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| Ford Closing 3 Plants in European Downsizing | |
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| 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 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 auto industry has been in decline in Europe, where sales have fallen to nearly a 20-year low and production capacity far outstrips current demand. | The auto industry has been in decline in Europe, where sales have fallen to nearly a 20-year low and production capacity far outstrips current demand. |
| By acting forcefully to address its problems there, Ford is setting a bold example for the rest of the industry, analysts said. Other companies will face pressure to make similar moves or explain to investors why they are continuing to employ too many workers at underused factories. | By acting forcefully to address its problems there, Ford is setting a bold example for the rest of the industry, analysts said. Other companies will face pressure to make similar moves or explain to investors why they are continuing to employ too many workers at underused factories. |
| Ford is following the same blueprint to downsize in Europe that it used to turn around its North American business several years ago. | Ford is following the same blueprint to downsize in Europe that it used to turn around its North American business several years ago. |
| The company said Thursday that it expected to lose more than $1.5 billion in Europe this year, up from an earlier estimate of at least $1 billion. Ford said the cuts would save about $500 million in annual costs, and help it return to profitability in the region by mid-decade. | The company said Thursday that it expected to lose more than $1.5 billion in Europe this year, up from an earlier estimate of at least $1 billion. Ford said the cuts would save about $500 million in annual costs, and help it return to profitability in the region by mid-decade. |
| Ford’s chief executive, Alan R. Mulally, said 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,” he said in a conference call with analysts and reporters. | Ford’s chief executive, Alan R. Mulally, said 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,” he 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 close two plants in Southampton and Dagenham in Britain next year. | 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 close two plants in Southampton and Dagenham in Britain 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 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 automakers that have either avoided plant closings altogether, or scheduled shutdowns for several years from now. | The moves contrast with those of other automakers that have either avoided plant closings altogether, or scheduled shutdowns for several years from now. |
| One industry analyst said other auto companies in Europe could follow Ford’s lead and step up their restructuring efforts. | One industry analyst said other auto companies in Europe could follow Ford’s lead and step up their restructuring efforts. |
| “There is something to be said for swallowing all of the bad medicine at one time,” said Michael Robinet, managing director of IHS Automotive Consulting in Northville, Mich. “I think other manufacturers have to acknowledge a real sense of urgency now.” | “There is something to be said for swallowing all of the bad medicine at one time,” said Michael Robinet, managing director of IHS Automotive Consulting in Northville, Mich. “I think other manufacturers have to acknowledge a real sense of urgency now.” |
| European auto sales have fallen to a projected 14 million vehicles this year, down from about 18 million in 2008. | 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. | 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.” | “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 euros ($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 euros ($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. Since 2007, only three European auto plants have been closed: a Saab Automobile plant in Trollhattan, Sweden, which closed after the company collapsed; a General Motors factory in Antwerp, Belgium; and a Fiat plant in Termini, Italy. | 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 closed: a Saab Automobile plant in Trollhattan, Sweden, which closed after the company collapsed; a General Motors factory in Antwerp, Belgium; and a Fiat plant in Termini, Italy. |
| AlixPartners, a consulting firm, said that Europe was drowning in car factories, with 26 percent overcapacity, equivalent to seven million units in a shrinking market. | AlixPartners, a consulting firm, said that Europe was drowning in car factories, with 26 percent overcapacity, equivalent to seven 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. |
| G.M. 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. | G.M. 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 would provide 7 billion euros 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 would provide 7 billion euros in state credit guarantees to Peugeot’s finance unit. |
| Ford said it is moving forward with its plans despite opposition from its unions. Ford’s sales in Europe have declined 12 percent this year, compared with about 7 percent for the industry in the region. | Ford said it is moving forward with its plans despite opposition from its unions. Ford’s sales in Europe have declined 12 percent this year, compared with about 7 percent for the industry in the region. |
| “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. 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. 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. |
| Ford said it expected to conclude the union consultation process within six months but declined to estimate the cost of the layoffs. | Ford said it expected to conclude the union consultation process within six months but declined to estimate the cost of the layoffs. |
| 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, 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, 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?” |