Oct. 25, 2012 at 11:18 AM ET
Its European losses likely to be significantly worse than originally forecast, Ford will close or sharply cut back operations at three of its European plants as part of a major restructuring meant to cope with the continent’s economic woes and the collapse of the European automotive market.
Ford now expects to lose $1.5 billion in Europe this year, a 50% increase over the already gloomy forecast it made just three months ago. With sales falling even faster than the overall market, Ford says it will cut capacity in Europe by 18%.
That will include the closure of a truck assembly plant in Southampton, England and a tooling and stamping facility in Dagenham. The maker earlier this week advised union leaders that it would close an assembly plant in Genk, Belgium.
All told, about 1,500 jobs will be lost in the UK – out of the current British total workforce of 11,500. Along with the closure in Belgium the total jobs lost to the restructuring could come to as much as 6,000, though it is possible the automaker might have to add some new employees at a factory in Valencia, Spain that will take over production of the Ford Mondeo and other models currently assembled in Genk.
“We recognize the impact our actions will have on many employees and their families in Europe, and we will work together with all stakeholders during this necessary transformation of our business,” said Ford’s president and CEO, Alan Mulally.
The former Boeing executive also oversaw a number of production cuts in the U.S. after moving to Detroit six years ago – just as the U.S. auto industry began to collapse under the weight of a faltering economy and the U.S. Big Three makers began fighting for their survival.
The situation is not much different in Europe right now. With southern nations including Spain, Greece and Italy crushed by sovereign debt problems the entire continent is in retrenchment, car sales plunging even in relatively prosperous Germany.
That has forced PSA Peugeot Citroen to seek a bailout from the French government and lay out plans to close an under-utilized assembly plant. Opel is restructuring, as well, and also plans to close one or more factories.
European automotive analysts generally agree that there are about eight more assembly plants than necessary to meet the continent’s needs – even accounting for exports. Until recently, however, makers seemed to be locked in a stalemate, no one wanting to make the first cut.
Ford expects the latest moves to reduce capacity in Europe – excluding Russia – by 18%, or about 355,000 units. The maker saw its sales tumble nearly 15% last month, even more than the overall market’s 10% decline.
Despite the worsening European losses, Mulally forecast Ford will remain in the black worldwide for 2012 – and should actually see third-quarter earnings rise a bit over the previous quarter.
The maker expects to shift production of the Transit currently produced in Southampton to a factory in Turkey also building the truck. It will add production of the Transit in the U.S. next year, as well, to replace the aging American Ford E-Van.
The planned closure of the British operations drew a sharp union rebuke, Len McCluskey, head of the Unite union said the move was handled “disgracefully,” considering that Ford had recently indicated the plant would get new work. He warned Unite would attempt to block the closures.
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