Ford forced to close factory in Europe? image

Ford Motor Co. said that conditions in Europe had “deteriorated significantly” and that it expected to lose $500 million to $600 million outside North America in the second quarter.

The U.S. giant, which is scheduled to report July 25 said that the company couldn’t rule out closing one of its five European plants.

Unlike GM, which has lost money year after year – more than $16 billion since 1999 — and has gone all-in on a high-stakes restructuring, Ford’s issues have seemed like less of a big deal.

Ford was actually making money in Europe, almost $2 billion since 2007, until the latest economic downturn in the region.

So where is the problem? The main problem ( not just for Ford in Europe ) is that the automaker is using just 63 percent of its factory capacity in Europe, where pretax losses this year may exceed $1.1 billion, double what the automaker previously said.

“By our calculations, Ford’s capacity utilization in Europe is even lower than GM’s, making it lower than any automaker besides Fiat SpA” , Adam Jonas, an analyst at Morgan Stanley said.

Auto Sales in Europe
Ford’s sales in Europe were down a whopping 10% in the first half of 2012. Believe it or not, that’s about in line with the overall market, which has been clobbered by tough economic conditions throughout the region.

The month-on-month decline added to a sharp 6.8 percent fall in European car sales in the first six months of 2012, resulting in 6.64 million fewer new cars being registered compared with the same half-year period in 2011.