Ford into Simca

One evening last March, Francis Carlson ("Jack") Reith, general manager of Ford of France, went to an American Embassy dinner in Paris and found himself sitting next to Henri-Theodore Pigozzi, managing director of Simca. France's third biggest automaker (after Renault and CitrOeen). The two started talking shop, found that their ideas about France and about automobiles were remarkably similar. This week the meeting of their minds gave France a new industrial giant. French Ford stockholders voted to merge their company with Simca, making the new company second in size only to the nationalized Renault auto works. Pigozzi only 30 years ago was an obscure scrapiron exporter, became head of a company that Reith calls "comparable to General Motors in the French auto industry."

Hottest Thing in France. Italian-born Motorman Pigozzi, 56, has had a supercharged rise in the French auto business. He left the scrap business in 1926 to become the French distributor of Italy's Fiat cars. When he ran into import and tariff troubles, he took over a small assembly plant in France. In 1934, after assembling 32,000 Fiats, he bought out a bankrupt auto factory near Paris for $300,000 and organized Simca (Societe Industrielle de Mecanique et Carrosserie Automobile). Gradually he loosened his ties with Fiat, and today Simca, while it still uses Fiat designs on a royalty basis, is Pigozzi.

Simca's sleek little Aronde car is considered the hottest thing on the French market today. Priced at $1,870, it is a strong competitor in popularity to the $995 Renault Baby. Simca's passenger-car output in the first six months of 1954 totaled 40,655. Net profit last year was $1,570,000. Simca's exports have climbed from 4.77% of all French cars sold abroad in 1949 to 18% last year.

No Place to Grow. Ford of France had good reasons to merge with Simca. Until two years ago French Ford was in trouble. The first postwar model of the Vedette, its bestseller, was brought out in November 1948 with a 67-h.p. engine* that proved underpowered for the weight of the car. It sold well until the sellers' market disappeared. Then French Ford began to lose money. Jack Reith and a team of experts were sent over from Detroit early last year to put the company on its feet. They cut labor and materials costs, produced 20,338 passenger cars in 1953 and converted a $2,000,000 loss in 1952 to a profit of $1,000,000 last year. Reith has already rolled up earnings of $1,500,000 in the first seven months of 1954 and has completely redesigned the Vedette and cut its price. But Reith was also convinced that Ford of France had no place to grow. Said he: "There is a definite ceiling on the French market for a medium-priced car like the Vedette. We have 6% of the total French automobile production, and with this figure we hit the ceiling."

Target: 700 Cars a Day. Reith convinced U.S. Ford, which owns 55% of the French company's stock, that it would be best to merge with Simca. This gives Simca Ford's 60-acre plant at Poissy, eleven miles from Paris, with 4,500 workers and 3,000 machine tools, plus its own 55-acre plant at Nanterre, with 9,000 workers and 3,200 machines. Production next year is scheduled at 500 Aronde and 200 Vedette passenger cars a day, about 40% of the French market. The new Vedette so impressed foreign dealers that the Belgian distributor ordered 3,500 and the Swiss distributor 2,500 after the showing last week.

On the Paris Bourse and American Stock Exchange, stock traders looked with favor on the Simca-Ford combine. French Ford shares rose from 56-c- last January to $1.87 on the American Exchange, while Simca stock went from $34 to $54 a share on the Bourse. Stockholders of Ford of France will get one share of Simca for each 23 shares they now hold. They will be entitled to a dividend of $2.14 paid on Simca stock last May (i.e., about 9-c- a share on Ford stock) and will also have a U.S. market for their stock when Simca is listed on the American Exchange in New York.

*French car builders keep horsepower low because income-tax inspectors use it to estimate a citizen's wealth, call it a "signe exterieur de richesse."

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