a critical role as fuel economy and emissions rules in the U.S. are tightened. The new Obama Administration has ordered a study to see whether California should be permitted to enact new standards on the production of the global warming gas, CO2. That, in function, would create even tougher mileage rules than the ones being implemented by the federal government. In fact, they’d begin approaching the levels set by the European Union for 2015, 127 grams of CO2 per 100 kilometers (62.5 miles).
“We’ll have to have technical help available for the U.S.,” noted Fleming, though he cautioned that the primary European tool is the clean diesel, which now can be found in roughly half the Continent’s new vehicles. Diesels, said the executive, “are not prolific in the U.S., so different technologies will be required.” Nonetheless, Europe is significantly ahead in developing the smaller and lighter vehicles needed to meet future standards, as well as other clean powertrain technologies.
In a wide-ranging interview Fleming noted that the economic situation in Europe is continuing to worsen, though he was pleased to report that February car sales in Germany were at a 5-year record. That supports the use of government intervention programs, in this case, incentives designed to get motorists to trade in older, less efficient vehicles for new products.
The February sales numbers were far less optimistic in the rest of Europe, Fleming acknowledged. While Ford of Europe posted a much-needed, billion dollar profit for its struggling parent, “Margins are under pressure,” and that, he added, is forcing the company to try to stay ahead of the downturn by aggressively adjusting production and other operations. That includes new vehicle programs.
“We’re looking at all our product development and we’re having to slow some things down,” revealed Fleming. “But we’re slowing them down, as we understand the competition, so it will not have a major impact as we come out of the recession.”