Ford Europe to cut 5700 more jobs in U.K., Belgium - Detroit Free Press

Ford said Thursday it will cut an additional 5,700 jobs at three facilities in the U.K. and Belgium, in an intensified restructuring meant to return the automaker's money-losing European operations to profitability by 2015.

The plant closings became more urgent because Ford now expects to lose $1.5 billion in Europe this year, 50% more than its previous forecast. The deeper loss includes more than $400 million from reducing dealer supplies and $100 million in accelerated depreciation associated with plant closures.

Ford reports its third-quarter earnings Tuesday. Ford executives said that its third-quarter global profit will be greater than the $1 billion it earned in the second quarter. Fortunately, Ford is making far more money in North America than it is losing in Europe.

The European actions will cut capacity by 18% or 355,000 vehicles a year, which will eventually save $450 million to $500 million annually.

Ford is attacking its glut of factories more aggressively than nearly all competitors if it follows through with the announced plans.

In some ways, it is similar to the strategy Ford used to turn around its North American business when the industry went into freefall in 2008 and 2009. Duplicating it in Europe is difficult. Companies must deal with multiple countries, the European Union and more militant labor unions that have much more political clout than their brothers in the U.S.

Including the 500 Ford salaried and agency workers expected to leave by the end of the year, Ford said the 6,200-person cuts represent about 13% of its European work force that was 47,000 in 2011.

"We expect to achieve profitability by mid-decade," said Ford CEO Alan Mulally.

Eventually, Ford's goal is to earn between 6% and 8% of sales in Europe, but breaking even would be a big improvement.

The costs of restructuring, depreciation and capital spending to shift production to other plants will be felt over 2 1/4 years, said Chief Financial Officer Bob Shanks. The U.K. plants won't close until the second half of 2013. The Belgium factory will stop production by the end of 2014.

Shanks said separation costs will exceed $100,000 per employee. A report by Barclays puts the severance cost at $300,000 per employee.

Standard & Poor's Ratings Services on Thursday estimated Ford's operating losses in Europe, including some restructuring costs, at about $3 billion over 2012-13. That puts more pressure on the stronger North American business to offset the continuing red ink from across the Atlantic.

"We do not expect to raise the corporate credit rating on Ford to investment grade before late 2013 at the earliest," the agency said.

Other agencies have returned Ford to investment grade.

Production of the next-generation Ford Mondeo, S-Max and Galaxy would shift to Ford's Valencia plant in Spain, where wages are lower, and the tooling allows Ford to build both compact and midsize vehicles.

After Ford closes the Southampton plant, production of the Transit commercial van plant will be consolidated in Turkey. It also will close a stamping and tooling operation in Dagenham with 1,400 jobs.

Ford hopes voluntary separation programs and transfers will eliminate layoffs in the U.K.

Ford plans to invest $2.4 billion to engineer a next-generation 2-liter diesel engine in Essex and build it in Dagenham.