Ford's Fields on Europe: 'You See Headache, We See Opportunity'

DETROIT -- (TheStreet) -- Ford's (F) rising star Mark Fields sketched out a surprisingly bleak picture of the world auto industry Wednesday, but said Ford's strategic approach should enable it to avoid the potential pitfalls.

Fields spoke to a Barclays Capital investor conference in his first public appearance since Alan Mulally said on Nov.1 that he would remain CEO at least until 2014, but would turn over some key responsibilities to Fields and focus on strategic planning. Fields was promoted to chief operating officer, effective Dec. 1.

At one point during the conference, Barclays Capital analyst Brian Johnson introduced the topic of the troubled European auto market by telling Fields that "after Thanksgiving, this becomes your headache." Fields quickly corrected Johnson with a single word: "Opportunity."

Ford's plan is to be profitable in Europe by the middle of the decade. Fields noted that even in the third quarter, when Ford lost $452 million in Europe, Ford pricing in the region improved. "Our share was down a bit, but the net pricing was positive," he said.

It is clear that one of Ford's greatest strength is the success of its U.S. turnaround and the ability to use that as a blueprint in other regions. One aspect of the turnaround, Fields reminded, is matching capacity to growth. Another is to maintain a focus on new products.

"Our approach when we went through the downturn in North America was that we would sell the furniture before we cut the product program," Fields said.

While Europe's problems are well known, Fields noted that South America and the U.S. also present challenges for the auto industry. In South America, where Ford is the No. 4 automaker with 9.5% of the market, Ford earned nearly $4 billion from 2008 through 2011. But in the first nine months Ford's profit in the region shrunk to about $100 million, reflecting added industry capacity, unfavorable currency exchange that cost Ford about $400 million in the third quarter, and restrictive regional trade policies.

In Brazil, the region's largest market and Ford's fourth-largest market, "excess capacity is going to put more pressure on pricing and margins, particularly in the B segment (compacts), the largest segment in Brazil," Fields said.