Ford may cut more European capacity if outlook worsens

BERLIN Wed Nov 7, 2012 11:46am EST

1 of 2. Alan Mulally, President and CEO of Ford Motor Company speaks at the Automobilwoche automotive industry conference in Berlin November 7, 2012. Ford Motor Co Chief Executive Alan Mulally said on Wednesday that the U.S. car maker will 'continue to monitor' the situation in European auto markets to gauge whether further restructuring moves might become necessary.

Credit: Reuters/Thomas Peter

BERLIN (Reuters) - Ford Motor Co (F.N) said it cannot rule out more European capacity cuts if the auto market deteriorates further, increasing losses from underused car plants.

The situation in Europe remains "very volatile", Chief Executive Alan Mulally said at a conference in Berlin on Wednesday, two weeks after the company announced plans to scrap 6,200 jobs and three plants in the region.

"We don't know whether it will stabilize or hit bottom or not because it's continuing to decrease," Mulally said.

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.

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

"That will determine what we do - if we do anything more," the CEO said. "The most important thing is to match our production to the level of demand."

The European cutbacks at Ford are expected to generate savings of $500 million annually by 2015. The U.S. car maker aims to make a profit in the region around this 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 on Wednesday. "If you don't do that, you continue to lose money and will be gone."

Ford's arch-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 - but not until 2017.

(Editing by Erica Billingham)

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