Cologne, Germany (ots-PRNewswire) - Ford is to undertake a major
restructuring of its European operations in a key move to drive the
company back to profitability and strong, sustainable growth. The
plan for its future was unveiled today, following an extensive
business review of its entire European operations.
The multi-faceted plan results from a three-month review of all
Ford's product plans and timings, its capacity utilisation and
deployment of vehicle assembly, powertrain manufacturing, and other
key activities, including engineering. The key elements of the plan
Five-year investment of $500 million in Dagenham Engine Plant to
become more technology based as the global centre for diesel engine
A proposed 50:50 joint venture company to be formed with
transmission specialists Getrag to engineer and manufacture manual
transmissions at facilities in Bordeaux, Halewood and Cologne.
Cessation of vehicle assembly and major body construction at
Dagenham by first quarter of 2002.
Voluntary redundancy programme for around 1,900 employees at
Dagenham Body and Assembly, partially offset by about 500 incremental
jobs associated with the expansion of diesel engine production and
engineering elsewhere within the Dagenham Estate. Net job losses on
the Dagenham Estate will therefore be around 1,400.
Confirmation of $15 million investment for Ford Design Centre in
Ford to proceed with $100 million Dagenham investment plans,
including $50 million for regeneration of Dagenham Estate, $26
million in the Press Shop and $10 million for the Wheel Plant.
Creation of a further 360 new jobs with the transfer of Commercial
Vehicle Engineering from the U.S. to Britain.
240 diesel engine engineers to be relocated to Dagenham
$12 million Ford-funded Employee Support Programme initiative.
Proposal for a Joint Advisory Board, including trade union,
government and local development agency representatives, to oversee
development and implementation of the Employee Support Programme.
Opportunity for expansion of diesel engine production at Dagenham
by 80-100,000 units per year.
Additional opportunity for Bridgend Engine Plant to be source of
new petrol engine.
Possible joint venture for forging and die casting operations in
Ford of Europe Chairman, Nick Scheele, said: "This is one of the
most crucial and difficult decisions we have ever had to make in
Europe, but we needed to take quick and decisive action. Our European
business situation was totally unacceptable.
"Fundamental to the entire review process was Ford's outlook for
vehicle assembly capacity in relation to expected demand. In 1999
Ford of Europe had the capacity to build 2.2 million vehicles, but
sold only 1.65 million. The company does not anticipate that
situation altering dramatically in the near future unless decisive
action is taken.
"Our new European management team plans to transform Ford's
business in Europe with accelerated product programmes - nine
significant new product actions every year over the next five years -
and a rigorous focus on cost and asset utilisation in particular. The
plan targets growth in sales volume, market share and much improved
financial performance, in the next three to five years.
"By taking aggressive measures to increase our sales volume, to
increase the number of new product introductions, by regaining market
share in our major markets and by capitalising fully on opportunities
in growth markets in central and eastern Europe, we are going some
way forward," said Mr.Scheele.
"Nevertheless, even on our most optimistic projections, we do not
expect to be selling in excess of two million vehicles a year over
the short to medium term. With the planned actions we will take to
improve efficiency and operating flexibility, also adding to our
capacity, we have the equivalent of one full plant's capacity more
than we need to meet demand."
Ford of Europe President, David Thursfield, and his business
review team, concluded that to leave the situation unaddressed would
not only threaten the viability of all Ford's plants, but also
maintain an unsatisfactory business situation.
"Over-capacity is a problem throughout the European automotive
industry and we are not alone in having to take tough decisions, but
action was necessary," said Mr.Thursfield.
"I know that what we plan to implement will be more difficult and
painful for some than others, but the study team has examined every
possibility, every option, and its recommendations are, we believe,
the best way forward.
"Through these actions Ford of Europe will emerge as a more
vigorous, competitive and dynamic company. We are aiming for on-going
cost reductions of over $1 billion and these actions will be the
single largest contribution to that goal."
Restructuring Under Way
The business review represents a culmination of Ford's
restructuring of its European operations, which has also included the
sale of Azambuja plant in Portugal and closure of the Plonsk plant in
Poland; transferring Halewood production over to Jaguar; selling
Ford's share in the AutoEuropa facility in Portugal to former project
partner VW; the introduction of single-shift working at Dagenham; a
realignment of the workforce at Genk in Belgium to more realistically
meet demand in the C/D (Mondeo-size) car segment; and ending
production of the Scorpio at Cologne.
