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Ford Europe mulls cuts
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February 3, 2000: 6:17 a.m. ET
Auto giant plans shake-up of struggling factories as rivals move ahead
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LONDON (CNNfn) - Ford Motor Co. announced plans Thursday for a radical overhaul of its troubled European operations, possibly including factory closures and changes to its supplier and distribution strategies.
Though the world's second-largest automaker last month posted record group profit, earnings in Europe slumped to $28 million in 1999 from $193 million a year earlier.
Ford was consistently Europe's auto industry leader by market share through the 1980s, but has fallen back under intense pressure from rivals such as Volkswagen, which is now Europe's largest automaker.
"Ford in Europe is in trouble," said Peter Schmidt, at industry consultant Automotive Industry Data. "Its market share in western Europe is the worst in living memory."
Ford Europe said its "new management team is reviewing all aspects of the business" though it declined to comment on whether it planned specific factory closures or job cuts.
However, Ford Europe Chairman Nick Scheele indicated that the need to cut costs was particularly urgent in the U.K., according to the Financial Times, mainly because of the strength of the pound against the euro. U.K. factories have also seen turbulent industrial relations in recent months, with part of the workforce voting Wednesday for strike action over pay and conditions.
Ford's European market share fell into single-digit figures last year, dipping to 9.7 percent from 10.3 percent, according to the European Automobile Construction Association. It ranked third behind VW's 11.5 percent and General Motors (GM: Research, Estimates) with 10.9 percent.
Schmidt at Automotive Industry Data said that while many of Ford's problems are not of its own making - it runs some of the most efficient auto plants in the region - it had suffered from a weak product range and increased marketing efforts by rivals. "VW, for example, has taken lots of leaves out of Ford's marketing book and learned how to move the metal," he said.
Ford (F: Research, Estimates) shares closed down 1-3/16 at 48-5/8 in New York Wednesday. 
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