Ford is investigating whether president Nick Scheele may have improperly steered business to WPP Group, the London-based conglomerate that controls most of the car maker’s multibillion-dollar advertising accounts, the Detroit News reported.
The newspaper, citing people close to the situation, said that Ford’s head of human resources, Joe Laymon, opened the internal inquiry in February after Scheele, Ford’s No. 2 executive, sent a one-page letter to executives ordering the consolidation of Ford’s marketing and advertising business with WPP Group.
The Detroit News said a small group from Ford’s human resources and purchasing divisions is questioning whether Scheele’s directive violates company policies governing single-source suppliers by channeling all of its advertising to WPP. Ford is the world’s second largest advertiser.
The newspaper said the inquiry is also scrutinising Scheele’s ties to WPP chairman Sir Martin Sorrell and the fact that Scheele’s son, James, is an account manager in the New York office of WPP’s Young & Rubicam division, although he reportedly does not work on Ford accounts.
The Detroit News said the probe, findings of which could be sent to the board of directors, comes as corporate America is under increased scrutiny for allegations of self-dealing and questionable business relationships and also reflects Ford chairman and CEO Bill Ford Jr.’s push for the company to be more open and transparent in its dealings with suppliers, investors and the public.
The newspaper reported that its sources had said that Scheele, a member of the board of directors and also chief operating officer, has been advised to stop any direct decision-making over WPP accounts until the inquiry is complete, which should happen within the next month.
Citing a person close to the matter, the Detroit News said senior purchasing executives were startled by the decision outlined in Scheele’s letter but company officials reportedly said that Scheele and Ford marketing executives pushed the plan to gain efficiency and save money at a time when Ford is trying to cut costs after losing $6.4 billion in the past two years.
Ford has put the decision to consolidate its business with WPP on hold until the inquiry is complete, sources told the Detroit News.
The Detroit News said WPP Group is the corporate owner of one of the world’s largest collections of advertising, marketing and public relations firms, including ad agencies J. Walter Thompson, Young & Rubicam and Ogilvy and Mather.
The newspaper said WPP Group already controls most of Ford’s multibillion-dollar advertising business and has added more in recent years. Detroit-based J. Walter Thompson USA oversees the Ford division’s estimated $1.7 billion U.S. advertising budget while Young & Rubicam controls Ford’s Lincoln Mercury division’s advertising, the Detroit News noted.
The decision, outlined in Scheele’s letter, would make it difficult — if not impossible — for competing ad agencies to bid for Ford accounts, the Detroit News added.