Europe needs a "car czar" to solve its problems and Lewis Booth is the right man for the job. That's the view analysts at Credit Suisse shared in a 53-page report on how to fix Europe's broken car industry.
Credit Suisse says Europe's car czar must already have experience with auto restructuring in Europe and globally.
Booth has done both during his time as CEO of Ford of Europe and more recently as Ford Motor Co.'s chief financial officer. The 63-year-old native of Liverpool, England, retired from his CFO post in April, concluding a 34-year career with Ford. He actually was born into the industry as his father was a Ford, Austin and Morris car dealer.
Credit Suisse presented the car czar idea last week. The timing is perfect because Europe's car industry is in crisis. PSA/Peugeot-Citroen announced today it would close a plant in Aulnay, France, by 2014 while Opel said last month that car production at its factory in Bochum, Germany, would end in 2016.
There are a number of reasons why Credit Suisse thinks a car czar could work.
1. Despite the likelihood that European mass-market brands will report huge first-half losses and massive cash burn, the industry has a bright future provided that it formulates a coordinated European restructuring plan and gets it started immediately.
2. Automakers are not suffering just because of a tough economy. The companies that are in the most trouble have made poor management choices, which have caused automakers' overall profitability to decline steadily in Europe since 2000. People created the problem so they can find a solution.
3. The auto industry directly or indirectly supports 12.7 million jobs in Europe. Given its importance to the region's overall economic fabric, everyone stands to gain if the majority of the automakers are profitable rather than losing money or just breaking even.
4. A Europewide plan would prevent protectionism, stopping the establishment of uncompetitive business practices that reinforce the view that automakers are run for the wider social good here.
5. Europe's car production capacity would need to be reduced by 10 percent for the industry as a whole to reach breakeven –- which is achievable -– or drop by 24 percent to have a utilization level like that in the United States, where overcapacity is no longer an issue, resulting in big profits for most automakers in that region.
Lewis Booth began his career with Ford in 1978 and led the company’s operations on three continents during his 34-year career.
Credit Suisse's key conclusion is that Europe should replicate what was done in the United States.
"The EU should take ownership of the problem and put someone in charge," the analysts said, citing the Obama administration's restructuring of two of the Detroit 3 in the space of six months in early 2009.
"Crucially, we believe that the EU needs to accept responsibility for the restructuring and establish an automotive task force which can co-ordinate capacity reductions among European OEMs and which is capable of removing the first-mover disadvantage that currently keeps automakers from committing funds to plant closures in a politically uncertain environment."