Ford boss warns of risks of a car crash Brexit
Stirring cry of Ford’s European boss – as he takes on Tesla chief to entice youthful buyers
MOTORING stalwart Ford, founded in the industrial heartlands of the United States of America in 1903, is unlikely to ever be considered as ‘cool’ as Tesla, the trendy electric car firm set up in California 100 years later.
And Steven Armstrong – Ford’s straight-laced European boss, who has worked his way up through the industry – will probably never command a cult following in the same way as Tesla chief executive Elon Musk. But Armstrong will always be able to treasure the day when he – in the words of one youth-orientated website – ‘perfectly trolled’ Musk on Twitter.
In July, Musk excitedly declared that Tesla had become a ‘real car company’ – because it had manufactured 7,000 vehicles in a week – tweeting the news to his 24million followers on Twitter: ‘7,000 cars, seven days,’ he declared, inserting red love hearts around the words ‘Tesla Team’.
Armstrong’s tongue-in-cheek response? ‘7,000 cars, circa four hours,’ he responded, before rubbing salt in Musk’s wounds by adding the words ‘Ford Team’ between heart symbols.
‘There’ll always be products that come along that people think are cool,’ Armstrong says, as he sips on a polystyrene cup of coffee in his no-frills office in Dunton, Essex. ‘I think Tesla do a great job of what they do, and they’ve been very disruptive in the industry. That’s what prompts us to up our game. But we’ve been around for 115 years, so we’ve been through lots of people coming up with cool products.’
For Armstrong – the Englishman who heads up Ford across the UK, the rest of Europe, Africa and the Middle East – the growth of Tesla is a minor issue, overshadowed by the looming figure of Brexit.
Standing in the corner of Armstrong’s open-plan office are three large boards listing the dozens of individual issues Ford is facing as a result of the UK leaving the European Union. The company this year reported a $1billion loss in Europe, with $600 million attributed directly to Brexit and the fall in value of the pound since the EU referendum.
The motoring giant has its European headquarters split between Cologne – where Armstrong spends four days a week and where its cars are made – and Essex, home of production for vans and commercial vehicles. The commercial side of the business is performing better, but because all of Ford’s vehicles are distributed across the Continent, nothing should be considered Brexit-proof.
Armstrong does not mince his words. If the UK leaves the EU without a deal, it would be a ‘catastrophe’. That is why he, like many others in the car industry, is backing Theresa May’s Withdrawal Agreement, which is due to be voted on by MPs this week. But Armstrong makes clear the Government still has a lot of work to do to satisfy his industry.
‘My view is that what’s on the table isn’t perfect,’ he says. The Withdrawal Agreement does not contain enough to ensure the continuation of ‘frictionless’ trade between the UK and EU, Armstrong says. ‘It’s important to recognise that we can’t just push the cliff edge to 2020,’ he adds. ‘We need to use the implementation period to get a free trade agreement and protect the ability to trade.’
The potential ‘catastrophe’ Armstrong and others have spoken of certainly creates headlines and ramps up pressure on the Government. But there has been little in the way of detail. Pulled investment, factory closures, job losses? ‘All of the above could happen,’ says Armstrong. ‘If the industry can’t continue to operate competitively, we would have to think about where we continue and how we continue to invest.’
He adds: ‘I love being in the UK, not just because I’m English, but because it’s been a very good place for us to do business. But if the final deal erodes the competitiveness of our business and our facilities here, then the economic facts will prevail.’
Another issue giving Armstrong a headache is Generation Z – those born between the mid-1990s and early 2000s. Are they interested in cars? As more people migrate into public transport-served cities, will they need them? And do they have any desire to own a car?
‘It’s true that people are taking their driving licence later or they’re not taking it at all,’ says Armstrong. ‘There will be a softening of demand at some point in time. But there’s also an opportunity to say, “What do the Gen Z people want from mobility and vehicles?” ’
Ford is reasonably coy on its plans to establish itself as, in Armstrong’s words, a ‘mobility business’. But, as a clue, last month it invested in Spin, a San Francisco company that enables people to hire electric scooters for short periods. But how much of this technology will Europe enjoy? Brexit issues aside, Ford has been struggling – losing money – in Europe for some time, and there has been speculation that the Michiganbased company could decide to take a large step away from the Continent. Over the summer, a Morgan Stanley analyst predicted that the process could lead to 24,000 job cuts, mainly in Europe.
‘We’ve not been sustainably profitable in Europe,’ says Armstrong, who was made president of the region last summer. He is preparing to unveil a ‘reset and redesign of the business in Europe’ next June.
This will be concerning for Ford’s 15,000 workers in the UK, many of whom will already have been unsettled when Ford’s major US rival, General Motors, deserted the Continent by selling its European operations – including Vauxhall – to French firm PSA.
But Armstrong does offer some words of reassurance: ‘I’m committed to making sure we remain the number one commercial vehicle brand in Europe and that we have passenger vehicles that people want and aspire to own.’
If the deal erodes the competitiveness of our business, then the economic facts will prevail