Ford deepens European cuts, sees $3 billion losses

LONDON/DETROIT (Reuters) - Ford unleashed a second volley of European job cuts and plant closures on Thursday to try to halt regional losses it expects to total $3 billion over two years.

A day after announcing the closure of a major car plant in Genk, Belgium, Ford told British unions it would scrap its Southampton van factory and an associated stamping facility in Dagenham next year, slashing 1,400 jobs.

Thursday's announced closures end vehicle manufacturing by Ford in Britain and bring its total job cuts to 6,200, reducing European production capacity by 18 percent to save $450-500 million a year, the company said.

With no market recovery in sight, car makers are struggling to scrap underused factories and surplus jobs that are racking up losses in Europe.

The Southampton plant was the fourth European vehicle plant closure announced this year.

Ford Chief Executive Alan Mulally told reporters and analysts the cutbacks were designed to "return profitability to our very important European operations by mid-decade", setting new medium-term operating margin goal of 6-8 percent.

Stephen Odell, chief executive of Ford of Europe, said during the same call that Peugeot's , French government-backed refinancing deal announced on Wednesday raised questions, highlighting transatlantic tension over the industry.

"I don't think it's sustainable for support from governments to keep competitive companies going forward, particularly in a protracted downsized economy," he said.

Workers at Ford's British plants were distraught. "It's a kick in the teeth," said Dominic O'Callaghan, 39, a shop steward at Dagenham. "The guys worked hard."

PSA Peugeot Citroen has encountered stiff government and union resistance to 8,000 planned job cuts and the closure of its Aulnay plant, while General Motors' Opel division is in protracted talks to slash jobs and close its Bochum plant in Germany - but not before 2016.

"What's remarkable about Ford is how quickly things are moving, which is a sign of good management," said London-based UBS analyst Philippe Houchois.

"With GM Europe you always wonder what's going on - it looks like they are still bogged down in deciding what to do."

Ford had previously forecast a full-year European loss in excess of $1 billion, without giving further guidance.

On Thursday the company increased the loss forecast to more than $1.5 billion and said it would likely be repeated next year. But Ford said overall pre-tax profit improved in the third quarter, excluding non-recurring items.

The announcements came in a grim week for the industry. On Thursday Chinese-owned Volvo Car Corporation said it was cutting production in Belgium, while Germany's Daimler said late on Wednesday it would not improve profit margins next year.

Ford said future versions of the Mondeo, S-MAX and Galaxy, currently assembled in Genk, will be moved to Ford's plant in Valencia Spain, the company said on Wednesday. The new Mondeo will be introduced in late 2014 after an 18-month delay.

Southampton's production, which last year fell short of 30,000 vehicles, is to be transferred to Ford's existing Transit plant in Turkey, under the plans announced on Thursday.

Graphic http://link.reuters.com/ger53t

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Ford's stamping and tooling plant in Dagenham, Essex, will also close next year, the company said. The facility employs 930 workers.

Staff in Southampton were told to down tools and take the day off as news of the closures broke, and most said they were heading to the pub. The U.S. automaker currently employs 11,400 British workers at sites including Halewood, near Liverpool, and Bridgend in South Wales.

Britain will remain a centre of "powertrain excellence" for the automaker, Odell said.

The company announced a "next-generation low-CO2 2.0-litre diesel" to be made in Dagenham that would power future Ford vehicles from 2016. It also said additional investment was expected at Bridgend to support ongoing high volumes of petrol engine manufacture.

"Ford is demonstrating the vision and industrial courage to make tough decisions today that will pay off long term," Morgan Stanley analyst Adam Jonas said in a note to investors.

Jonas, who had previously expected Ford to continue reporting European losses through 2015, said its restructuring measures could bring the breakeven forward one year.

Others including Christoph Stuermer of consulting firm IHS Automotive said further upheaval was yet to come at Ford.

"One other passenger-car factory will have to close," Stuermer predicted.

(Additional reporting by Alessandra Prentice, Andreas Cremer,; writing by Laurence Frost; editing by Kate Holton and Philippa Fletcher)

Source: http://news.yahoo.com/ford-cut-1-300-british-jobs-sky-news-102250045--finance.html

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