Ford cutting 1,500 UK jobs and closing plant as losses in Europe exceeding $1.5B

LONDON—Carmaker Ford announced it will cut 1,500 jobs in Britain, closing a plant and eliminating a stamping and tooling facility, as it warned that losses in Europe will exceed $1.5-billion this year.

Ford Motor Co., which on Oct. 24 announced the closure of another plant in Brussels, is struggling in Europe, as are many major carmakers.

Sales are down as the region’s economic crisis hurts demand from households and businesses.

Ford said its transit van plant in Southampton would be closed in July and the stamping and tooling facility at the plant in Dagenham, east London, would shut sometime in 2013.

Transit van production will be consolidated at the plant in Kocaeli, Turkey.

The Southampton plant, which employed 500 workers, was Ford’s last vehicle assembly plant in Britain.

Production has fallen from 66,000 vehicles in 2008 to 28,000 last year, when work was reduced to a single shift.

Ford now has 11,500 workers at plants in Britain, the Unite union said.

“We recognize 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,” said Ford’s president and CEO, Alan Mulally.

Len McCluskey, general secretary of the Unite union, said workers would fight against the closures.

“This announcement has been handled disgracefully,” McCluskey said. “Only a few months ago Ford was promising staff a new transit model for Southampton in 2014.”

The company said it needed to cut costs in Europe, where it will try to refocus its operations on fuel efficient motors and safety technologies.

Although it expects to make a loss in Europe for the full year, Ford said it still expects a strong pretax profit for the company overall.

Earnings will be better in the third quarter than in the second, when excluding one-time costs and gains.

It promised to invest in the Dagenham plant to support production of a new series of 2-litre, four-cylinder, low-CO2 diesel engines.

It will also invest at the Bridgend plant in Wales to support gasoline engine manufacturing.

Closing the Belgian and British plants reduces vehicle assembly capacity, excluding Russia, by 18 per cent, or 355,000 units, yielding annual savings of at least $450-million, Ford said.

Ford’s sales were down 14.9 per cent in September compared with a year ago, worse than the 10.8 per cent fall for all European vehicle brands, according to Acea, the European carmakers’ association.

Carmakers are facing big problems in Europe, where there are too many plants and demand for cars is shrinking. France’s PSA Peugeot-Citroen is currently in talks to take a $9-billion lifeline from the French government, which wants to avoid layoffs.

The weak sales in Europe are hurting even the more competitive German companies—Daimler, the maker of Mercedes Benz, this week lowered its full-year profit outlook due to the economic challenges.