US auto giant Ford, a day after announcing the closure of a key plant in Belgium, said Thursday it will shut down two British factories as well in a bid to steer its European operations back to profit. Ford had already revealed plans Wednesday to close its Genk factory in northeast Belgium in 2014 with the loss of 4,300 jobs.
In a further shake-out Thursday, the carmaker announced that an assembly plant in Southampton and a stamping and tooling facility in Dagenham would also face the chop next year with an additional 1,400 jobs on the line. Combined with previous plans to axe 500 jobs across Europe, that brings the total number of positions being shed to 6,200, equivalent to 13 percent of Ford's European workforce.
In Britain alone, Ford employs around 11,400 workers at plants including Dagenham in Essex, Halewood on Merseyside in north-west England and Bridgend in south Wales. The cuts are all part of a massive drive to steer Ford's European operations - expected to run up a loss in excess of $1.5 billion this year amid falling demand in the region - back to profit by the middle of the decade, Ford explained.
The reorganisation will reduce vehicle assembly capacity by 18 percent or 355,000 units and yield gross annual savings of $450-500 million. Ford argued there was a manufacturing overcapacity in the region, stemming from a drop of more than 20 percent 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.
While Belgium was still reeling from Ford's shock announcement, Swedish maker Volvo Cars dealt a further blow, saying it, too, would downscale production at its own site in Ghent in 2013. Ford's facility in Southampton makes Ford's Transit vans, with combined output there totalling around 2.2 million vehicles there since 1972. Its workforce has, however, been steadily reduced over the years, as production slumped from 66,000 vehicles in 2008 to 28,000 last year.
The Transit activities would now be consolidated in the group's principal commercial vehicle manufacturing facility operated by Ford Otosan in Kocaeli, Turkey, the company said. In Dagenham, the stamping and tooling operations would be shutdown and relocated to Saint Petersburg in Russia and the factory will build a new diesel engine for Ford vehicles from 2016, Ford said.
Unions were up in arms over the plans. "This is devastating news for the workforce in Southampton and Dagenham. It's also devastating news for UK manufacturing," said Justin Bowden, national officer for the GMB union, adding that "Ford's track record in Britain is one of broken promises and factory closures."
Len McCluskey, general secretary of Unite, accused Ford of betraying its workforce. Ford president and chief executive Alan Mulally said the company recognised "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." Stephen Odell, chairman and CEO of Ford Europe, said: "The European market holds potential for profitable growth if we accelerate product development and move decisively to address our costs and overcapacity."
Ford's finance chief Bob Shanks said the group's pre-tax profits in the third quarter were set to be stronger than the level achieved in the second quarter, despite the heavy losses in Europe. For the group as a whole "third quarter 2012 pre-tax profit and earnings per share are better than second quarter 2012, despite the substantial loss in Europe," Shanks said. In the second quarter, Ford booked pre-tax profit of $1.8 billion. The group is scheduled to announce its full third-quarter financial results on Tuesday next week.
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