LONDON - Ford has been slowly shifting the center of its European activities from its traditional UK base to Cologne, Germany.
The shift began when James Donaldson became president of Ford of Europe on January 1, 1998.
In making the move, Ford has been performing a delicate operation. It is moving European headquarters out of a market it dominates into one where it is much weaker.
The move is mostly complete and has resulted in the transfer of only about 150 jobs, most of those the staffs of vice presidents who now operate out of Germany.
The company knows it needs to perform better in Germany, but Ford officials are wary of losing sight of the UK. Even though Ford is based in America, it is regarded as almost a domestic company in the UK, and has long been dominant there.
Ford is showing some signs of weakening in the UK, where its market share has declined from 21.1 percent in 1995 to 17.7 percent so far in 1999. Ford has a market share of about 8 percent in Germany.
Ford believes that if it can succeed in Germany, it can succeed anywhere. Ford is a distant third to Volkswagen and Opel in Germany. The company believes it must increase share there in order to return European operations to profitability.
Ford argues it helps to be close to the companies it must compete with: Volkswagen, Opel, DaimlerChrysler and BMW. Also, as the auto industry expands eastward into the former Soviet bloc, Ford wants to be as close as possible to those emerging markets.
Nick Scheele, new president of Ford of Europe, is aware of the dilemma. He has decided to keep an office in Ford's old European headquarters at Warley, UK, even though his primary office is in Cologne.
Ford still retains 28,000 jobs in the UK, including about 4,000 at the small-vehicle center in Dunton. Ford splits its small-vehicle development between Dunton and Merkenich, near Cologne. Dunton is responsible for developing diesel engines, minis and superminis, while Merkenich handles gasoline engines, lower-medium and upper-medium vehicles.
When Donaldson was first appointed by then-Ford Chairman Alex Trotman, he went to Cologne, but his second-in-command, Chief Financial Officer Henry Wallace, was based in Brentwood, UK. When Wallace was reassigned to Asia, his German replacement Gerhard Klein remained in Cologne.
Increasingly Ford public relations staff in the UK have been asked to move permanently to Germany. Some have declined, preferring instead to spend the week in Cologne and return home on weekends.
Tony Woodley, chief negotiator for the Transport and General Workers Union, the largest British automotive union, said he is watching Ford's moves with concern.
'We are extremely disappointed Ford has once again decided for whatever reason to ditch the UK,' he said.
Ford's decision not to make the new Focus in the UK at Halewood was a disappointment to workers, although its predecessor, the Escort, will continue to be manufactured there until 2000, and the Jaguar X400 will be made there after that.
Woodley is battling currently to see that Ford's Bridgend engine plant in Wales stays open and wins the contract for the new engine project, code-named 14/15. Bridgend is vying for that project against Ford plants in Cologne and Valencia, Spain.
Woodley does not believe the shift to Germany has made any difference to Ford's UK market share, but he does worry it could adversely affect Ford investment in the UK long term.
Ford officials point out they have continued investing in the UK, including an average of £320 million (euro 485.5 million) annually at Dunton the last few years. Ford is also investing £468 million to refurbish its Dagenham plant. The company will increase capacity there and add 2,000 jobs.
John Lawson, auto analyst for Salomon Smith Barney in London, believes where Ford has its European headquarters is probably not a big issue.
What could be an issue would be a long-term 'deskilling' of the UK labor force resulting from a shift of so-called 'brain jobs' out of the UK, Lawson said. But Ford is committed to building a new environmental test facility at Dunton.
Ford must also maintain a strong marketing organization in the UK with a direct line into the factory so it doesn't lose touch with what its UK consumers want, he said.
But Lawson said Ford's move has really been just an acknowledgment of the present state of affairs in the European auto industry.
'The truth is that standards for the European auto industry are set in Germany and of course we Brits don't like it,' said Lawson. 'That (Germany) is where the preponderance of the European industry is.'