Yesterday, it was revealed that Ford had begun an inquiry into Sir Nick's decision to channel all of the motor company's advertising and marketing services via WPP, which currently handles 80% of the car giant's advertising.
The review will result in tighter spending controls on Ford's purchasing. In a letter sent yesterday by Sir Nick to senior executives, he said: "The recommendation is that the proposed arrangements with WPP be reviewed and represented internally to ensure that the business benefits are achieved in the context of full compliance with the company's single-source supplier policy and overall company purchasing procedures."
The decision not to follow through with what has become known as Sir Nick's "WPP directive" will come as a severe blow to the British executive who is number two to Ford chairman and CEO Bill Ford Jr. It will no doubt weaken Sir Nick's position within the troubled motor group.
The subject is set to be the discussion topic at a board meeting on Thursday where Ford's purchasing policies will be discussed.
According to a Reuters report, the incident will stoke tensions between Sir Nick and some senior executives, namely David Thursfield who reports to Sir Nick and is the recently appointed head of global purchasing.
Jim Bright, a spokesman for Ford North America, said: "The incident is now behind us. Case closed."
WPP shares fell on the news yesterday, falling 3.27% to 330.75p, but they were up somewhat this morning at 337.5p.
Ford is the advertising firm's biggest client, accounting for 7% of WPP's revenues of £3.91bn. WPP agencies, including Young & Rubicam in the US and Ogilvy & Mather in Europe, work on Ford accounts including Lincoln Mercury, Jaguar Cars, Volvo and Land Rover. J Walter Thompson handles the main Ford advertising account, worth $1.4bn (£875m).
In July, WPP extended its grip on Ford's global advertising business as the motor giant shifted its $50m US advertising account for Land Rover out of Omnicom's GSD&M and into Young & Rubicam.
The investigation into the WPP directive began last month examined whether Sir Nick violated Ford's purchasing policies with the decision to allow WPP companies to handle all advertising and marketing activity.
The inquiry was headed by Ford's head of human resources Joe Laymon, and followed a one-page letter sent to executives by Sir Nick ordering the consolidation of Ford's marketing and advertising business into WPP.
The WPP directive was issued following a meeting in New York between Sir Nick and WPP executives, including CEO Sir Martin Sorrell. According to the Detroit News, Sir Nick said the directive would not only protect WPP's current business with Ford, but also could generate millions of dollars in new revenues for WPP.
The directive makes it more difficult for rival groups to win Ford business. The investigation centres on whether Sir Nick's directive violates company policies governing single-source suppliers.
The inquiry also examined Sir Nick's ties to Sir Martin. Sir Nick's son, James, works for WPP as an account manager at Y&R New York -- but not on the Ford account.
"Our review looked at the [decision to opt for] single status source and whether it conformed to the companies' purchasing procedures, and took the decision to rescind the single source status for WPP," Bright said.
He added: "Marketing will continue to look at the idea. There is a group of marketing senior executives and people in finance who are having another look at it, to see if it is a wise decision from a cost standpoint."
Sir Nick, who joined Ford in 1966, has been a key player in the automotive firm's $9bn restructuring.
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