It is also announced today that Ford will discontinue production
of the Escort and Transit at its assembly plant in Obchuk, in the
Minsk region of Belarus, by July of this year.
In addition, to achieve a re-balancing of capacity utilisation in
existing engine production, Ford will now concentrate all Zetec-SE
volume at Bridgend, a new family of four cylinder petrol engines at
Valencia and 4.0litre V6 OHC/SOHC volume at Cologne.
New Joint Venture Company For Transmissions
Ford has signed a letter of intent with German transmission
specialists Getrag to form a 50:50 joint venture company for the
engineering and manufacture of a range of manual transmissions. The
new company will take ownership of existing Ford manual transmission
facilities at Bordeaux in France, Cologne in Germany, and Halewood in
Subject to the successful completion of negotiations, the new
joint venture company is expected to begin operation in the fourth
quarter of 2000. It would continue to produce the IB5, MT75, MTX75
and VXT75 transmissions for Ford. Further investment would be
committed to develop and produce new transmission products for Ford
and other vehicle manufacturers, subject to any Government grants
Mr.Thursfield said: "This is an outstanding business proposition
for Ford. Joining with a highly respected partner creates an
opportunity to take the Ford manual transmission business forward
with fresh momentum, opening up the prospect of innovative new
products and future growth through sales to other vehicle
Ford also intends to enter into negotiations with potential
partners to establish a joint venture for its forging and die casting
operations in Cologne.
New Role For Dagenham Estate
Following the recommendations of the review team, Ford's senior
European management has elected to give the Dagenham Estate a new
strategic role, with new investment totalling $500 million over the
next five years in diesel engine engineering and manufacturing and
also in other key areas of manufacturing technology, process and
logistics. This is in addition to $500 million already invested over
the last five years. As part of the transition of the estate it is
also planned, with regret, to cease vehicle assembly and major body
construction there by the first quarter of 2002.
It is anticipated that today's announcement, including the
cessation of vehicle production and major body construction, will
result in an overall loss of some 1,400 jobs on the Dagenham Estate
by the first quarter of 2002. A voluntary requirement to reduce by
some 1,900 employees will be offset by increased diesel engine
activities, resulting in a net reduction of 1,400. This is in
addition to the 1,350 job losses resulting from Ford's move to a
single-shift in the Body and Assembly Plant, announced in February.
Ford will, however, remain as London's largest manufacturing
employer, with some 4,455 employees continuing to work at the
"It is with sincere regret that we have had to take this
decision," said Mr.Scheele. "We have a responsibility to employees
and to the community and are making it an absolute priority to
minimise job losses through redeployment to other Ford facilities in
Britain, where job opportunities may be available. We will do
everything possible to achieve these job losses on a voluntary basis
and are also launching a $12 million ground-breaking Employee Support
Programme, which will provide help in terms of retraining, priority
for re-hiring, self-employment start-ups, independent financial
advice and outplacement support.
"We also propose the formation of a Joint Advisory Board,
including representatives of the UK Government and trade unions, to
oversee the development and implementation of the Employee Support
Ford Plans $3 Billion Investment in UK
Ford Motor Company will continue to invest significantly in
Britain and plans a total investment of $3 billion in its facilities
over the next five years.
In 1999 alone, over $600 million was invested by Ford in research
and engineering. Its Dunton-based Engineering Centre is Britain's
largest automotive research and engineering facility employing some
2,686 people and will continue to play a major role in Ford's global
The Dagenham Press Shop is a major operation, running three
shifts, which will be modernised as a result of the review. Over the
next two years, investment of $26 million will further improve its
The Dagenham Wheel Plant, which produces steel wheels for a range
of Ford products, will receive a $10 million investment to re-tool
and re-equip for the production of high strength, light weight, steel
wheels for upcoming models.
Dagenham-based Group Tooling will also continue and will be
expanded to include development of tooling for the manufacture of
doors, bonnets, bootlids and other body parts, at all Ford's European
facilities, with potential for capacity expansion.
Existing plans for production of 700,000 petrol car engines and
55,000 V8 engines at Bridgend Engine plant, will continue. However,
the plant has been identified as a potential source for production of
an additional new petrol engine.
