DETROIT - Huge profits in North America are carrying Ford Motor Co. while the company struggles to reverse ailing operations in Europe and South America.
Robust U.S. sales and cost cutting propelled Ford to record earnings of $7.2 billion in calendar 1999.
Ford boasted that its 1999 earnings outpaced those of 'any other automotive company in history.' But Ford CEO Jac Nasser termed the company's performance in Europe and South America 'unacceptable.'
Ford is revamping its European operations and product lineup, said Henry Wallace, Ford CFO. Reducing production capacity is 'a possibility,' he said.
'It is clear we have excess capacity,' Wallace said. 'That is something we need to work on.'
Ford's toughest tasks in Europe will be cutting costs and restructuring operations, he said. The company already has laid the groundwork for a product revamping.
'The Focus was a good start in terms of repositioning the Ford brand in Europe,' Wallace said. 'Later this year, we will have a new Mondeo, a new Transit and new diesel engines. We need a better level of product than today. We will see that over the next two to 21/2 years.'
In 1999, Ford posted net income of $28 million in Europe on revenue of $30 billion.
Ford is farther ahead in turning around South American operations, Wallace said. He cited freshened products, distribution improvements and the construction of a new assembly plant.
'We have a pretty good plan laid down in South America and are now in the implementation stages,' he said. Ford lost $452 million in South America in calendar 1999.
North America is shouldering the load while Ford attacks its problems in other markets. North American Automotive Operations generated a record $6.1 billion in profit on record revenue of $100 billion in calendar 1999.
The heat remains on Ford's North American operations in 2000. The region's goal is record earnings, according to the financial milestones Ford announced this month.
Ford expects profit and market share improvements in North America despite a slight cooling in the economy this year, Wallace said. Ford also anticipates higher interest rates, although he did not specify the amount of increase.