Ford: Plant Closings to Restore European Profit

Ford Motor Co. intends to shutter three factories in Europe, shrinking its production capacity in the region by 355,000 vehicles, or 18%, and eliminating 5,700 jobs.

The company said on Tuesday it would close its assembly plant in Genk, Belgium, by the end of 2014, shedding 4,300 employees.

A day later Ford confirmed it would end production at two facilities in England next year: a Transit chassis-cab plant in Southampton and stamping and tooling operations in Dagenham. The two closings will cut 1,400 positions in the U.K.

The carmaker has already eliminated 500 salaried jobs in Europe through a voluntary retirement program.

Ford says the closings will save it $450 million-$500 million (€348 million-€386 million) annually and boost its capacity utilization in the region to more than 80% from 65% now. The shutdowns and new vehicle introductions will enable its European operations to return to profitability by 2015, according to the company.

CEO Alan Mulally says the restructuring is an effort to "reflect the reality" of the region's downturn. Analysts credit Ford for moving more decisively to slash excess European capacity than its rivals.

In the U.K., the company aims to redeploy some of the displaced workers to other facilities and offer severance packages to the rest. Ford plans to transfer chassis-cab work to its joint-venture factory in Kocaeli, Turkey.

Dagenham will continue to be a major center for powertrain development and production, according to the company. It notes that the Ford technical center in Dunton, England, is developing a 2.0-liter diesel that will go into in production at Dagenham in 2016.

U.K.'s Unite union vows to fight the job losses. Belgian law requires four to six months of negotiations between Ford and its unions about terms of the closing.

The company's sales in Europe have dropped 12% this year, and it says the region's car market is likely to decline in 2013. Ford, which warned previously that its European operations would lose more than $1 billion (€766 million) this year, now expects a 2012 loss of more than $1.5 billion (€1.2 billion) and a similar deficit in 2013.