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Ford to shut car factories in Belgium, UK

Made in Spain: Production of the next generation Ford Mondeo will shift to Valencia, Spain as the global giant looks to close its Genk, Belgium plant.

More than 6000 jobs to go as European crisis forces Ford to announce plant closures

Ford logo25 Oct 2012

FORD intends to close its assembly plants in Genk, Belgium, and Southampton, England, as well its stamping and tooling operations in Dagenham, east of London, by the end of 2014, in a move that would cost at least 6200 jobs and address the company’s “crisis” in Europe.

The “transformation plan” for the US auto giant’s European manufacturing operations revealed this week is still to be thrashed out with unions, but Ford has already singled out new destinations for vehicles produced at Genk, which employs 4300 workers and has been operating at less than 70 per cent of capacity since last year.

The company plans to shift production of the next-generation Mondeo, S-Max and Galaxy to its Valencia plant in Spain, and transfer C-Max and Grand C-Max production to Saarlouis, Germany, better utilising these factories while Genk closes its doors.

Employing around 500 workers, the Southampton plant produces the Transit van and has been operating on a single shift since 2009. Production will now shift to Kocaeli, Turkey, in 2013.

The Dagenham stamping operations currently employs around 750 workers, although some of these are expected to be redeployed to the diesel engine plant on the same site, which will begin production of a new global 2.0-litre four-cylinder oil-burner in 2016.

 center imageLeft: Ford of Europe CEO Stephen Odell.

This engine will be developed at Ford’s technical centre in Dunton, Essex, whose 3500 workers are not affected by the cuts announced this week.

Taking into account the previously announced move to cut around 500 salaried and agency positions across Europe, Ford’s job cuts now run to at least 6200 employees, or about 13 per cent of Ford’s European workforce.

However, an indeterminate number of jobs in the supply chain in Europe and the UK – potentially running into the thousands – will also be lost as a result of the closures.

The planned actions will reduce Ford’s vehicle assembly capacity in Europe by 18 per cent, or 355,000 units, realising estimated gross annual savings of between $US450 and $500 million.

In July, Ford delivered a $US404 million pre-tax operating loss in Europe for the second quarter, sending its first-half loss to $553 million and prompting the company to tell shareholders it was expecting a full-year loss in Europe of more than $1 billion.

That figure has now blown out to more than $1.5 billion, with the company not expecting to return to profitability in Europe until at least mid-decade. It is targeting a long-term operating margin of six to eight per cent.

Ford Motor Co president and CEO Alan Mulally said this week that “using the same One Ford plan that led to strong profitability in North America, we will address the crisis in Europe with a laser focus on new products, a stronger brand and increased cost efficiency”.

“We recognise 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,” he said.

Ford of Europe chairman and CEO Stephen Odell added that “the proposed restructuring of our European manufacturing operations is a fundamental part of our plan to strengthen Ford’s business in Europe and to return to profitable growth”.

“The challenges facing the European car industry have become more structural than cyclical in nature and require decisive action,” he said.

“The actions we are proposing come after extensive review and consideration, and we fully recognise and accept Ford’s social responsibilities in this necessary transformation of our business.

“Going forward, we will as always continue to review all areas of the business and take appropriate actions to strengthen our business.” Ford said the plan would help address manufacturing overcapacity “stemming from a more than 20 per cent drop in total industry vehicle demand in Western Europe since 2007”, adding that new-vehicle sales in the region have reached a nearly 20-year low this year “and are expected to remain flat or fall further next year”.

Only last month, Mr Mulally underscored the company’s commitment to Europe and its desire to “grow our business profitability” with the unveiling of a raft of new models for Europe at an extravagant launch in Amsterdam, including the all-new Mondeo and Transit and heavily upgraded Fiesta.

He also committed to a new global Mustang sportscar for Europe, the UK and beyond.

“When you include Russia and other fast-growing markets, the total European vehicle market is expected to increase by 20 per cent over the next five years,” he said.

“That will represent about one of every four vehicles sold around the world. That’s why, as some may back off, Ford is increasing its investment in new products and technologies for Europe.

“Our aim is to be a leading player in all major segments.”

News of Ford’s plan to reduce its production capacity in Europe came as General Motors – which is also considering further plant closures in Europe after shutting down its factory in Antwerp, also in Belgium, in 2010 – outlined details of a new global product-sharing alliance with rival PSA Peugeot Citroen.

The alliance covers four vehicle projects: a compact multi-purpose van for Opel/Vauxhall and related compact crossover for Peugeot a small MPV for Opel/Vauxhall and Citroen an upgraded low-CO2 small-car segment platform “to feed Opel/Vauxhall’s and PSA’s next generation of cars in Europe and other regions” and a joint program for mid-size cars for Opel/Vauxhall and both Peugeot and Citroen.

The first vehicles on these common programs are due to be launched by the end of 2016.

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