Ford Motor Company announced it will close three European facilities, relocating production of key products for a more efficient manufacturing footprint, significantly improved plant utilization and work force reductions.
The planned actions will reduce installed vehicle assembly capacity, excluding Russia, by 18 percent or 355,000 units. The related gross annual savings total will be $450 million to $500 million.
The facility actions include the planned closure of two UK facilities next year – Ford’s assembly plant in Southampton, and stamping and tooling operations in Dagenham. Ford also plans to end production at a major assembly plant in Genk, Belgium, by the end of 2014, pending confirmation following completion of a consultation process with employee representatives. These three facilities currently employ approximately 5,700 hourly and salaried employees.
“Using the same One Ford plan that led to strong profitability in North America, we will address the crisis in Europe with a laser focus on new products, a stronger brand and increased cost efficiency,” said Alan Mulally, Ford president and CEO. “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.”
Ford last month detailed an aggressive product acceleration in Europe, leveraging the company’s One Ford global portfolio. Specific product announcements include:
- Plans to introduce 15 global vehicles in Europe within five years as Europe increasingly benefits from the One Ford global product portfolio
- Expansion in the growing European SUV segment, starting with the all-new Kuga later this year; followed by the EcoSport small SUV within 18 months; and later, Edge, a larger utility vehicle that is popular in other regions
- A complete redesign and expansion of its commercial vehicle range over the next two years, including new Transit, Transit Custom, Transit Connect and Transit Courier – plus a family of new Tourneo people carriers
“The European market holds potential for profitable growth if we accelerate product development and move decisively to address our costs and overcapacity,” said Stephen Odell, chairman and CEO, Ford of Europe. “Even in today’s environment, we are increasing the introduction of new products, leveraging our One Ford global strengths.”
Building on this product acceleration, Ford will strengthen its brand in Europe, emphasizing class-leading quality, fuel efficiency, safety, smart technology and value. These actions include:
- Increasing investment in exciting new brand-enhancing products valued by retail and commercial fleet customers
- Accelerating product development to target growth opportunities in segments such as large cars, sport utilities, and commercial vehicles
- Using new products to deliver healthier business channel mix, including growing retail and commercial fleet business
- Leveraging new series mix opportunities
- Strengthening dealer network profitability and customer retail experience; and strategically reducing dealer stock levels for the benefit of Ford, its dealers and customers
- Growing aggressively in expanding markets of Europe, such as Russia and Turkey
Ford’s announcements this week address manufacturing overcapacity stemming from the more than 20 percent drop in total industry vehicle demand across Western Europe since 2007. New vehicle sales in the region have reached a nearly 20-year low this year and are expected to remain flat or fall further next year. The plan, which would significantly improve plant utilization in Europe, includes the following:
- Ford said its UK operations will remain a center of excellence for powertrain development and production. This includes plans to add a new next-generation, low-CO2, 2.0-litre diesel engine in Dagenham that will power future Ford vehicles from 2016. The engine will be developed at Ford’s Technical Centre in Dunton, Essex, one of the largest automotive R&D centers in the UK. Additional investment also is expected at Ford’s Bridgend Engine Plant in South Wales to support ongoing high volumes of petrol engine manufacture
- Manufacture of Transit will be consolidated in Ford’s principal commercial vehicle manufacturing facility operated by Ford Otosan in Kocaeli, Turkey, in 2013
Should the proposed plan be confirmed in Belgium following completion of the information and consultation process with the employee representatives, Genk will cease all production by the end of 2014.
The actions announced today - along with a previously announced initiative to reduce approximately 500 salaried and agency positions across Europe, with the Ford salaried reductions achieved voluntarily - affect 6,200 positions or about 13 percent of Ford's European workforce. That includes 4,300 positions in Genk and 1,400 positions in the UK. Ford's goal is to achieve employee reductions in the UK through voluntary means, enhanced employee separation programs and redeployment to other Ford locations. Actions in Genk are dependent on the outcome of the ongoing employee consultation process.