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Ford to close 2 U.K. plants, says 2012 European losses will top $1.5B


Ford to close 2 U.K. plants, says 2012 European losses will top $1.5B

Ford Motor Co. said it will reduce production capacity in Europe by 18 percent, or 355,000 vehicles, and cut 6,200 jobs to bring its European operations back to profitability.

The U.S. automaker said it will close three facilities in Europe, among other restructuring efforts that will save about $450 million to $500 million in annual costs. It warned its European operations would lose in excess of $1.5 billion for 2012. The previous forecast was for losses of at least $1 billion.

The automaker today said it plans to close two U.K. facilities next year: An assembly plant in Southhampton, which makes vans, and its stamping and tooling operations in Dagenham. The moves will mean 1,400 job cuts.

The move follows Wednesday's announcement that Ford plans to end production at an assembly plant in Genk, Belgium, by the end of 2014 -- cutting 4,300 jobs.

The automaker already cut 500 salaried jobs in Europe through a voluntary program.

Still profitable

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 and that over the long term, it was aiming for an operating margin of 6-8 percent in Europe.

Ford posted net income of $1.04 billion in the second quarter, down from $2.40 billion during the same quarter last year. Ford said it lost $400 million in Europe during the second quarter.

Ford shares finished the day up 21 cents or 2.1 percent on the New York Stock Exchange.

"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.

Analysts said the speed of the announcements showed Ford was tackling the problem of over-capacity 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," London-based UBS analyst Philippe Houchois said.

General Motors Co. has said it would shut a factory in Belgium in 2016 and will update its restructuring plan before the end of the month.

Center of excellence

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 commercial van, 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.

Ford plans to move production of the next-generation Mondeo mid-sized car, and S-Max and Galaxy minivans, to its plant in Valencia, Spain. All three models are nearing the end of their current life cycles. The new Mondeo will now be launched in late 2014, Ford said.

Ford's engine plant at Dagenham in Essex escaped the cuts and is likely to see growth plans. A source close to Ford had said earlier it would unveil plans to produce new diesel engines in Dagenham, which employs some 4,000 staff making engines and panels.

Tough decisions

Analysts at Morgan Stanley believe Ford is "demonstrating the vision and industrial courage" to make tough decisions that will pay off long term. The U.S. autos giant employs 11,400 at British sites which also include Halewood, near Liverpool, and Bridgend in South Wales.

The Swaythling factory at Southampton, on England's south coast, has built about 6 million Ford 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.

Securing increased production by foreign-owned car makers based in Britain had been one of the few bright spots in Britain's drive to boost manufacturing.

Earlier this year, GM opted to build the next generation of its Astra compact in Britain, instead of at its German plant in Bochum. Japan's Nissan, Toyota and Honda as well as Tata Motors' Jaguar Land Rover have all committed to production in Britain in recent months.

Christoph Stuermer, a Frankfurt-based 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

Read more: autonews.com


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