Ford to close European plants, 2012 losses likely to exceed US$1.5 billion

By David Zalstein | October 26th, 2012

FIND DEALS

Ford has announced plans to close three European plants as it attempts to achieve profitable growth within its European operations, against projected losses for 2012 set to exceed US$1.5 billion ($1.45 billion).

The Ford plan involves the closure of two UK facilities next year – an assembly plant in Southampton and stamping and tooling operations in Dagenham – and a major assembly plant in Genk, Belgium, by the end of 2014.

The closures will impact 5700 currently employed workers – 4300 employees from Genk and 1400 from the two UK plants.

Ford says the closures will reduce installed vehicle assembly capacity (excluding Russia), by 18 per cent or 355,000 units, for a gross annual saving of US$450 million ($435 million) to US$500 million ($483 million).

Ford president and CEO Alan Mulally said the aim was to mirror the success of the ‘One Ford’ scheme in North America by addressing the European crisis with a 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,” Mulally said.

New vehicle sales in Western Europe have reached a near 20-year low in 2012, with Ford expecting these figures to remain flat or fall further next year.

In July, Ford Europe returned a loss for the second quarter of 2012 totaling US$404 million ($390 million).

Despite recent actions including reducing line speed, short-time working days, lay-off days and a reduction of temporary employment in several plants, Ford last month announced plans to introduce 15 global vehicles in Europe within five years.

Ford isn’t the only car maker struggling in the current European financial climate, though, with both PSA Peugeot Citroen and General Motors Europe experiencing challenges of their own.

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James W

Here’s Ford Australia’s best chance to score Mondeo production for our region and at least give Ford Australia the best chance at giving us better supply, not only for our market, but for other markets in the Asian and African regions too. This will add jobs and boost production levels and give Ford Australia an answer to a 4 cylinder model, other than the Falcon EcoBoost.

Would also give Ford Australia the best chance to take a lead in any development in an SUV designed off the Mondeo platform, in case the Falcon and Territory get the axe! At least then they’ll have the Mondeo and a Mondeo SUV to fall back on.
- Amlohac
  
  They want to save money, closing factories in europe and moving production over here wont save a whole lot.
- JooberJCW
  
  Australia is probably going to be more expensive that europe with the economic crisis and strong australian dollar, plus over there governments would try anything desperate to not worsen things as they already are.
  
  I’d say they’ll use developing nations as a base for manufacturing going forward… perhaps also expand the Thai plant.
  - Zaccy16
    
    yeah they like thailand ford! cheap labour, they will definatly expand the thai plant, its a shame there closing the Belgium factory because the build quality of the focus and fiesta when it was built there was much much much better the the low grade thai plant
    - YoLex
      
      Focus and Fiesta were made in Germany before production moving to Thailand, which explains the better quality
- Andrew M
  
  If there is one vehicle that Ford Aus should have tried to get production of it was the Ranger.
  Even local sales alone could have been enough to sustain it. They should have tried to make the Ranger the back bone of Ford Aus production
  - twinspinnerl
    
    You are absolutely right ……but they make more profit building in Thailand they are pushing barrow loads of money too the bank from the sale of every Ranger
  - jeery
    
    The Ranger is a Mazda. And its not Euro 5 compliant either (which comes in next year).
    
    Ford has already dumped it in North America.
- Schah7
  
  Great ideas there “James W” but in the meantime Alan Mulally saved FORD USA & I’d say at a rough guess he knows what to do to save FORD EUROPE.
  Ford has designed & produced some amazing small/medium economical cars/engines [so important in today climate] BUT he’s forgotten about the “soul” vehicles like RWD v8[Lincoln] & a Ford version of Viper/Corvette. They both went BROKE but they can still produce,design & market them to the customers. Come on FORD how about it. Hu.
Cbf

Production costs are lower in Thailand
G

All of Ford’s good development comes out of Europe. Sure Ford AU does some good work but not much seems to be applied to Ford globally.
- JooberJCW
  
  You can still have design and R&D divisions in Europe, but manufacturing can be anywhere in the globe practically…
  - Huwtm
    
    Yeah I don’t know that it makes a lot of difference where it’s built, some cars are built 100% by robots, they just need to tinker a bit with the programming to get the quality up. In theory the Thai plant would be the most modern, being newest. I’ve heard of at least one manufacturer who has moved production back to Japan, which is interesting. This one platform thing i think is an excuse, Ford have been doing that for years, eg, Mondeo/Mazda6/Fusion, Fiesta/festiva/Mazda2, the outstanding ones are the Falcon, and Crown Victoria.
    - Dave W
      
      I’m curious to know which manufacturer went back to Japan and the reason why.
      
