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Ford to Cut 5,700 Jobs With Three European Factory Closings

Thursday, 25 Oct 2012 08:26 AM

Ford Motor Co. will shut three European plants, its first factory closings in the region in a decade, and cut about 5,700 jobs to stem losses that the company predicts will exceed $1 billion in 2012.

A factory in Southampton, England, that makes chassis cabs for the Transit van and a stamping plant in Dagenham, on the outskirts of London, will close as early as next July, people familiar with the situation said, asking not to be identified revealing internal plans. A 48-year-old plant in Genk, Belgium, that builds cars and minivans will close by the end of 2014, Dearborn, Michigan-based Ford said yesterday.

The European sovereign-debt crisis is set to lead to the biggest annual drop in car sales in 19 years. Manufacturers such as PSA Peugeot Citroen, General Motors Co.’s Opel brand and Fiat SpA have responded by shutting or outlining plans to close factories in an effort to restore earnings. Ford Chief Executive Officer Alan Mulally said last month that the European industry needs to “size to the real demand” to become profitable.

‘Subscale’ Capacity

The Southampton factory built fewer than 30,000 Transits last year, while “about 200,000 is the industry standard for an efficient plant,” said Brian Johnson, a Chicago-based analyst at Barclays with an overweight recommendation on Ford. The carmaker’s other European sites have capacity to make 230,000 vehicles a year, so Southampton is “clearly subscale from that standpoint.”

The cutback at Southampton, which according to Ford’s website employs more than 530 workers, will eliminate Ford’s last British vehicle-making operations since it started making cars in the country in 1911.

A separate facility in Dagenham manufactures engines. The town was the site of Ford’s most recent car-plant closing in Europe, when the U.S. company shuttered an assembly line for the Fiesta compact in 2002, getting rid of 2,000 jobs.

The Genk factory makes the Mondeo mid-sized sedan, S-Max wagon and Galaxy minivan. Production of those models will shift to Ford’s plant in Valencia, Spain, as the carmaker brings out new versions of the vehicles, it said yesterday. The entire 4,340-employee workforce at Genk will be cut, Belgian union officials said.

‘Better Trajectory’

“This was some low-hanging fruit that not only Ford, but other manufacturers are having to take a hard look at,” said Michael Robinet, managing director of consultant IHS Automotive in Northville, Michigan. “This certainly goes a long way toward putting Ford on a better trajectory with respect to future capacity utilization.”

Ford shares gained 1.7 percent to $10.17 at the close yesterday in New York. The stock has slid 5.5 percent this year.

The company’s other western European operations include its regional headquarters and car- and component-manufacturing sites in Cologne, Germany; a vehicle plant in Saarlouis, Germany; and sites that make transmissions in Bordeaux, France, and engines in Bridgend, Wales. A joint venture with the Getrag Group in the Liverpool, England, suburb of Halewood produces transmissions.

Ford’s Turkish joint venture with Koc Holding AS would probably be the beneficiary of the Southampton plant’s shutdown, according to Barclays analyst Johnson. The Ford Otosan business 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, he said.

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Ford Motor Co. will shut three European plants, its first factory closings in the region in a decade, and cut about 5,700 jobs to stem losses that the company predicts will exceed $1 billion in 2012. A factory in Southampton, England, that makes chassis cabs for the Transit...
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2012-26-25
Thursday, 25 Oct 2012 08:26 AM
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