Ford Motor Co announced a series of job cuts and plant closures in a bid to halt regional losses in Europe. If all goes as planned, Ford will be saving $450 million to $500 million a year by cutting 6,200 jobs and reducing its European production capacity by 18%. Chief Executive Alan Mulally said, “We are really trying to reflect the reality. That’s why we need to move decisively now.”
Ford announced that in mid-2013, it would close its Southampton van factory and an associated stamping facility in Dagenham. The plant closures would eliminate 1,400 jobs and end vehicle manufacturing by Ford in Britain. The announcement that the Southampton plant was closing was the fourth European vehicle plant closure announced this year.
Ford also announced that it would close a major car plant in Genk, Belgium, by late 2014. Chief Financial Officer Bob Shanks said, “What we’ll continue to do is look at the reality that we’re facing, just like we do every day, all the time. We’ll respond as appropriate to strengthen the business.”
Ford’s plant closures will not address the industry’s broader problems. Carmakers have been struggling to close underused factories and eliminate surplus jobs that are fueling their losses in Europe. Vehicle sales in Europe are expected to hover at or below 14 million this year and next. Production capacity in Europe outstrips current demand by 9 million vehicles.
The company expects its losses in Europe to surpass $3 billion over the next two years. Ford expects to lose more than $1.5 billion in the region this year. The company expects to record a similar loss next year, with European car sales expected to be on par with 2012 levels. Ford lost $27 million in the region last year. Stephen Odell, Ford’s head of Europe, said, “If you had asked me two years ago, I would have said that’s the trough. It’s difficult to predict. It does feel like we’re running at a very low level.”