DETROIT -- Ford Motor Co. said on Tuesday it had reversed a decision by President and Chief Operating Officer Nick Scheele to make WPP Group PLC its only advertising agency after an internal review suggested the deal breached Ford's standards.
While the decision has little financial effect on either company, the probe sparked concerns of infighting between Scheele and David Thursfield, Ford's global purchasing chief and the executive most often seen as a successor to the 59-year-old Scheele. Thursfield's cost-cutting strategies have been hailed by Ford Chairman and Chief Executive Bill Ford Jr. as key to the company's financial targets for 2003 and its turnaround plan.
It was Thursfield's department that started the review, but Ford spokesman Jim Bright denied there was any feud between the two executives.
"Nick and David have been aligned for months now," Bright said.
Shares of Ford, the world's second largest automaker, hit a record low on Tuesday as analysts and investors fretted about U.S. auto sales, a weakening economy and Ford's fledgling recovery from $6.4 billion in losses over the past two years.
Bright said the decision made by Scheele to make WPP Ford's only ad agency had been rescinded, but that company executives would continue to discuss whether the move might make financial sense going forward.
WPP Group, the world's largest advertising firm, already handles 80 percent of Ford's ad business, including its Ford, Lincoln, Mercury, Jaguar and Land Rover brands.
TWO BRITISH KNIGHTS
The review started after Ford's purchasing department questioned whether the decision met Ford's standards for sourcing from a single supplier, such as whether a study of pricing from other agencies was done.
It also probed whether Scheele was influenced by his friendship with WPP head Martin Sorrell; both men are British knights, and have worked together on a number of boards. In addition, Scheele's son works for WPP Group in New York.
Bright said the advertising decision began with Ford's marketing staff, which was frustrated by a lack of coordination with WPP's various agencies. At the request of Ford's marketing department Scheele told WPP's leaders in November 2002 that if they appointed one executive to work with Ford, the automaker would "make them the preferred or sole source for marketing support," Bright said.
WPP Group did appoint an executive to manage contact with Ford, and Scheele sent a memo in February to Ford's marketing executives making WPP the sole advertising supplier. WPP's share of Ford's marketing spending has not changed since then, Bright said.
"It's off temporarily, but it's still going to be reviewed," Bright said. "Whatever storm cloud was hovering over Nick Scheele and the marketing department has blown past."
Thursfield, 57, also heads international operations at Ford.