Ford may cut more capacity if Europe outlook worsens

BERLIN Thu Nov 8, 2012 1:42am IST

Traffic passes the Ford stamping plant in Dagenham, Essex October 25, 2012. REUTERS/Olivia Harris

Traffic passes the Ford stamping plant in Dagenham, Essex October 25, 2012.

Credit: Reuters/Olivia Harris

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BERLIN (Reuters) - Ford Motor Co (F.N), which plans to close three factories and scrap 6,200 jobs in Europe to stanch losses, said on Wednesday it cannot rule out further capacity cuts in the region if the auto market deteriorates further.

While Ford has no current plans for further capacity cuts - which can range from dropping a factory shift to closing a plant - the automaker is monitoring Europe's market and economic outlook very closely, Chief Executive Alan Mulally said.

"That will determine what we do - if we do anything more," Mulally said at a conference in Berlin. "The most important thing is to match our production to the level of demand."

About 170 protesters burned tires and threw fireworks at police officers outside a Ford plant in Cologne, Germany, during a Wednesday meeting between management and Ford's European Works Council.

The protest comes about two weeks after Ford outlined its restructuring plans for Europe, where the company's losses could surpass $3 billion over the next two years.

A group of protesters in Cologne, where Ford of Europe is based, stormed the Ford factory grounds, smashing windows and injuring a Ford employee, police said. Six people were arrested and three police officers were injured.

Ford said in a statement, "While we understand the impact that our European business transformation plan has on people and respect their right to peaceful demonstrations, we are disappointed that some of the protesters used force to gain entry to our facilities in Cologne."

EUROPE IS 'VOLATILE'

The situation in Europe remains "very volatile," Mulally said in Berlin. "We don't know whether it will stabilize or hit bottom or not because it's continuing to decrease."

The second-largest U.S. carmaker said last month it will shutter a British van factory in Southampton and an associated stamping plant in 2013, and close a bigger site in Genk, Belgium, the following year.

The European cutbacks by Ford are expected to generate savings of $500 million annually by 2015. The automaker aims to make a profit in the region around that time.

Ford, which posted a $468 million European loss in the third quarter, expects to lose a combined $3 billion in the region in 2012 and 2013.

"We needed to move decisively, also to be able to invest in new products," Mulally said. "If you don't do that, you continue to lose money and will be gone."

Ford rival General Motors (GM.N), which is forging an alliance with struggling French automaker PSA Peugeot Citroen (PEUP.PA), remains mired in talks with Germany's IG Metall labor union over plans to cut jobs at its Opel division and close a plant in Germany in 2017.

(Additional reporting by Deepa Seetharaman in Detroit; Editing by Erica Billingham)

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