Back to basics with a hi-tech Model T Ford for the Nineties: The company is again looking for economies of scale but this time with an adaptable 'world car'

ON Thursday Ford announced its biggest reorganisation ever. Alex Trotman, the Scottish- American chairman, used a hi- tech video link to tell employees and journalists around the world that the European and American operations were being merged. From now on, all small front-wheel drive cars would be developed in Britain and Germany, while bigger cars, vans and off- roaders would be designed in Dearborn, Michigan.

Mr Trotman's reshuffle will mean the long-established geographical divide between Ford of Europe and Ford US is being demolished and replaced with five Vehicle Programme Centres responsible for diferent types of car.

Consumers will not see any difference until about 1998, when the current and planned range of cars starts to be replaced: after that, they will notice that Fords in Paris France and Paris Texas look identical. The 'world car' will have arrived.

This may make the streets a little more dull, but it will also make Ford a little more profitable. Mr Trotman reckons it will save dollars 2bn ( pounds 2bn) to dollars 3bn a year. Not only will development costs be reduced, as duplication is excised, economies will be squeezed out of ever larger- scale production.

According to Garel Rhys, motor industry professor at Cardiff Business School, unit costs on body panels continue to fall until production reaches 1 million to 2 million, while R&D economies are still being registered at 3 million to 4 million. Ford produced 6 million cars last year, but they were spread across dozens of models: the logic of producing fewer variants in greater numbers seems impeccable.

But it has a flaw that has scuppered the world car before. Tastes are not uniform - especially tastes in Europe and America. Ford points proudly to its Mondeo as the way it wants to go. Design was led from Europe, with American contributions, and it is already a best-seller in Europe. The car is now built in Kansas City and will be launched as the Ford Contour and Mercury Mystique this year. The company says the Mondeo is its first global car. But it is suffering a little from amnesia. Ten years ago it was possible to buy a car called the Escort in the States. It looked like a European Escort - but was not one. 'The two versions shared about six components, two of which were the badges,' Professor Rhys says. The Escort suffered from a Not Invented Here syndrome: Ford wanted to share parts, but when the American engineers looked at the European version, they thought they could do better.

The divergence of taste is a relatively modern phenomenon. The Model T Ford was built in Michigan, in South America and in Trafford Park, Manchester, from 1911 to 1929. Because the factories made only the chassis and drive trains, local customers could add bodies to suit their needs.

In the thirties American cars gradually grew, but it was only after the war that they started taking steroids. The straight wide roads allowed manufacturers to build curvaceous wide cars, powered by engines of eight or nine litres. Cheap petrol helped to widen the gap with cars built in austere, post-war Europe, while the arrival of monocoque (non- chassis) construction meant it was impossible to adapt them for local conditions.

Americans also came to expect softer suspension, while the Europeans needed tight handling to get them around corners. Though there was a demand for chic European sports cars, as well as the most luxurious marques, the mainstream markets grew further apart. Yank tanks were a non-starter in Europe: they would not fit on its roads. There was one notable exception. The Volkswagen Beetle became a cult car in sixties America - a symbol that the driver was different.

The gap started to narrow with the oil crisis, which brought not only more expensive petrol but also a 55mph limit in the States. But it was the Japanese, not the Europeans, who benefited. They produced cars that were ugly, underpowered and uncomfortable - but they were cheap and refused to break down. By the late eighties, the Honda Accord was the top-selling car in the country.

European attempts to infiltrate the market were less successful. Volkswagen built a plant to make the Golf in the US. But the Rabbit, as it was called, could not match Japanese reliability and VW withdrew with its tail between its legs. Renault was even less successful with a European- designed car built by American Motors, while Rover won the foreign turkey award. Its Sterling (the Rover 800), though essentially the same as the Honda Legend, repeatedly came bottom of satisfaction tables the Honda topped. Again, reliability was the problem.

Nor were the Americans any more successful at selling in Europe. Even off-roaders such as the Jeep were too 'soft' for European tastes.

With the Mondeo, Ford is not trying to impose one style on all - but to use modern design and production techniques to give consumers what they want with different versions. The car will be available with suspension that causes mal de mer or makes the teeth rattle; steering will be light or heavy. Despite this, Professor Rhys says, 'there can still be 80 per cent design commonality'.

But Mr Trotman will be watching the US Mondeo's sales performance with anxiety. The Honda Accord has been sent flying from its pedestal by American cars. US car companies can now build cars that are almost as reliable as Japanese ones. Once American consumers discovered this, they fled back to the big floppy cars they seem, deep down, to prefer.

Not even the world's third biggest industrial company can make Europe's roads wider, or American petrol more expensive. Mr Trotman should not feel sanguine: the world car will not be an automatic success.

(Photographs omitted)