Former Ford Executive Leach Said to Be Talking With Fiat

DETROIT August 25, 2003; Norihiko Shirouzu writing for WSJ reported that the former head of Ford Motor Co.'s European operations, who resigned abruptly two weeks ago, is negotiating with Fiat SpA (FIA) to become chief executive of its auto operations, but a noncompete agreement may stand in Fiat's way.

Fiat officials -- commenting on condition of anonymity -- say the negotiations between Fiat and Martin Leach, 46 years old, are proceeding, but are far from done.

One official said it would be "good for Fiat" if it could snag Mr. Leach. "The guy has done well, taking a company [Ford of Europe] that was in bad shape ... out of the tunnel," said the official. "He is young and competent. He has international experience."

The official added it would be "fully normal" for Giancarlo Boschetti, who is close to the usual Italian retirement age of 65, to step down as CEO of the Fiat Auto subsidiary to make room for Mr. Leach. A Fiat spokesman declined to comment.

Fiat Auto, in which Ford's archrival General Motors Corp. owns a minority stake, is struggling to pull itself out of a deep slump.

The Italian auto maker's parent has the right to sell its 80% interest in Fiat Auto to GM starting next year. But GM has indicated in recent public filings it may seek to invalidate that agreement. GM disclosed recently it is in talks to possibly renegotiate the Fiat agreement. Fiat executives have said recently they want to fix Fiat Auto so it can remain independent.

Ford executives indicated Monday they are prepared to try to block Mr. Leach from jumping so quickly to a rival. Ford of Europe and Fiat compete vigorously in the European market. Ford of Europe recently targeted efforts at grabbing market share from a wounded Fiat in the Italian market.

On Aug. 12, Mr. Leach unexpectedly resigned as head of Ford of Europe "to pursue other business opportunities." The resignation came a month after Ford of Europe reported a second-quarter loss of $525 million. The loss, which was wider than expected and followed a $249 million loss in the first quarter, deepened the financial difficulties of its parent.

Individuals familiar with the situation say that while Mr. Leach was under pressure to improve Ford of Europe's performance, the decision to leave was his.

Ford of Europe hasn't named Mr. Leach's successor.