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Old 09-24-2008, 09:04 PM   #1
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Check this out

Euro lineup key to Ford
Automaker hoping to sell U.S. consumers on smaller, more fuel-efficient overseas models
The Detroit News 09/15/2008
Author: Bryce G. Hoffman
(Copyright 2008)

LOMMEL, Belgium -- On a winding test track hidden in a dense pine forest near the Dutch border, a new generation of Fords is being put through its paces. The vehicles are small, stylish and fuel-efficient -- everything Ford Motor Co.'s current North American lineup is not.

Whether Ford thrives -- or even survives -- depends as much on what is happening here, at its European proving ground, as it does on what is happening in the boardroom in Dearborn. The automaker, still struggling to stop a market share decline that began more than a decade ago, is betting this new lineup of small cars from Europe will win American consumers back from its Asian rivals.

Ford tried a similar strategy before, albeit on a smaller scale, and largely failed.

It cannot afford a repeat. The automaker has lost $23 billion since the end of 2005, including $8.7 billion in the second quarter this year.

Ford was caught by surprise when U.S. consumers abandoned its profitable pickups and sport utility vehicles. It needs these European cars to fill the gap.

"We all have the scars on our fingertips from the last 15 or 20 years," said Andreas Ostendorf, Ford of Europe's chief engineer for product development. "Now is the time to do it right."

Hoping to learn from its past to avoid repeating it, Ford is overhauling everything about how it develops new models, from executing a design to choosing parts suppliers to considering the needs of drivers around the world.

The poster child for Ford's earlier failures is the first-generation Focus -- a critical success in Europe that was stripped down for the U.S. market, where it became a lackluster economy model.

Ford of Europe used the success of the Focus as a springboard to become a small car leader. Engineers created some of the best-handling front-wheel-drive cars on the road, while designers sketched out a new look that put Ford on the cutting edge of automotive design.

But there was little impact on Ford's showrooms in the United States.

It was the sort of narrow strategy that has typified Ford for decades: each region narrowly focused on producing vehicles for its own markets with little regard to what is going on in the rest of the company -- a costly anachronism in the era of globalization.

The product of 'One Ford'

Two years ago, new CEO Alan Mulally walked in the door shaking his head at Ford's divided global structure. He quickly outlined a plan for uniting the company and using its global scale to turn the tide.

Under his "One Ford" plan, each region has global responsibility for doing what it does best.

Designers and engineers in Dearborn continue to work on trucks and crossovers. But the Europeans are in charge of small cars for the world.

And those European small cars are about to become a big part of Ford's U.S. lineup.

As gasoline prices hit record highs this summer, Ford unveiled an unprecedented plan to retool truck and SUV factories in North America to produce these fuel-efficient cars for the domestic market. Ford's new Fiesta, which just debuted to rave reviews in Europe, will lead the charge.

By this time next year, workers who are today building F-150s will be training to build this sporty subcompact.

Ford's critics wonder what will be lost in translation this time. Even if the new Fords that begin hitting U.S. showrooms in 2010 are as good as the ones racing through the dark pines of Belgium today, Wall Street wonders whether the Euro Fords can ever garner the big profits Ford's big trucks and SUVs used to generate.

Making sure Ford meets vehicle performance and profitability goals means taking an entirely different approach to vehicle development, says Gunnar Hermann, the head of Ford's compact car program.

He is in charge of developing the next-generation Focus that, in 2010, will replace the models now sold in Europe and the United States.

This time, he says, the car is being designed to be sold around the world from the start by a team of designers and engineers that includes representatives from each region.

"This is the real difference now," he said. "From the first minute on, you operate really globally. And you make sure each region has a say."

Suppliers are another important part of the equation. When Ford brought the first Focus to the United States, it parceled out important components to companies that were not part of the product's development.

That introduced all sorts of quality problems into a vehicle that had already established a reputation for reliability. There were waves of recalls, and Focus buyers in the United States reported parts falling off in their driveways.

This time, supply contracts are global. Suppliers must agree to provide parts for these cars no matter where they are manufactured.

The parts must be modular so that they can be swapped to meet the specific requirements of each market.

Ford says global parts contracts will translate into lower components prices, a key element of its strategy to sell the vehicles profitably in the United States.

Another piece of the profit puzzle is the labor agreement Ford signed last year with the United Auto Workers. The deal transferred responsibility for retiree health care from the company to the union, dramatically reducing the cost of producing cars in the United States.

"The UAW contract was a game-changer," said Jim Farley, Ford's global head of marketing, sales and service. "Before that, the numbers would never have worked."

Small is big

Consumer tastes also have changed, he said, creating new opportunities for Ford.

High gas prices and economic uncertainty have soured American consumers on big vehicles. Even if gas prices come down, most people realize they are likely to go back up. And tight credit has forced many to economize.

In Europe, small cars are the norm, and consumers are willing to pay big prices for ones that deliver quality and comfort. In the United States, the base price for a Focus runs from less than $14,500 to just under $17,000. In Britain, a newer -- and nicer -- version starts at just under $22,000 and can go well over $35,000.

The original Focus was too expensive for Americans to even consider, so Ford eliminated many features. The new Focus is being designed from the start to sell for what Americans can afford and is being built up to give Europeans what they expect.

But Farley believes many Americans are also ready to pay top dollar for a premium small car.

So, Ford will offer inexpensive entry-level versions of its new small cars to get customers in the showroom and then try to sell them up to more expensive -- and more profitable -- versions.

BMW AG has proven Farley's point with its popular and pricey Mini Cooper, which can command well over $25,000. It remains to be seen whether fashion-forward drivers will respond to a Ford with as much an enthusiasm.

But some analysts say Ford still has a long way to go.

Jim Hall of 2953 Analytics LLP says cars like the Fiesta are still European designs that are being adapted to meet changing consumer demand in the United States. He says Ford has a long way to go before it can match companies like General Motors Corp., which uses the same global platform to produce different cars for different countries.

"It's a great idea as a stopgap," Hall said. "But if they don't maintain discipline on this project, they'll be in the same situation again. They've got to go way farther next time."

The Fiesta design was already done when Mulally decided to bring it to the United States. Ford acknowledges that reworking it has added cost to the program, but the company also says these costs are being offset by the added scale the American version brings.

The new Focus, and other vehicles based on that platform, will be the first real product of the "One Ford" strategy.

"You can't do this overnight," Hermann said. "It is an evolutionary process."


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Old 09-25-2008, 01:16 AM   #2
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zzzzzzz im to lazy to read this thing but hope this are good news for FOFO Fans.
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Old 09-25-2008, 06:36 AM   #3
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Wow, nice find! Finally ford has realized, that dumbing things down for us is a bad move. We want the nice cars, and I'm sure most of us are willing to lay that dollar at your foot for it. :)
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Old 09-25-2008, 06:43 AM   #4
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Does this mean they're gonna bring back the Fiesta as a better model than the Focus?
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Old 09-25-2008, 07:20 AM   #5
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Originally Posted by PURO LATINO View Post
Does this mean they're gonna bring back the Fiesta as a better model than the Focus?
Highly unlikely. The Fiesta is going to be the little child in the "one ford" plan. With the Focus being the unruly big brother.
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