Despite the losses, Ford of Europe boss believes that there is no reason to panic

Cologne. CEO Martin Leach says Ford of Europe is not in bad shape despite first-half losses of $774 million (665 million euros) in the first half and $525 million in the second quarter.

There is no reason to panic, he said.

"The economic trend forces us to work harder to further improve the basis of our business," Leach said in an interview with Automobilwoche after returning from a meeting with Ford president Nick Scheele and chairman Bill Ford.

Leach seems optimistic.

"We are well on the way to reaching the goals we have set ourselves within our restructuring plan," he said.

Leach rejected press reports that David Thursfield, chairman of Ford of Europe and responsible for Ford's global automobile business, would take over the lead at the European head offices.

"My cooperation with Thursfield is unchanged," Leach said. "We meet regularly and discuss our strategy. However, I still have the full operational responsibility."

Leach believes that the current problems are a result of the weak economy in Germany and other European countries and of the strong euro.

"The whole automotive industry is currently suffering due to those factors," he said.

Despite all the problems at the end of June Ford's European market share increased to 9 percent. In 2000 the share had fallen to 8.3 percent.

Said Leach: "One must not only look at the German market. In Italy for example our market share has grown to a double digit figure during the past few months."

Ford's goal is to grow in countries where higher profits can be achieved, which is not currently the case in Germany because of discount price wars.

In a recent memo to his executives, Ford boss Scheele announced further saving measures. The hiring freeze now also includes Ford of Europe. Jobs that become vacant will not be filled until further notice and overtime will be reduced. Scheele said in his memo that, should these measures not suffice, there would be no way to avoid layoffs. This could affect up to 2,000 employees. But Leach believes that for now the European business will not be affected.

"We can not afford any redundancies," Leach said. "We need every single employee for our aggressive model offensive."

But savings will be made within engineering and production.

"We are hoping that by the end of 2003 we will be working by 14 percent more efficiently than at the beginning of the year," he said.

He said that in the past three years the company had saved $1.3 billion by working closely with its suppliers.

"We now have to intensify our efforts," Leach said.

He added that Ford still has enough cash for the second part of the model offensive. Since 2000, 32 new models have been launched and 13 more are planned by 2005. He neither intends to increase the planning period nor to cancel individual projects.

Said Leach: "There will be no cutbacks."

That includes the new Focus planned for August 2004. The market launches of the Focus' major competitors - the new VW Golf will be available from October 2003, the new Opel Astra from March 2004 - don't seem to worry Leach.

"There is no reason to rush anything," he said.

He said that the current model is still selling well. Leach believes it is more important to launch a top quality model than to start a race with the competitors.