But Short-term Plant Closure Likely As 2012 Losses Breach $1 billion
Ford Europe is likely to lose more than $1 billion this year and maybe close its factory in Genk, Belgium, but that didn’t stop it announcing a massive product offensive with two new SUVs, more vans, a trend-setting one litre engine in its new Mondeo family car, and a plan to sell its Mustang sports car here.
At a press conference in Amsterdam, Ford said it will launch the EcoSport SUV-B, based on the Fiesta, in 2014. This will be built in Brazil, India, China and Thailand. It unveiled the new Mondeo ahead of its debut at the Paris Car Show, which will offer an 1.0 litre Ecoboost engine, a hybrid, and a diesel four-wheel drive version. Ford will sell the big Edge SUV and Mustang sports car from its U.S. lineup, although it didn’t say when. The Kuga compact SUV will also be extensively restyled. The van lineup will also be increase.
“This extensive ramping up of the model launch schedule is an impressive gesture of commitment to the European market by Ford,” said IHS Automotive analyst Tim Urquhart.
Urquhart said it was expected that because of its current losses in the European market Ford might be cutting products and capacity.
Deutsche Bank said last month Ford Europe would lose about $1.3 billion in 2012.
“Instead Ford is coming out fighting with a host of new product launches and an entry into brand-new segments for the company in Europe, such as the SUV-B segment with the EcoSport,” Urquhart said.
“The product launches detailed here should provide a very solid foundation for growth when the market begins to recover in 2014, while at the same time the reaffirmation of Ford’s commitment to Europe is a sign of the company’s strength and confidence under the leadership of (CEO) Alan Mulally,” Urquhart said.
Pressure to “resize”
But Ford is under pressure to take short-term action to reduce production, like most other mass market car makers in Europe. At the Amsterdam press conference Ford recognised the need to “resize” production as demand in Europe falters.
Deutsche Bank estimates that in 2012 Ford’s European factories will be operating at 69 per cent of capacity. To reach over 80 per cent capacity use, would require the elimination of one large plant.
News on the future of the Genk, Belgium plant is expected within a month.
Neil Winton – September 15, 2012
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