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Ford Germany CEO: We're Not Calling For Government Aid

The head of Ford Germany, Bernhard Mattes, told DW-TV why he's rejecting a government bailout for his struggling industry, but still supports a concerted European effort to help carmakers get back on their feet.

Ford Germany CEO stands in front of a production line at one of the company's plants

Mattes doesn't believe that helping individual carmakers is the way to go

DW-TV: Mr. Mattes, you're the boss of more than 24,000 workers building cars for Ford here in Germany. Recently your turnover has dropped dramatically, why is that?

Bernhard Mattes: The financial crisis around the world and here in Europe -- and the real estate crisis -- have unsettled consumers, so they're buying less. We don't just produce cars here for Germany, but for other European markets too -- that's forced us to scale back our overall production.

How bad is the situation? Can you still sleep well at night?

A red Ford Fiesta

Smaller models like the Ford Fiesta are popular in Europe

Yes, I do sleep well. You need to regenerate in order to tackle the challenges with renewed vigor. We have an excellent range of models and a strong European sales structure. These have allowed us to do relatively well, despite a drop in demand. We're the second-strongest car brand in Europe and we've also been able to achieve growth in Germany, which is positive, but we're adapting our production to the overall demand.

But in the last few months the picture has changed quite a bit, hasn't it?

Absolutely. You can divide the year into two halves. In the first half we had a strong demand and good sales, and in the second half it has dropped significantly, all over Europe, also in markets like Spain, Italy, France and, of course, Germany.

Would you describe the slump as dramatic?

Well, it has taken on quite sizeable dimensions. If you consider that demand in Europe was at 18 million cars and now we're at about 16 million or perhaps only 15 million this year, then that's quite a significant drop. And it calls for flexibility.

What does being flexible mean for Ford Germany? You can't just lay off workers, it's not that easy, what are your plans?

We had the advantage that our production was working to capacity, sometimes even more than 100 percent. So we were able to bring production down to normal levels first and then we also reduced capacity by not renewing the contracts of 100 temporary workers for example. In our engine plant here in Cologne, we also reduced working hours.

Your parent company in the US is in serious trouble. To what extent will that affect Ford Germany?

A man checks out Ford trucks

Europeans have little interest in US-style gas-guzzlers

The only direct way we'll feel it is in our plant here where we build the engines for large US vehicles: we've had to reduce working hours. But otherwise our model range is primarily aimed at European markets and so we won't feel any effect. On the contrary, we have developed a plan for the entire Ford Motor Company: to develop cars jointly and manufacture and sell globally. We will implement this with our parent company and with our colleagues in Asia.

But what happens if your parent company suddenly can't pay its bills anymore?

We have cash reserves of about $30 billion (24 billion euros) for the entire concern. And that's enough for us to implement our plan to restructure the company and at the same time develop new, fuel efficient cars. And so we're not thinking in terms of the kind of scenario you just described.

Does this means that Ford won't be asking for state aid then?

That is the reason that we've said we're not calling for government aid or guarantees. We are in a situation where our reserves are adequate for developing our products and implementing our plans.

How long will those reserves last? Is there an end in sight?

We are confident that the economy will slowly start to recover in the second half of 2009 or, at the latest, in 2010. By then we'll be that much stronger worldwide with our products so we'll be able to react to the market. So that's not really a concern for us.

All that sounds quite optimistic and relaxed. So why are all these crisis scenarios for the car industry being tossed around, for instance that the European car industry will need 40 billion euros of support?

Well, of course we're not that relaxed. We're looking intensely at our costs. We're looking intensely at our productivity and efficiency and we're looking for ways to further reduce our costs, to stay competitive and to be able to grow profitably. That's the one thing. The other is the competitiveness of the European auto industry. And here European car makers have proposed a 40-billion-euro package from the European Investment Bank to provide financial means, payable back with interest, to develop new technologies that ensure European carmakers maintain and expand their ability to compete.

But if you're profitable, why should the state provide money? Wouldn't that suspend the rules of the marketplace?

What we're seeing now is that financing, the availability of financing on world credit markets, has been restricted. We want to develop efficient vehicles and new technologies as fast as possible, and that's why we're asking the European Investment Bank to make this financing available, as loans -- interest-earning loans -- so that we can develop progressive technologies, thereby improving our ability to compete.

The auto industry is one sector, but there are other sectors too that want government aid. How can a domino effect be prevented? Or can it be prevented at all?

First of all there is of course this protective program that the German government has set up. It's an outstanding device for financing all sectors, to make resources available. But this package was not set up just to prop up the finance sector. It was set up to make loans available so that companies have the ability to make necessary investments and implement research and development projects. So here is a significant amount of money available, and guarantees, which can be used to do these things and I think it would be quite helpful to accelerate this.

Your direct competitor, Opel, has already applied for state guarantees, and said they are necessary. Wouldn't that give a company like Opel a competitive advantage over other auto makers? Do these kinds of solo bailouts make sense?

A red light in front of an Opel logo

Opel is hoping to get government help

Well, I'm sure the European Commission will take a very close look at what bailouts for individual companies mean from a competition point of view, and that's true not just in our industry. We think that a coordinated action, like the one European makers have proposed, with the European Investment Bank, is the right answer.

So no solo bailouts?

From the point of view of competition, I'd say a coordinated effort is better than going it alone.

How often do you talk with politicians these days? Are there intensive contacts between automakers and political leaders?

Of course. Politicians want to know what's going on, and I think that's very welcome, that the German government as well as the European Commission are very closely monitoring the well-being of the automobile industry, which is a core industry in Europe and in Germany. Our exchange of information is transparent and we discuss what measures are appropriate and necessary, for instance, to revive demand and growth.

That means, if you walk out of here and call Chancellor Merkel's office, you'd be put right through?

Mattes looks on as German Chancellor Angela Merkel checks out a new Ford car on the passenger seat

Mattes has the chancellor's ear

You could see it that way. Right now, she has my proposal on her desk -- suggesting how a vehicle tax waiver or reduction might be made more effective -- or better for the environment -- than the proposal that the government has adopted. So there is a dialogue with various ministries, and with various state premiers, like here in North Rhine-Westphalia.

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