Martin Leach was a Ford man through and through. He had worked for Ford almost his entire working life, had rotated through a series of ever more important assignments and had embodied the “driving dynamics” that Ford had made a core brand value in Europe, Automotive News Europe reported.
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That such a talented, dedicated executive would leave his job during a critical restructuring is not a good sign for Ford of Europe. Until August, European operations had been held up as a model for Ford’s global recovery.
Analysts had been stunned when it reported earlier this month that its European operations lost $US525 million (€477 million) in the second quarter.
Leach was a victim of Ford’s larger problems in its North American home base. He is one of the industry’s most respected product men, but Leach, 46, may have been too young when he was handed Ford of Europe in 2001.
He had grown up in product development and marketing at Ford and had led Mazda’s product team. He lacked experience in finance, manufacturing and purchasing and could have gotten more seasoning in those areas in lesser jobs had Ford not been so desperate for top talent.
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By GlobalDataLeach was given the top job at Ford of Europe’s Cologne headquarters although he was less experienced and much younger than his predecessors David Thursfield, 57, and Nick Scheele, 59. Leach had many of the credentials for the top job but his rise was accelerated primarily by developments across the Atlantic.
When Ford Chairman William Clay Ford Jr. ousted flamboyant CEO Jacques Nasser in October, 2001, Ford senior executives looked around their global organisation and identified the congenial Scheele as the best person to succeed him.
Scheele had been Ford of Europe chairman for 18 months in 2000-2001 and had been transferred to Dearborn as a troubleshooter during Nasser’s final turbulent months in office.
Scheele and Thursfield, his top lieutenant, had been architects of Ford’s European turnaround strategy, launched in 2000.
The plan looked great on paper: Ford closed several inefficient plants, including its huge Dagenham, UK factory; launched an aggressive new product strategy scheduling 45 new or heavily-revised products in five years; and devised a cost-cutting plan aimed at making suppliers partners rather than adversaries.
But the plan had barely been put in place before Scheele and Thursfield were called to Dearborn to work their turnaround magic on Ford’s troubled North American operations.
Thursfield retained the Ford of Europe chairmanship, but had two other time-consuming jobs: head of global purchasing and international operations.
That left Martin Leach in charge of a turnaround that was far from complete in a market getting more difficult by the moment.
“He jumped because he was fed up with being ridden too hard,” said a Ford insider. “I think he left out of exasperation for being the fall guy. Scheele and Thursfield were taking credit for things that hadn’t been institutionalised yet.”
Ford officials say their recovery plan is still on track and that cost-cutting measures are beginning to take hold. Ford has taken $1.3 billion out of its cost base in the last three years using a combination of factory closings, greater purchasing efficiency and more flexible plants.
“This year, the pace of cost reduction has accelerated,” said a Ford executive who declined to be identified. “Part of what’s making this so complicated is it really has to happen on both sides, cost and revenue.”
The executive cited downward pressure on prices and relatively high costs as key factors.
“We need to get the volume to support the cost structure,” he said.
Analysts say the Ford brand has not caught up with the strength of its vehicles.
“They did a lot of it right about four years ago,” said Steve Saxty, executive director of the automotive practice of FutureBrand, a New York and London brand consultancy. “They had begun to turn the brand around again, but they backed away from it.”
Ford of Europe’s brand inconsistency is matched by a lack of continuity in the executive suites. Ford officials look with envy at the success of PSA/Peugeot-Citroen SA, which sells small cars in Europe at a profit.
Since the merger of Peugeot and Citroen in 1978, the French company has had three chairmen. In the same period, Ford of Europe has had at least 12.
They have tried to guide Europe through a succession of reorganisations. The most damaging was Ford 2000, which dismantled Ford of Europe completely and left only global small-car development in its place. As a result, Ford wasn’t able to respond to European market trends.
Through the years of tumult in Ford’s huge bureaucracy, Europe frequently turned into just a short-term executive posting before a more desirable job became available at Ford Motor headquarters in Dearborn, Michigan.
Shifting Ford of Europe’s headquarters from Essex, England, to Cologne, Germany, in the late 1990s didn’t help. Ford, long the market leader in Great Britain, has watched its UK market share slide alarmingly from 21% in 1994 to 15% today. Gains in Germany have not made up for it.
“They’ve lost a lot of talent along the way, and they’re losing talent at the moment,” Saxty said. “They should be strengthening at a time when VW is weakening, but they’re not. And Opel has more stability and vision at the moment.”
No Ford executives in Europe stand out as obvious contenders for Leach’s job.
Thursfield, who may be asked to remain in Europe, now must jump-start the company again while Leach’s replacement is sought. But Ford must commit to a long-term plan before Europe really turns around.