      I don’t think there’s any car that is built 100% by robots. The interior most certainly won’t be. Same with the engine compartment innards.
      
      It’s those hand assembled parts that make the difference. I have to admit that I feel more confident buying a car if I know it was built in Japan rather than Thailand, or even Australia. Japanese by nature are meticulous people and it shows in their workmanship.
      
      Generally, they also have excellent work ethics, so good it’s detrimental to their own personal and social life. And I don’t think they have unions there.
      
      So yeah, where a car was built is important to me.
      - Huwtm
        
        Yes important to me too. It was reported on a TV motoring show, that Mazda had moved production of the 2 back. The 100% statement was based on a comment in a megafactory doco, so may be in accurate.
      - Noddy of Toyland
        
        No that is true, and when they did it they dropped the sedan and I think the three door, or brought the three door in, one of those.
    - Doctor
      
      Ford’s CV is no more so its just the Falcoon/Territory orphans left.
- Andrew M
  
  What about the Ranger? Fiesta? and there was something else too that was applied Globally, just slips my mind
  - Andrew M
    
    All good engineering in general either comes from Europe or Australia in my opinion, and not just in the Automotive world
Julia

Tony Abbott was in Indoneeezia recently, that’s somewhere near Europe, so it’s his fault.
- Sumpguard
  
  I LoL’ed
F1orce

EU woes can be blamed on Germany and their backwards policies & deep actions of self interest. i.e Neglect

They can have fun considering over 60% of their precious net exports are to fellow EU nations.
- tiddy
  
  Interesting…care to expand on the Neglect?.
  
  To be honest, I’m really surprised that so far, no one has blamed these closures on Ford AU, just like they blamed Ford AU for the delay in getting the next Mondeo here, when it was completely out of their control.
  
  Still you never let facts get in the way of a good/bad story, just ask ANY policitican.
  - Julia
    
    The Mondeo thingy was HIS fault too!
    - Ezz
      
      Yes – his populist one liners can have an effect on confidence in some sectors, especially since it is expected that he will become our next PM. My hope that when he is trashing the Aussie car industry, he is merely preaching to the converted / Alan Jones listeners and not investors.
- Luke Brinsmead
  
  If it weren’t for Germany bringing foreign money into Europe from exporting good cars, the euro would be in even worse condition.
- Schah7
  
  Hello… Germany is the strongest & virtually the only country in Europe holding the whole Euro Dollar afloat. If it wasn’t for them[Germany] Europe would be stuffed.!
  - Golfmother
    
    So true , GM are working towards giving opel to PSA , you will see more closures in the future .
- Huwtm
  
  I think you’d find it was the Mediterranean member states which have brought things undone for the EU. that and the fact that all economies in so many separate countries aren’t running at the same speed.
- Guest9
  
  Are you a Greek socialist by any chance?
  You seem to forget that even before the Euro, Germany was in the top 2 or 3 for world exports. Nothings changed. The Germans work hard & smart and save their money.
  That’s the formula for success. The Euro nations that are in debt just don’t subscribe to that formula…and so they’ve reaped what they’ve sowed.
  - F1orce
    
    Hahahahaaa why are you pointing fingers? Let’s all assume every nation just exports and form a positive (+) Current Account Balance.
    
    Who’s gonna consume? To export someone has to be willing to import. You and your stupid thoughts obviously hadn’t thought of that..
    
    Why has Germany refused to issue of the Common Euro Bond? Which would of prevented this whole mess?
    
    And did you read that over 60% of German exports are to EU nations. Without EU Germany will lose.
    
    I guess German’s are the masters of losers, they lost wars they started such as WW1 & WW2.
    
    And now since they cannot use actual brutality, Germany is using political brutality.
    
    Germany what losers
    
    Besides i’m no Greek or anything.
Luke Brinsmead

Poor Ford.

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Ford to close European plants, 2012 losses likely to exceed US$1.5 billion

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