Ford Europe Announces Cuts And Production Slowdowns To Shore-Up Viability

Above: Ford of Europe CEO John Fleming and Ford Motor Co. CEO Alan Mulally

In an attempt to stimulate new car sales, the German Government has come up with a new-for-old initiative. It is offering a $A4,918 incentive for drivers to buy a new car if their current car is nine years or older.

This is all in attempt to give European car makers a glimmer of hope, and increase sales, in a stalling European car market.

However, even this has not been able to assist the European division of Ford which has announced further cuts to its operations and production slowdowns.

In a statement released from Ford, “Cutting capacity, reducing costs and safeguarding our future product plans are essential actions for Ford of Europe to sustain a viable business for the future."

Ford recently surprised the car community with an AUD$393.47 million injection to the Cologne plant in Germany. This was done to ensure the sustainability of the operation and job security at the plant.

With the future of the Cologne plant apparently secured, it is now to enter into a joint venture with Ford's Romanian Engine Plant. This will see both plants building the new EcoBoost gasoline engine.

Cologne will still make the Ford Kuga and C-Max models. The C-Max will also be another joint venture, but this time with the Valencia plant in Spain.

The Valencia plant will see the axe fall on its Fiesta production to make way for the C-Max. Production of the Focus is  still to continue there however.

Ford Europe was one of few profitable operations for the Ford Group in 2008, recording a USD$1.06 billion pre-tax profit last year in very difficult circumstances.

But things have dramatically worsened this year.  "Ford of Europe must return to sustainable profitability as soon as possible. We will do whatever it takes to ensure the continuing viability of our business, and further actions can be expected," John Fleming of Ford Europe said (Reuters).

With sales falling 19 percent in the first two months of 2009 however, Ford is determined to shore-up its operations and has signalled more shift cutbacks and production reviews ahead.