Ford Chairman Alex Trotman said the company will probably break even in Europe this year after losing $291 million in 1996. Trotman credited aggressive cost-cutting on existing models like the Fiesta. Trotman was interviewed in London on 16 October by Editor Richard Johnson and Managing Editor William Diem.
What are you doing about global warming?
There is agreement that there is a buildup of CO2 over the last 100 years. There is not complete agreement by any means as to what is causing that. Nor is there agreement on the economic implications or climatic implications.
Ford has seven different kinds of alternate-fuel vehicles on sale at the moment. We are recycling.
We've made tremendous improvements in efficiency. It takes 130 of today's Ford cars to equal the emissions of one early-1970s Ford.
Take the temperature of Ford 2000.
The best way I can answer that is to point to the last six quarters, where we have had six consecutive year-over-year improvements. We've had $2.3 billion in cost improvements in the first nine months compared to last year.
How much of that is in Europe?
Proportionately about what you would expect based on the revenues in North America and Europe. It is pretty well spread between all of the operations.
A huge piece is in South America. We got into the black faster than any of us thought possible at the beginning of the year. We have taken hundreds of bucks in cost per vehicle in a short period of time.
In South America we got into production very fast with new product, primarily European-type products. That is one of the real victories of Ford 2000.
We were able get those products into production so fast because of the synergy between the South American part of Ford and the European part of Ford.
It simply was not possible before Ford 2000.
The Amazon project - the little sport-utility - seems to have started in Brazil. Do they have independence in Ford 2000 to come up with their own products?
All parts of Ford do. We are not going to talk about what we are making in that new plant in South America yet. But whatever it is, if the Brazilians think there is a pressing desire for something, then they would make the business case for it.
If at all possible they would use a platform that already exists somewhere in the Ford world and they would use a very high degree of commonality of design and sourcing for that vehicle.
Will you break even in Europe this year?
I believe so. That was one of our publicly stated objectives at the beginning of the year. We think we will achieve that, maybe better. (Cost is being cut from) the manufacturing system, inventory, material costs. Quality is a lot better so warranty is reduced. The reduction on the Fiesta, for example, is dramatic from last year to this year - hundreds of dollars.
Does it involve going back and changing suppliers?
Most of it is working with existing suppliers to take out complexity. Using four seat belt anchors instead of six, that kind of stuff. Redesigning parts and making an assembly three pieces instead of six. Some of it is changing materials. We are surprising ourselves even with the size of the improvements.
Is Mazda part of your global thinking?
Mazda and Ford have a coordinated product cycle plan, product and manufacturing plan for the next five years that is firm and tentative five years beyond that. There will be much more synergy, to the advantage of both Mazda and Ford shareholders, over the next 10 years, way beyond anything there has been in the last 10.
Does your five-year plan include products that will be sold by both Mazda and Ford as in the past?
There is a pickup truck that will be built in a factory in Thailand. It will be called a Ford and a Mazda. It will be developed primarily by Mazda. They have the design responsibility. There will be other examples like that in the next 10 years.
Have you made a decision on a small car for Jaguar?
No, we haven't. If we want to go ahead we would go to the board within the next year. We are presently doing deep-dive evaluation on the product itself, the business case for the product, the volume and various alternative manufacturing locations. In practical terms, that is Germany, the UK or the USA.
Jacques Nasser is chairman of Ford of Europe, but Ford no longer has one executive on the ground with responsibility for all parts of the business here. Would you consider reviving that job?
I wouldn't rule that out. Jacques and his team are looking at that now, a job like Jim Padilla has in Brazil.