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| Ford to Close 3 Plants to Stem European Losses | Ford to Close 3 Plants to Stem European Losses |
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| DETROIT — The Ford Motor Company has broken from the pack of troubled European automakers, announcing deep cuts that include shutting three factories in the region and eliminating 5,700 jobs. | |
| The moves by Ford were the most dramatic made so far among the struggling car companies in Europe, where sales have fallen to nearly a 20-year low and production capacity far outstrips current demand. | The moves by Ford were the most dramatic made so far among the struggling car companies in Europe, where sales have fallen to nearly a 20-year low and production capacity far outstrips current demand. |
| Ford, the second-largest American automaker, is following the same blueprint to downsize operations that it used to turn around its North American business. | Ford, the second-largest American automaker, is following the same blueprint to downsize operations that it used to turn around its North American business. |
| The company said Thursday that it now expected to lose more than $1.5 billion in Europe this year, up from an earlier estimate of at least $1 billion in losses. It said the cuts would save about $500 million in annual costs, and help Ford return to profitability in the region by mid-decade. | The company said Thursday that it now expected to lose more than $1.5 billion in Europe this year, up from an earlier estimate of at least $1 billion in losses. It said the cuts would save about $500 million in annual costs, and help Ford return to profitability in the region by mid-decade. |
| Ford’s chief executive, Alan R. Mulally, said Thursday that the automaker was working with its unions in Belgium and Britain to assist workers affected by the factory closings. | Ford’s chief executive, Alan R. Mulally, said Thursday that the automaker was working with its unions in Belgium and Britain to assist workers affected by the factory closings. |
| “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,” Mr. Mulally said in a conference call with analysts and reporters. | “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,” Mr. Mulally said in a conference call with analysts and reporters. |
| Ford had said Wednesday that it would close its assembly plant in Genk, Belgium, by the end of 2014. On Thursday, it said it would also shutter two plants in Southampton and Dagenham in England next year. The actions will reduce production capacity in Europe by 18 percent, or 355,000 vehicles. The company said it would eliminate 4,300 positions in Belgium and 1,400 in Britain. | Ford had said Wednesday that it would close its assembly plant in Genk, Belgium, by the end of 2014. On Thursday, it said it would also shutter two plants in Southampton and Dagenham in England next year. The actions will reduce production capacity in Europe by 18 percent, or 355,000 vehicles. The company said it would eliminate 4,300 positions in Belgium and 1,400 in Britain. |
| The moves contrast with those of other auto companies that have either avoided plant closings altogether, or scheduled shutdowns several years down the road. | The moves contrast with those of other auto companies that have either avoided plant closings altogether, or scheduled shutdowns several years down the road. |
| European auto sales have fallen to a projected 14 million vehicles this year, down from about 18 million in 2008. Ford’s European chief, Stephen Odell, said the market may drop even further next year, making production adjustments essential for a long-term turnaround on the continent. | |
| “It’s fairly evident there is surplus capacity across most manufacturers,” Mr. Odell said. “At some point it has to be addressed.” | |
| Renault underscored the gloom, saying Thursday that its third-quarter revenue fell 13.3 percent from a year earlier, to €8.45 billion, or $11 billion. It warned that “the continuous deterioration of the European market remains a source of concern.” | Renault underscored the gloom, saying Thursday that its third-quarter revenue fell 13.3 percent from a year earlier, to €8.45 billion, or $11 billion. It warned that “the continuous deterioration of the European market remains a source of concern.” |
| Several automakers have pledged to reduce capacity in Europe, but actually closing plants has proved difficult. | Several automakers have pledged to reduce capacity in Europe, but actually closing plants has proved difficult. |
| Since 2007, only three European auto plants have been shuttered: a Saab Automobile plant in Trollhattan, Sweden, which closed because the company collapsed; a General Motors factory in Antwerp, Belgium; and a Fiat plant in Termini, Italy. | Since 2007, only three European auto plants have been shuttered: a Saab Automobile plant in Trollhattan, Sweden, which closed because the company collapsed; a General Motors factory in Antwerp, Belgium; and a Fiat plant in Termini, Italy. |
| Alix Partners, a consulting firm, said that Europe was drowning in car factories, with 26 percent overcapacity, equivalent to 7 million units in a shrinking market. | Alix Partners, a consulting firm, said that Europe was drowning in car factories, with 26 percent overcapacity, equivalent to 7 million units in a shrinking market. |
