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MAASTRICHT, THE NETHERLANDS — For just a flash, Derrick Kuzak is throwing daggers with his eyes. And this is totally out of character for Ford's group vice-president for global product development.
With a doctorate in electrical engineering and a background in systems integration in the aerospace industry, Kuzak comes across as a calm, organized, respectful and thoughtful automotive executive.
More than once, during dinner in a restaurant carved out of a cave about an hour's drive from Ford of Europe's Lommel Proving Grounds in Belgium, Kuzak apologizes for any difficulties we might have in hearing his deep but soft baritone. But his eyes communicate a fierceness that is impossible to miss.
Kuzak's message is worth hearing. It is all about the proof of Ford's long-awaited, and some would say stalled, turnaround. In the car business, proof of success is easy enough to see, though.
The new European Ford Fiesta will come to Canada and the United States in 2010 as a 2011 model. Ford (FORD)
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New models that come out of any makeover, if they are stylish, well-built, properly equipped with the latest technology and rewarding to drive, sell fast and at premium prices.
I got the sharp look from Kuzak for rather rudely suggesting that he and his Ford colleagues are burning up the company's cash reserves at a ferocious rate — on average more than $1-billion (U.S) a month. This gives them less than 24 months to reinvent not only the cars and trucks themselves, but the way they are developed and built and how the public perceives them. Any longer and Ford will be bled dry of all the money it raised by mortgaging all its assets in the world.
In June, Ford reported a second-quarter loss of $8.7- billion, its worst single quarter in history. That came after a loss of $2.7-billion for 2007 and a loss of $12.6-billion in 2006. And Ford expects to incinerate $16-billion in cash through 2009.
Even at this rate, Ford has the money to survive. At the end of June, at the time of its last quarterly filing, Ford had $26.6-billion in cash and $11.6-billion in credit, for a total of $38.2-billion in available cash. But the losses must eventually end, and the key to it all is a plan to make over its lineup with a slew of small and smallish vehicles in the next 2-1/2 years.
It is when I point to the financial issues that I get the look. And then it's gone even as I suggest that he's not happy with my skepticism.
"We all understand what you are saying, the seriousness of it," he says.
"But we believe we're doing the right things to turn this around."
The first, and perhaps most important, thing is the new 2009 Ford Fiesta subcompact, what is known as a "B-car" in the auto industry. It is going on sale in Europe right now and will come to Canada and the United States early in 2010 as a 2011 model.
In Europe, the Fiesta starts at about €11,000 ($16,600 Canadian) for a three-door hatchback. Kuzak and his Ford colleagues expect four-door sedan and five-door hatchback versions to sell in volume numbers for between €14,000 to €16,000.
That's a reasonably competitive price, though a stripped version of the rival Opel Corsa sells for around €8,000 in Germany.
Remember, though, that one euro is worth about $1.52 Canadian dollars. So here is the rub: In Canada and the United States, Ford must sell four- and five-door cars for $15,000-$16,000 at most (the three-door hatch is not planned for Canada and the United States).
That price is dictated by the marketplace. That is, the Fiesta must compete against comparably priced models such as the Honda Fit, Toyota Yaris, Nissan Versa, Chevrolet Aveo, Kia Rio and Hyundai Accents of the world.
Ford certainly is facing a steep challenge. Can it sell a car with a price tag in dollars that is nearly identical to the euro price of the European Fiesta?
