TRAVERSE CITY, MICH. -- Ford Motor Co.s revitalization campaign could get a boost this year from one of the sources of its past troubles the heavy reliance of Ford of Europe on British pound-based business.
The European operations were hit hard the past couple of years because the pound was expensive against the euro. Ford cars made in Britain had trouble competing against vehicles made in euro-based countries.
But speaking to reporters here yesterday, Ford President and Chief Operating Officer Nick Scheele said that gains in the value of the euro have given Fords British market a break.
That has now turned around, Scheele said of the pound-euro exchange, and we anticipate significantly better results in the second half.
The pound is currently trading for 1.41 euro. One year ago, 1 pound traded for 1.58 euro.
Ford was significantly disadvantaged because of the sterling/Euro relation, Scheele said. We were under severe attack. We were far more sterling based.
Scheele declared that Fords financial revitalization plan remains on track, despite a slowing North American market and soaring consumer incentives on new vehicle purchases.
Weve said all along that we will deliver the 70 cents (earnings per share) this year, he said. That is still our goal. Its still our plan. We will take whatever actions we need to reach deliver it.
At the start of the year, everybody said no, we couldnt get there, Scheele said. And we delivered in the first quarter, and we delivered in the second quarter. Weve delivered now six straight quarters of better than forecast returns.
Scheele maintained that Ford is actually out-performing its cost-cutting program, announced in early 2002 after a dismal $6 billion loss in 2001.
At the beginning, we set a goal of half a billion of cost cutting this year, and we blew past that comprehensively in the second quarter, he reported.
Some of the cuts in overhead have come from Tier 1-supplier price and cost reductions. Outside component costs typically constitute a large part of any automakers expenses. Scheele said that suppliers had done a good job of meeting cost-cut targets so far.
Are suppliers a major contributor? Yes. Suppliers are the major cost element in our total cost. Were working very closely on that.
But, he added, youre never satisfied. Youre always looking for more.
In addition, Scheele said he has sent out memos to Ford executives, asking them to deliver 9 percent cuts in the 2004 budgets, which they are now planning.
The company previously announced a round of white-collar layoffs as part of the revitalization efforts.