Ford Motor Co. will close two British plants, cutting 1,500 jobs, the automaker announced Thursday — the latest sign of the extent of the troubles faced by Europe’s car industry.
Also Thursday, French carmaker Peugeot Citroen said it has found a company, ID Logistics, to take over a plant it wants to close and to hire 600 of the workers whose jobs were on the block.
Europe’s debt crisis has cut sales in a region that already has too many plants, leading Ford to warn Thursday that its losses in the region will exceed $1.5 billion US this year.
ACEA, the European carmakers' association, says sales of all European vehicle brands in September were down 10.8 per cent from a year earlier. Ford's sales fell 14.9 per cent in the same period.
The announcement came a day after Ford said it would shut a plant in Brussels, with the loss of 9,500 jobs.
'The actions that should have been taken three years ago are starting to be put into place.'—Tim Urqhart, senior analyst, IHS Automotive
Ford, which sells a quarter of its cars in Europe, said the closures would result in annual savings of at least $450 million.
It still expects a strong pre-tax profit for the global company. Earnings will be better in the third quarter than in the second, when excluding one-time costs and gains.
Ford said its transit van plant in Southampton would be closed in July and a stamping and tooling facility at the plant in Dagenham, east of London, would shut sometime in 2013.
Transit van production will be consolidated at the plant in Kocaeli, Turkey.
"The actions that should have been taken three years ago are starting to be put into place," said Tim Urqhart, senior analyst at IHS Automotive.
"It speaks to the gravity of the situation and the seriousness of where things are."
France offers Peugeot loan guarantees
Peugeot’s announcement came hours before a high-stakes meeting with the French government, which has offered the firm €7 billion ($9 billion Canadian) in loan guarantees in order to avoid the 8,000 layoffs the firm says it needs to make in France.
Unemployment in France is stuck above 10 per cent.
"My government has no intention of just giving, of offering a gift without anything in return," Prime Minister Jean-Marc Ayrault said.
In return, the government wanted influence in decision-making within the company. CEO Philippe Varin insisted the government would not make decisions for Peugeot.
It's the first French intervention in the industry since a €6 billion loan package to Peugeot Citroen and Renault in 2008-2009 when the economy was reeling from a financial crisis that triggered a global recession.
But the European car industry didn't undergo the dramatic overhaul that U.S. bailouts prompted among its carmakers.
General Motors also is in negotiations with unions to shutter a plant in Bochum, Germany, in 2017.
Weak sales 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.