The U.S. company turned a full-year profit of $259 million in Europe
in 2015, its first since 2011, helped by a 10-percent gain in
It will offer a voluntary redundancy scheme to its 10,300 salaried
workers in Europe including severance pay and early retirement, Jim
Farley, head of Ford Europe said in an interview on Wednesday,
predicting hundreds of takers.
It will also increase its range of sport-utility vehicles (SUVs),
which last year outsold all other segments in Europe for the first
time, and scrap less profitable models.
"We want to make sure we have that stable footing so we can build a
viable business in the future," Farley said, citing a longer-term
operating margin target of 6-8 percent, compared with less than 1
percent achieved last year.
Ford is following up on a restructuring program under which it
closed three European factories and cut thousands of jobs. It shut
an auto-assembly plant in Genk, Belgium, in 2014 after closing a
stamping plant in Dagenham, Britain, and a van factory in
Southampton, Britain, the year before.
That plan stabilized Ford's European operations and helped increase
capacity utilization to about 90 percent, with some of Ford's plants
including a site in Valencia, Spain, running three-shift, six-day
operations, Farley said, adding a plant in Romania producing the
B-Max minivan was still underperforming.
Ford and U.S. rival General Motors have been fighting years of
losses in Europe, which in 2014 recovered from a six-year downturn
during which demand dropped to a two-decade low.
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GM's European division Opel still made a loss last year but its
parent has promised profitability in the region by 2016. Fiat
Chrysler Automobiles posted an adjusted operating profit in
Europe, the Middle East and Africa in 2015 for the first time in
Analysts say that although demand has recovered, profitability is
destined to stay low in Europe as cut-throat competition and
regulatory costs eat into margins.
"The consensus on Europe is that it is a market where the auto
industry has little hope of making any money, as it is beset with
overcapacity, very high structural costs, and is populated by too
many automakers all offering technically sophisticated and
expensive-to-build vehicles," Bernstein analyst Max Warburton said
in a note last month.
(Additional reporting by Edward Taylor and Agnieszka Flak; Editing
by Victoria Bryan and Mark Potter)
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