How Ford made it work in Europe

DETROIT — General Motors hasn’t made money in Europe since Bill Clinton was president.
If the world’s third-largest auto-maker fails to unload its Opel European division on PSA Group, it could look to its crosstown rival in Dearborn, Mich., for an example of how to right the ship.
Ford Motor Co. was unprofitable in Europe from 2011 to 2014. During that time, the company lost $3.1 billion there.
But then-CEO Alan Mulally implemented an aggressive restructuring plan that included shuttering three manufacturing plants, slashing thousands of jobs and reinvigorating Ford’s product lineup with new and freshened vehicles, including performance and luxury variants.
And, whereas GM has tried selling a number of brands in Europe, Ford focused solely on the Blue Oval, even opting to keep its Lincoln luxury brand out of the region in favor of upscale Ford Vignale trims.
As a result, Ford turned a profit in Europe each of the past two years — including a record $1.2 billion pretax profit in 2016 — and executives predict it will remain in the black in 2017, despite an expected $600 million hit from the U.K.’s vote to leave the European Union.
Ford’s decision to cut excess capacity through plant closures was met with opposition from rank-and-file workers.
Employees at its Genk, Belgium, plant protested with a blockade of the facility after the company announced its intentions to close.
By the time the final white Galaxy van drove off the assembly line in December 2014, Ford had agreed to pay about $750 million in severance to the plant’s 4,300 workers.
A factory in Southampton, England, that made chassis cabs for the Transit van also was closed. Roughly 500 workers lost jobs there, although Ford said it worked with those affected to either find new employment at other Ford facilities or to persuade them to take early retirement offers.
Ford also shuttered a stamping plant in Dagenham, on the outskirts of London, which employed just under 1,000 workers. Ford moved production from the three facilities to lower-cost countries, including Spain and Turkey.
The automaker has continued its restructuring in recent years, saying in early 2016 that it would offer “voluntary separation programs” to roughly 10,000 salaried employees, a move executives said would save it $200 million a year in administrative and selling costs.
Ford’s product also strengthened its turnaround.
Its Transit and Transit Connect vans are leaders in the industry; Ford has been the No. 1 seller of commercial vehicles in Europe for two years running.
It also has redesigned popular utility vehicles such as the EcoSport and Kuga. And it expanded its performance lineup with a redesigned Focus RS, Focus ST, Fiesta ST and Mustang. The company says performance vehicle sales rose 60 percent last year.
Ford proved Europe can be profitable for U.S. automakers with the right balance of product, capacity, leadership and brand recognition.
Source: Automotive News

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