The company also intimated earlier this year that London would be
the location for a new design studio.
"I am pleased to be able to confirm today that we are continuing
with our plans to invest $15 million in the new Design Studio, which
will open in central London next year. We believe London is currently
the most influential city in the world for new design trends and our
centre will perfectly place our designers to explore other design
mediums, opening their minds to a different way of creating products
for the consumer," said Mr.Scheele.
Global Source For Diesel Engines
Dagenham is Ford's sole global manufacturing source for diesel
engines and, with $500 million investment already approved over the
next five years, is set to produce three new engine families, with a
resulting volume increase of 22 per cent. Now, the company is set to
expand and develop its diesel capability even more, with another new
programme, providing potential for a further 80,000-100,000 extra
The new project involves amongst other things the addition of
another new family of diesel engines, the installation of additional
manufacturing capacity and also relocation of engineering resources
from Dunton to Dagenham. Some 240 engineers, currently based at
Dunton, will move to Dagenham as part of the new totally integrated
Diesel Engineering and Manufacturing team.
"The Dagenham Engine Plant is recognised as having produced high
levels of performance coupled with the flexibility to take advantage
of business situations as they arise and it is this track record that
has generated the confidence to invest further in the estate," said
Ford also confirmed that it will proceed with plans to invest more
than $50 million for the regeneration of the Dagenham Estate, in
close co-operation with local government authorities, local
development agencies, and involving closer integration with the local
Existing plans include significant environmental upgrades of the
estate, construction of a modern single point of entry, construction
of a new visitor centre and new technical training centre,
contribution of land for use as part of a major technical education
initiative and construction of a new flaghsip dealership.
This now includes confirmation of an additional second phase, with
further physical upgrading, refurbishment of the now-unused main
office block on the historic river front landmark of the Dagenham
Estate and further commitments to education, with the establishment
of an Engineering Faculty on the Education Campus with major links to
other Ford Partner Global Engineering faculties.
Specific Roles For Assembly Facilities
Ford currently has five major assembly facilities producing
passenger cars for Ford in Europe, which the business review
identified as being one too many. All were subject to the same review
process and to the possible cessation of vehicle production.
Genk, in Belgium, is to continue as the lead plant for Mondeo-size
vehicles and will also continue to produce the Transit. The cost of
transferring Genk production to other plants was prohibitive, the
The other four existing plants all handle Ford requirements for B
(Fiesta-size) and C (Focus-size) class vehicles, for which current
and projected demand is such that these requirements could be handled
by just three plants. One of these will be nominated as a 'flex'
plant, giving Ford the flexibility to 'swing' production between its
B and C car platforms as required.
Saarlouis, in Germany, is to continue as lead plant for C segment
vehicles, such as the Ford Focus and has the potential to become a
B/C car 'flex' plant if required. Again, the investment and
re-tooling implications in moving production elsewhere would be
Valencia also has the flexibility for two-platform production,
with a proven capability for this over several years. Valencia also
has a good track record and is the lowest cost producer of the five
major facilities. It currently produces, on two different platforms,
the Ford Focus and Fiesta-based Ford Ka.
Of the two remaining plants and, based on the long-term relative
performance of each, it has been decided to continue with assembly of
B-segment vehicles in Cologne.
It is also confirmed that Southampton Plant will assemble the new
Transit range of vehicles later this year and has recently benefited
from investment in a new paintshop and other facility modernisation
in preparation for this.
Ford will now progressively move all its Vehicle Operations plants
in Europe to flexible bodyshops, modular supply/assembly and with
supplier parks, as new model programmes are launched. All will also
have the flexibility for three-shift assembly as required.
Commercial Vehicle Engineering
A key part of the plan will be the transfer of Ford's Commercial
Vehicle Engineering activities from the US to Britain. In itself this
will create some 360 new jobs in UK based engineering functions and
once more give them responsibility for roles including light and
medium commercial vehicle projects for Europe.
The Plan For The Future
With its new business plan, Ford is sharply focused on
profitability and growth. The actions outlined are expected to be
implemented in the period between now and the first quarter of 2002.
"In developing our plan for the future, we have had to balance our
current needs and projections against inevitable cost implications
and overall viability. What we have announced is a plan which will
ensure we create a platform for sustainable business growth," added
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