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Fordís European operations under pressure to improve bottom line

By SYF77 on 29 Jul 2012

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A stubborn sovereign debt crisis and collapsing consumer confidence has sent car sales skidding for nine consecutive months in Europe as the car market there falls to its lowest level in 17 years, according to the Brussels-based European Automobile Manufacturersí Association.

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Ford of Europe is not spared from the falling demand as its sales fell 10% in the first half of 2012. This is worse than the industry-wide average of 6.3%. At the same time, Ford is using just 63% of its factory capacity in Europe, where pretax losses this year may exceed US$1.1 billion.

This is double of what the automaker mentioned before, according to Adam Jonas, an analyst at Morgan Stanley. It does not take an economics graduate to guess that Fordís European factories are at the risk of shutting down. According to reports, Fordís assembly plants in Southampton, England, and Genk, Belgium, may be vulnerable.

ďBy our calculations, Fordís capacity utilization in Europe is even lower than GMís, making it lower than any automaker besides Fiat SpAĒ, Jonas commented in an e-mail.

ďFord must address its excess-capacity situation with decisiveness to stay ahead of the wave.Ē The Southampton plant employs about 500 people and manufactures the Transit, a light commercial vehicle. The Genk factory employs about 5,500 people, making the Galaxy, S-MAX and Mondeo.

At the point of penning this article, there are renewed concerns that the weight of the Eurozone sovereign debt would force Spain to seek a full state bailout. Like Fiat, General Motors and PSA Peugeot Citroen, Ford may have to take drastic measures such as layoffs and plant shutdown to survive the tough times ahead.

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Photo Credit: netcarshow.com

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Written by SYF77
I have been a car fanatic since 1989, when my father was changing our family car then to a Toyota Corolla 1.6 GL fitted with a Twin Cam 16 valve engine that was carburetor-fed, a big deal back in those days. The automobile technology and industry fascinates me and I hope to broadcast these interesting developments to everyone out there through this blog.

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