Europe: factory capacity usage on the rise image

While the US automakers swiftly returned to profit by shaking up their plant capacity utilization, in Europe the situation dragged on, with many of the automakers in the region having trouble keeping facilities in use.

All three Detroit big made serious cost cutting measures, closing any unprofitable plant and shuffling production to meet capacity demand and increase flexibility – but as they only had to deal with one union – the UAW – renegotiating personnel deals was easier.

In Europe, the fact that many automakers have plants in more than one country made it politically sensitive to close down unprofitable factories – even if they were in their home country.

“Our prediction is that capacity utilization will increase, but it won’t come back to peak levels of 2007,” said Michel Costes, CEO of France-based automotive research group Inovev.

Fortunately, industry observers now predict the region’s plant capacity utilization to finally grow to around 70% in 2014 and to 80% somewhere in 2016. That’s opposed to what happens in the US, where many facilities run close to or even exceed 90%.

In fact, in Europe, plants are not forecasted to get back to their 2007 peak – of 85% – until at least 2020. This year’s jump of just 2% – from 68% in 2013 to 70% this year is also not encouraging, all the while automakers actually needing the 85% utilization to finally return their factories to profit.

Via Automotive News Europe