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Ford-Werke chief says company is "well-positioned" in Germany

Publicity for new Focus will start next month

Cologne. Bernd Mattes, 48, has been chief executive officer at Ford-Werke AG since the autumn of 2002. After studying economics Matthes started his career within BMW sales in 1982 and was responsible for the German sales organization when he left the company. In July 1999 he joined the Ford management board, where he first was the head of marketing and sales.

As head of Ford's German division, Mattes is at the center of the company's European operations. Having made losses of 525 million dollars in the second quarter of 2003, Ford of Europe has now managed a pre-tax profit of 211 million dollars.

Automobilwoche Editor in Chief Franz W. Rother spoke to Matthes about the earnings outlook, delivery problems and the launch of the new Focus.

Mr. Mattes, Ford of Europe has achieved a profit again in the second quarter. A small miracle?

We sold more than 40,000 vehicles more, the economic development in Turkey is very positive and in regard to fixed costs we have laid a new foundation last year by restructuring. On top of that we worked on lowering material costs together with our suppliers within the scope of "team value management".

Will Ford still be making a profit by the end of the year?

It is our aim to improve the result by between 900 million and one billion dollars, which would mean a loss of between 100 and 200 million dollars by the end of the year. It will depend on the coming few months whether we will manage our target. As we all know, the second half is always the weaker one. We also expect that the positive development in Turkey will slow down slightly. However, we stick to our target.

How much did Ford-Werke AG contribute to the turnaround?

Production played a major part in it, considering that Saarlouis, Genk and Cologne manufacture a total of approximately 1 million units. We also are well positioned on the German market, despite there not being much of a buying mood.

How do you react to the latter?

I believe that we made the right decision launching our Viva special models at the beginning of the year. That way we managed to get away from pure cash discounts.

The Focus Viva is selling so well that dealers have delivery problems.

That is true. The Focus is still going outstandingly well in Europe, despite the model reaching the end of its life cycle. Some dealers have not ordered enough units in advance. Others did and that is why we now manufacture approximately 1,800 units of the Focus and the C-Max a day in Saarlouis, significantly more cars than planned.

How many of the new registrations with Focus models are represented by the Viva special model?

Around half of them.

When will the publicity campaign for the launch of the new Focus start?

Communication will start at the beginning of September. We will begin training dealers and sales staff in Germany on September 15. World premiere will be September 23 at the Paris auto show. And in November it will be launched on the market.

Opel started its advertising campaign for the Astra long before the car's market introduction. Why are you taking your time?

We do that on purpose. We do not intend to disturb the successful running-out of the current model. And I believe that new developments should only be talked about when they can be experienced by the customer. That is the only way to create a proper build-up of tension.

Is the pricing for the new car finalized?

We will do that within the next few days. The details will be available from autumn.

Will there be an "early order" discount?

No. We will find an attractive basic price. That's all we need.

Are you satisfied with your 7.8 percent market share?

Everything went according to plan in the first half of 2004. In 2003 our share was already down to 6.3 percent. It would be a great development if we could manage a 7.3 percent market share by the end of the year. It would be wonderful if there was an eight in front of the comma. But that is not our priority at the moment. It is more important to us to sell what we manufacture.

You have no overcapacity?

We spent the past few years adjusting our capacities. Today our plants in Cologne, Valencia and Saarlouis are utilized to the full. Genk is currently being converted to flexible production. Our productivity is good, the level of capacity utilization is good. We have adjusted our fixed costs and personnel. But that does not mean that we have reached our goal. We need to continue to work on ourselves, especially with regard to material costs and the use of identical components. We also have to improve even further regarding quality, where we already have become much better. We have to remain alert.

Will you discuss working hours again with your staff?

I believe that it is necessary to discuss labor costs with respect to improving Germany's competitiveness as a manufacturing location. But negotiations should not be focused on one point. At Ford we have already realized the collective wage agreement -- without increasing wages. We also have reduced the Christmas bonus. Our staff have contributed their share. The corporation will in return refrain from reducing staff for operational reasons until the end of 2005. This chapter is finished.

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