European Debt Won’t ‘Put Brakes on the World,’ Ford Executive Says

DETROIT – Ford is not overly concerned that its European operations will be hurt by the eurozone’s ongoing sovereign debt issues, but nevertheless is prepared for any contingency.

Stephen Odell, chairman and CEO of Ford of Europe, says the situation in the region will be interesting but won’t “put the brakes on the world.”

Ford expects European light-vehicle industry sales in 2012 to reach 14 million to 15 million units, a decline from the 15.3 million deliveries the auto makers says were made in 2011 in the 19 markets it tracks.

If this year’s sales come in on the low end of the projection, it will be “a lot more challenging,” Odell tells WardsAuto on a recent visit to the Motor City.

“We won’t oversupply the market with vehicles, and we have some flexibility with temporary labor in the plants,” he says. “At the higher end of the industry level, we can keep the boat moving forward.”

Odell believes Ford is better-positioned to weather any potential economic storm due to its One Ford strategy that stresses leveraging global resources.

The strategy spreads research and development costs throughout the auto maker’s regional markets, so one region is not overburdened. This has led to efficiencies every year for the past five years and also allows for common suppliers.

“The commonality of componentry and platforms is such that you…have the opportunity in negotiations to have a lot of leverage,” he says, noting purchasing large numbers of parts from certain suppliers allows Ford to build strong relationships with its parts makers.

Odell expects some European car markets to turn in a better performance this year than others, citing Germany as one example with its strong industrial base, low unemployment and low debt levels.

“I think Germany remains remarkably stable,” he says, “but Southern Europe – Spain, Italy, Greece, Portugal – they are the ones with the real sovereign debt issues.”

Scandinavian markets have slowed, and there are predictions the U.K. will experience a slight recession in the year’s first half, followed by a recovery period. But the U.K.’s fourth-quarter 2011 numbers were stronger than expected, “so it’s tough to tell,” Odell says.

“Russia keeps going because it’s a petro-based economy, and our view is that in four to five years Russia will be the largest car market in Europe.”

New product, including 10 vehicles to be introduced in Europe this year, will help Ford ride out any slowdowns in the region, he says.

Citing some examples, Odell says the launch of the new global Ranger pickup truck was affected by the March 11 Japanese tsunami and by floods in Thailand, but normal production now is under way.

The new 1.0L and 1.6L direct-injection turbocharged EcoBoost engines offered in the European Focus also will help bolster regional sales.

In the short term, the European Union has to address its sovereign-debt issues, Odell says. But for a sustainable recovery in the automotive market to occur, greater change must take place.

“In the long term, the EU needs to be an economic fiscal union,” he says. “But that, to me, is (more than) five years away. And that’s going to take an awful lot of persuasion for other governments to say, ‘We’re all going to have the same tax rate and we’re all going to have the same budget approvals.’

“First they need to resolve where they are today.”

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