A well thought-out Eastern Europe strategy has enabled Ford to bring some ‘white space’ thinking to the US market, says white van man Mark ‘Coolbear’ Bursa
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At last month’s Detroit Show something extraordinary happened. The North American Truck of the Year Award – usually they domain of supersized carbon-footprint V8 petrol-engined pick-ups and Sports Futilities – was won by a small, European compact panel van.
Ford was understandably rather pleased with this – and the fact that it had won North American Car of the Year too. Mark Fields, Ford’s president of the Americas, was positively gushing about the Connect at the time. “It’s what we call a white-space vehicle — there’s nothing like it on the road. “When you see this on the road, your first reaction is, ‘What is that?’ ”
Er, it’s a van, Mark. Get used to it – and get used to other European-sized and shaped products. Because make no mistake, they’re going to become the standard for America too. See also new Detroit unveilings from Toyota and Chevrolet. The fact that new Focus – like new Fiesta two years ago – debuted in Detroit is a clear sign that Ford CEO Alan Mulally’s ‘One Ford’ plan means, ultimately, just that. The same Fords, more or less, everywhere.
In fact the only disappointment is that the downsized Fiesta didn’t win Car of the Year, rather than Ford’s ‘Prius’, the Fusion Hybrid. But no matter. The fact that a European product won the Truck prize is something of a landmark.
Having sleepwalked through the last decade, the American auto industry has had the rudest of awakenings. Clever property management kept Ford out of Chapter 11, but the company has been heading in the right way for some time – ever since former Boeing boss Mulally joined in 2006.
While GM nearly de-globalised by selling its European Opel/Vauxhall arm, Ford under Mulally has looked hard at its strong-performing European operation. Fiesta and new Focus have been designed with North America in mind – not by compromising the cars to suit perceived US demands but by making desirable small cars that American consumers know they have to embrace.
The Transit Connect is the icing on the cake. The realisation that Ford of Europe had a different kind of vehicle in its range that might just play extremely well Stateside could turn out to be a stroke of genius. For a start, the Connect isn’t even remotely new. It was launched in 2002 as a replacement for the old Ford Escort van, and received a relatively minor facelift in 2009, with a new nose, cleaner engines and some interior tweaks. But the North American Truck of the Year of 2010 is essentially an eight-year-old design (by Peter Horbury, before he was transferred to the US!). It seems to be working – Ford has sold more than 9,000 Transit Connects since it launched the van in America last July.
The other unusual fact about the Connect – which will come as a surprise to many of its US buyers – is the fact that it’s made in Turkey. And it’s a sign of Ford’s confidence in the Connect that it has added capacity – in the form of a new plant in Romania – to cope with global demand for Connect.
The acquisition in 2008 of the former Automobile Craiova plant – whose 35-year history includes stints making Citroens and Daewoos – has given Ford plenty of light commercial shuffle room in Europe, where Connect and its bigger Transit siblings hold a strong position.
Craiova gives Ford the opportunity to reshuffle its pack, concentrating almost all its Transit and Transit Connect production in low-cost markets on Europe’s eastern fringes. The exception will be heavyweight chassis-cab Transits, which will remain in production at Southampton in southern England. That’s good news for the beleaguered UK auto manufacturing sector, which has already lost one van plant in the recession (LDV), while GM’s Luton plant is still in search of a long-term fix beyond its agreement to build Renault Trafics, which expires in 2013.
At Southampton, Ford is being clever. The plant has been building Transits for more than forty years, but the site is heavily constrained, and the bulk of Transit production is in Turkey, where costs are so much lower. So Southampton will concentrate on higher-profit chassis cab versions, and the plant will provide something of a bespoke service, adding specialist bodybuilding activities that might otherwise be outsourced to independent bodybuilders. So if you want a Transit Tipper, for example, the factory will supply one.
Ford also anticipates changes to how commercial vehicles are defined – the somewhat arbitrary 3.5-tonne limit could go, which would mean the next generation Tranny could become a larger vehicle – up to 5 tonnes gross weight and beyond. These bigger Transits are likely to fit the Southampton profile too – chassis-cabs with specialist bodies.
There have been cuts at Southampton – 500 jobs have gone – but the strength of Ford’s van market position in the UK alone means a right-sized UK plant still makes sense. Ford expects to build around 35,000 chassis-cabs at Southampton, and Steve Adams, Ford of Europe’s commercial vehicle director, said late last year that this would continue with the next-generation Transit, subject to Ford board approval. So long as the recession doesn’t linger, Southampton appears to have a future.
Mainstream Transit panel van models now come from Turkey, which continues to build both Transit and Connect in all forms. The fact that Otosan builds chassis-cabs as well is a subject of concern for UK workers, but Adams said this was because of the terms of Ford’s deal with its Turkish partner Otosan, part of the Koc Holding company, Turkey’s dominant automaker, which also partners Fiat via another subsidiary, Tofas.
So Turkish market Transit chassis-cabs will still be made in Turkey, but not for export. It’s not a problem for Ford, and there are tax efficiencies as a result of Transits being Turkish domestic products – remember, Turkey is not an EU member.
Otosan will build the US-destined Connects, but most of the European production will shift to Craiova. Craiova is a big plant – its capacity is 300,000, roughly three times annual Connect demand. So clearly, the plant will not just make Connect. In fact two other models are planned – a car and another, smaller van.
The template here seems to be none other than Tofas. The other arm of Ford’s Turkish partner makes the Fiat Doblo Cargo – a major competitor for Connect, incidentally – alongside the Fiat Linea sedan and the ‘Minicargo’ vans that are shared by Fiat and PSA’s two brands. We know them as Fiat Fiorino and Qubo, Citroen Nemo and Peugeot Bipper. These vans share the same platform as the Linea, making for good economies of scale.
From what we can glean, Ford is looking to replicate this arrangement in Romania. An emerging markets sedan – not Fiesta, but using the Fiesta platform – will be built, alongside a new light commercial, also using the Fiesta platform. This van will fit between the hatchback Fiesta Van and the Connect – and compete with the Fiat/PSA Minicargos. It would plug a significant gap in Ford’s van range, which has existed for several years since Ford dropped the old box-bodied Courier, based on the two-generations-ago Fiesta.
Ford has ummed and aahed about this project for some time. A year or so ago, the line was watch and wait – see how the Bipper/Nemo/Fiorino went in the market, as well as the similar-sized Renault Kangoo Compact.
It’s been hard to judge. These vans were well received, but the recession has hit their sales. But Ford now seems to have jumped in, and green-lighted the plan. Senior executives said the Craiova plant offered the opportunity to develop and build the vehicle with a sensible cost base. Craiova started low-key Connect production in September, initially using SKD kits from Turkey. But by the time Craiova is running three models at full production, the global recession should have faded and the economic cycle will be on the up again.
Those American families and businesses happily tooling around in their Truck-of-the-Year Ford Connects might not realise it, but their vehicles are part of a sensible and well-planned global strategic jigsaw puzzle involving emerging markets factories and European technical centres.
Joined-up thinking from one of the Big Three. Whatever next?
Mark ‘Coolbear’ Bursa