| Only 54 percent of Italian auto manufacturing capacity is being used, Alix estimated, and just 60 percent of French capacity. That contrasts with 89 percent capacity usage in Germany, where most of the region’s strongest carmakers are based, and about 90 percent capacity usage in the United States. | Only 54 percent of Italian auto manufacturing capacity is being used, Alix estimated, and just 60 percent of French capacity. That contrasts with 89 percent capacity usage in Germany, where most of the region’s strongest carmakers are based, and about 90 percent capacity usage in the United States. |
| General Motors has been negotiating with union leaders to close its large Opel plant in Bochum, Germany, and has said it intends to end production there by 2016. | General Motors has been negotiating with union leaders to close its large Opel plant in Bochum, Germany, and has said it intends to end production there by 2016. |
| The French automaker PSA Peugeot Citroën had announced plans in July to close a plant in Aulnay-sous-Bois, near Paris, and to lay off 8,000 workers in France. But the company may find it politically challenging to proceed with those cuts after the French government announced on Wednesday that it will provide €7 billion, or $9 billion, in state credit guarantees to Peugeot’s finance unit. | The French automaker PSA Peugeot Citroën had announced plans in July to close a plant in Aulnay-sous-Bois, near Paris, and to lay off 8,000 workers in France. But the company may find it politically challenging to proceed with those cuts after the French government announced on Wednesday that it will provide €7 billion, or $9 billion, in state credit guarantees to Peugeot’s finance unit. |
| Ford said it is moving forward with its plans despite opposition from its unions. | Ford said it is moving forward with its plans despite opposition from its unions. |
| “We are determined these are measures we have to take,” said Mr. Odell. | “We are determined these are measures we have to take,” said Mr. Odell. |
| The company has entered into a “consultation process” with its union in Belgium on compensating employees who will lose their jobs there. Ford wants to move production of cars like the midsize Mondeo from the Genk facility to a factory in Spain. | The company has entered into a “consultation process” with its union in Belgium on compensating employees who will lose their jobs there. Ford wants to move production of cars like the midsize Mondeo from the Genk facility to a factory in Spain. |
| In a statement released late Wednesday, after Ford told workers in Belgium about the planned plant closure, union officials expressed outrage at Ford’s moves, saying the company reversed an earlier promise to build the new Mondeo model in Genk. | In a statement released late Wednesday, after Ford told workers in Belgium about the planned plant closure, union officials expressed outrage at Ford’s moves, saying the company reversed an earlier promise to build the new Mondeo model in Genk. |
| “The consequences will be catastrophic,” said the statement by the union, ACV-CSC Metea. “This is criminal.” | “The consequences will be catastrophic,” said the statement by the union, ACV-CSC Metea. “This is criminal.” |
| In Britain, Roger Maddison, national officer for the automotive industry in the British union Unite, told the BBC that the announcements had taken workers by surprise. “We were absolutely gutted here,” he said. | In Britain, Roger Maddison, national officer for the automotive industry in the British union Unite, told the BBC that the announcements had taken workers by surprise. “We were absolutely gutted here,” he said. |
| “It’s a world-class facility with a world-class work force,” Mr. Maddison said, referring to the Southampton plant, “and the reason being given clearly is they can make these bits in Russia cheaper than they can make them here in the U.K.” | |
| Ford said it expected to conclude the union consultation process within six months. Company officials declined to estimate the cost of compensating laid-off workers. | |
| Auto analysts hailed Ford’s moves as a necessary step to better balance its production with shrinking demand across the region. One analyst, Brian Johnson of Barclays Capital, said the company was currently using only 66 percent of its production capacity. | Auto analysts hailed Ford’s moves as a necessary step to better balance its production with shrinking demand across the region. One analyst, Brian Johnson of Barclays Capital, said the company was currently using only 66 percent of its production capacity. |
| Investors will be watching closely to see whether Ford’s moves will set off similar cutbacks at other car companies. | Investors will be watching closely to see whether Ford’s moves will set off similar cutbacks at other car companies. |
| “Ford is demonstrating the vision and industrial courage to make tough decisions that will pay off long term,” Adam Jonas, an analyst with Morgan Stanley, said in a research note. “The biggest question is, can others follow in Ford’s footsteps?” | “Ford is demonstrating the vision and industrial courage to make tough decisions that will pay off long term,” Adam Jonas, an analyst with Morgan Stanley, said in a research note. “The biggest question is, can others follow in Ford’s footsteps?” |
David Jolly reported from Paris. | David Jolly reported from Paris. |