Ford will close two production sites in UK
Ford Motor Co. said it will close two facilities in the UK as it seeks to return its European operations to profitability amid the region's slumping market.
The company will close its Transit van assembly plant in Southampton, southern England, and stamping and tooling operations in Dagenham, near London, next year, Ford said today in a statement.
The automaker warned its European operations will lose more than $1.5 billion for 2012. The previous forecast was for losses of at least $1 billion.
Ford said it aims to return to profit in Europe by 2015, helped by growing aggressively in expanding markets such as Russia and Turkey.
The UK closures will precede the 2014 shutdown of Ford's car plant in Genk, Belgium, which the automaker announced on Wednesday.
Ford said it will reduce production capacity in Europe by 18 percent, or 355,000 vehicles, as part of a wide-ranging restructuring program. The related gross annual savings would be between $450 million and $500 million, the company said.
"The European market holds potential for profitable growth if we accelerate product development and move decisively to address our costs and overcapacity," said Ford of Europe CEO Stephen Odell in a statement.
Ford said despite the loss in Europe, total company pre-tax profit, excluding special items, was better in the third quarter than in the second. The company is targeting a long-term operating margin of 6-8 percent for Europe, driven by a more efficient manufacturing footprint, higher industry volume and market share, growth in emerging markets and a richer product mix.
Ford's UK operations will remain a center of excellence for powertrain development and production, including a new low-CO2, 2.0-liter diesel engine that will power future Ford vehicles starting 2016.
The automaker said it will also invest more in its engine plant in Bridgend, Wales.
Production of the Transit currently carried out at Southampton will move to Ford Otosan in Kocaeli, Turkey. Ford Otosan has capacity to manufacture 320,000 Transits, following an expansion of capacity this year, while it's only likely to make 250,000 of the vans by year-end, Brian Johnson, a Chicago-based analyst at Barclay said. Southampton built fewer than 30,000 Transits last year, while "about 200,000 is the industry standard for an efficient plant," he said.
The Southampton factory has built about 6 million Transit vans in 45 years but in 2009 the workforce was cut to around 500 from roughly 1,000 when the plant moved to a one-shift operation.
The restructuring will cut 6,200 jobs, about 13 percent of Ford's European workforce, including 4,300 jobs in Genk and 1,400 jobs in the UK.
Mondeo launch delay
Ford plans to move production of the next-generation Mondeo mid-sized car, and S-Max and Galaxy minivans, from Genk to its plant in Valencia, Spain. All three models are nearing the end of their current life cycles. The new Mondeo will now launch in late 2014, Ford said. The timing is a year later than originally planned.
Mondeo sales in Europe fell14 percent to 50,104 in the first eight months, according to JATO Dynamics. S-Max sales fell 9 percent to 29,354 while Galaxy volume was down 3.8 percent to 17,614.
Analysts said the speed of the announcements showed Ford was tackling the problem of overcapacity in Europe head-on, while other companies appeared to dither.
"With GM Europe you always wonder what's going on - it looks like they are still bogged down in deciding what to do," UBS analyst Philippe Houchois said.
Christoph Stuermer, an analyst at IHS Automotive, said Ford would need to go further to consolidate its core products. "In my expectation, one other passenger-car factory will have to close," he said.
Reuters contributed to this report