Ford Jockeys For Europe 1992


UNITED STATES corporations are planning for the future - the 21st century. Ford Motor Company's decision to seek a 15 percent stake in Britain's Jaguar PLC, as well as Ford's interest in possibly acquiring a stake in Sweden's Saab, underscores the intent of US companies to get ready for European economic union in 1992 and to prepare for intensified global competition in the next century, say some analysts.

``Among major multinational companies, it is assumed that if you haven't already started in Europe you won't be a major player in 1992,'' says Craig MacClaren, president of Comart-KLP Inc., a subsidiary of KLP International of London, a global marketing and sales firm.

``Ford, by seeking Jaguar, is reinforcing its major strength as the only true worldwide car company,'' says Arvid Jouppi, a Detroit auto expert. Jaguar, as of this writing, is reportedly seeking a friendly linkup with another global auto company, such as General Motors, to avoid a hostile takeover from Ford.

``Ford, General Motors, and Toyota,'' says Mr. Jouppi, ``are the only true world car companies.'' But of these, Ford has particular clout abroad, especially in Europe, he says. ``General Motors is now chasing Ford overseas.''

``Jaguar is a premium carmaker whose quality product would fit well into Ford's line,'' adds Al Fleming, industry editor of Automotive News, published in Detroit. ``Jaguar is a magic name. The product is a glamor product.''

Under current British law, Ford would be limited to a 15 percent interest in Jaguar. But that restriction expires at the end of next year, which means that Ford could then up the ante and seek a controlling interest. Winning the 15 percent share would cost Ford about $1.4 billion. But in return, Ford would have a matchup with a company that sold some 52,000 cars last year and expects to sell 50,000 products this year, ranging in price (in the US) from $40,000 to $48,000.

But despite Jaguar's resistance to the Ford offer, stemming largely from that company's longtime insistence on fierce independence, ``European carmakers have more of a need to align with other world car companies than is true the other way around,'' says Jouppi.

The enlarged economic market in 1992, when European economic union occurs, ``is certainly going to open up an opportunity for European car companies to participate in the world market in the future.'' But given their relative lack of available cash surpluses for major expansion programs, compared to flush US car companies such as Ford, going global appears more difficult without such overseas linkups.

Once the doors on the trade front are thrown open in the early 1990s, Europe, with its 320 million consumers, will be the largest single sales market in the world. For that reason, a spate of mergers and acquisitions have swept Europe (particularly Britain) in recent months. The European stock exchanges have directly benefited as global investors have poured money into that region through mutual funds or direct share purchases.

``It is very clear that all major US companies are now gearing up'' for 1992 and beyond, says Mr. MacClaren. US companies are ``probably in a better position to attack `Europe 1992' than the Europeans are.'' The reason? US companies tend to think in terms of regional or local markets, rather than transcontinental markets, he says.

The upshot, according to a number of car analysts, is that the major US carmakers are in a strong position vis-`a-vis the Japanese in Europe. In addition to often marketing products nationally, rather than regionally, the Japanese face cultural and linguistic challenges in Europe not shared by Americans, with their historical ties to the continent.

Still, the Japanese are working extensively to develop European markets. This spring, for example, Toyota announced that it would build a $1.3 billion car plant in Britain as its European base. Rival Nissan, for its part, already has a base in Britain.

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