Almost two months after announcing plans to revamp and expand its vehicle portfolio by nearly 30 percent, the Dearborn-based automaker Thursday morning said it plans to close three plants -- two in UK and one in Belgium -- and cut 5,700 hourly and salaried employees.
A security guard locks a gate after workers left the Ford Transit Assembly Plant in Southampton, England after being told that the site will close with the loss of up to 1,500 jobs Thursday Oct. 25, 2012. Ford, which expects to lose more than $1 billion a year in Europe, has been pursuing plant closures and layoffs. Fears were mounting that the axe may also soon fall in Britain as trade unions at Ford's Southampton plant have been called in for a meeting with management on Thursday. (AP Photo/Chris Ison/PA)
DEARBORN, MI- Ford Motor Co. is aggressively overhauling its European lineup, manufacturing and work force.
Almost two months after announcing plans to revamp and expand its vehicle portfolio by nearly 30 percent, the Dearborn-based automaker Thursday morning said it plans to close three plants – two in UK and one in Belgium – and cut 5,700 hourly and salaried employees.
Ford expects the closings to reduce vehicle capacity by 18 percent or 355,000 units and lower gross annual savings $450 million to $500 million.
“We recognize the impact our actions will have on many employees and their families in Europe, and we will work together closely with all stakeholders during the necessary transformation of our business in Europe,” said Ford President and CEO Alan Mulally during a media and analyst conference call earlier today. “The same One Ford Plan that transformed our business in North America, and guided us toward a better future, is being used to address the crisis in Europe.”
Ford, which is set to release its third-quarter earnings Oct. 30, expects its “planned actions” to help return its European operations to profitability by 2015.
Ford lost $404 million in Europe during the second quarter of this year and said it plans to lose more than $1.5 billion total, up from its expected $1 billion losses earlier this year.
New vehicle sales in the region have reached a nearly 20-year low this year, officials said, and are expected to remain flat or fall further next year.
A car burns as workers block the main gate of the Ford plant in Genk, Belgium on Thursday Oct. 25, 2012. Ford Motor Co. announced Wednesday it planned to close a car plant in eastern Belgium -- one of its main European factories -- by the end of 2014, a move that would result in 4,500 direct job losses and 5,000 more among subcontractors. (AP Photo/Geert Vanden Wijngaert)
“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 of Ford of Europe.
The three facilities set to close are the Genk Plant in Belgium, which was previously announced by the Dearborn-based automaker, and two UK facilities – Ford’s assembly plant in Southampton, and stamping and tooling operations in Dagenham.
The three facilities employ 5,700 hourly and salaried people, according to Ford. The Belgium plant is expected to close in late 2014. The two UK facilities are set to close next year, officials said.
Odell said including the previously announced cuts of 500 salaried and agency positions, about 13 percent of Ford's European workforce -- 6,200 people -- are impacted by the recent announcements.
Analysts have criticized other automakers and Ford, which had been running at about half capacity, for its European operations and overcapacity.
Martin Kahl, UK-based Automotive World editor, said Europe as a whole is suffering from overcapacity, but each country differs on how they are reacting to the problems.
“This collection of nations falls apart when it comes to national crises,” he wrote in an email to MLive Auto Wednesday. “There’s a recession in Europe, but more importantly, it’s the individual nation-states that are suffering recessions, not ‘Europe’.
“When it comes to responses, each government looks after its own – there is not a European response.”
Kahl said despite the best efforts of certain leading executives, there is no European response to the crisis in the automotive industry.
More automakers, according to Kahl, are expected to follow Ford’s lead in Europe.
“Generally, the mood is not good, and it’s clear that further cuts need to be made,” he wrote. “Although it’s been a long time coming, the Genk announcement, when it came, came quite suddenly. Workers at other at-risk plants must now be feeling increasingly nervous.”
As of 11:25 a.m., Ford (NYSE: F) shares increased about 2 percent.
Email Michael Wayland: MWayland@mlive.com and follow him on Twitter at twitter.com/MikeWayland