LONDON - Ford has been slowly shifting the center of its European activities from its traditional United Kingdom base to Cologne, Germany.
The shift began when James Donaldson became president of Ford of Europe on Jan. 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 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 United Kingdom. Even though Ford is based in the United States, it is regarded as almost a domestic company in the United Kingdom and has long been dominant there.
Ford is showing some signs of weakening in the United Kingdom, 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.
GERMAN SHARE VITAL
Ford believes that if it can succeed in Germany, it can succeed anywhere. It 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 its competitors: 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, United Kingdom, even though his primary office is in Cologne.
Ford retains 28,000 jobs in the United Kingdom, 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.
DISAPPOINTED WITH MOVE
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 U.K.,' he said.
Ford's decision not to make the new Focus in the United Kingdom at Halewood disappointed workers, although its predecessor, the Escort, will continue to be manufactured there until 2000, and the new Jaguar X400 will be made there after that.
Woodley does not believe the shift to Germany has made any difference to Ford's United Kingdom market share, but he worries that it could adversely affect Ford investment in the United Kingdom long term.
Ford officials point out they have continued investing in the United Kingdom, including an average of £320 million, or about $513 million, annually at Dunton the past few years. Ford is also investing £468 million, or about $750 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 the location of Ford's European headquarters is probably not a big issue.
'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.'