Martin Leach, the former head of Ford’s European operations, has been granted an injunction against Ford, preventing the automotive giant from enforcing a two-year non-compete clause. As Ford struggles to meets its goals in Europe, the negative publicity, however short lived, is the last thing that it needs.
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US District Judge Paul Borman has sided with Leach in his controversial court battle against Ford. The federal judge’s decision to prevent Ford from enforcing the non-compete clause against him will allow Leach to seek employment with a competing carmaker.
Leach filed a lawsuit against the US’s second biggest car manufacturer last November, requesting an injunction barring Ford from enforcing a non-compete clause he signed in May 2002. This stipulated that executives can not join another car manufacturer within two years of leaving the company. Leach alleged that the clause was not valid as Ford fired him after he announced to management that Fiat had offered him a position as chief executive.
Ford on the other hand maintained that Leach offered his resignation after a stormy meeting with David Thursfield, Ford’s executive vice president international, in August 2003, during which Leach reportedly claimed he had “lost faith” in the company’s management.
The struggling Italian manufacturer Fiat sought to hire Leach under the condition that Ford would approve the move. However it withdrew its offer last October after Ford sued the company in a German court to prevent Leach’s departure.
Ford is still battling against challenging conditions in the US, and its European unit’s performance continues to register losses in the face of strong competition, currency fluctuations and weak demand. Ford Europe had a $US1.2 billion pre-tax loss in the first nine months of 2003 despite the fact that it set production records and saw sales wins in many European markets.
The departure of Leach, while uncomfortable for Ford, may only be significant if he joins a close rival. Even if this does happen, he will probably be bound by certain confidentiality clauses that prevent him from revealing Ford’s secrets. No doubt Ford will be keeping a close eye on whichever company Leach joins in the future.
