News Column

Ford: Restructuring in Europe to Cut Jobs, Vehicle Capacity

Oct. 25, 2012

Alisa Priddle

Ford's restructuring plan for Europe will cut 5,700 jobs at three facilities in the U.K. and Belgium in a move designed to return the automaker's money-losing operations in Europe to profitability by 2015.

The actions will cut capacity by 18% or 355,000 vehicles a year which should result in annual savings of $450 million to $500 million, the company said today.

The target is a long-term operating margin of 6-8%.

But not without immediate pain. Losses in Europe are now expected to exceed $1.5 billion, substantially worse than the $1 billion in losses forecast earlier this year.

More details will be revealed when Ford reports its third-quarter earnings on Tuesday.

On a more positive note, Ford said total third-quarter pre-tax profit and earnings per share are better than second-quarter results, despite the huge hit from Europe. North America has been the big profit generator for the Dearborn-based automaker.

All automakers are struggling with slow sales in Europe that are at a 20-year low. Overcapacity has created a cutthroat environment where heavy discounts are needed to boost sales. Politics, labor laws and a more socialist sentiment have hampered efforts to close plants in many European countries.

Incentive spending and the cost of running underutilized plants is causing huge losses.

Ford is trimming its ranks with the decision to close its assembly plant in Genk, Belgium, by the end of 2014, eliminating 4,300 jobs. Production of the next-generation Ford Mondeo, S-MAX and Galaxy would shift to Ford's Valencia plant in Spain where wages are lower. To make room, the C-Max and Grand C-Max could move from Valencia to Saarlouis, Germany, in 2014.

In the U.K., Ford plans to close the Transit commercial van plant in Southampton as well as a stamping and tooling operation in Dagenham next year.

Source: (c)2012 the Detroit Free Press Distributed by MCT Information Services

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