The Europeans simply aren’t buying new cars. Indeed, according to the European Automobile Manufacturers’ Association, car sales haven’t been this slow since 1995. Ford’s annual losses across the European business have deepened to $1.75bn from $27m in 2011, on revenues down 21% to $26.6bn.
Off the back of these results, Ford has been forced to revise down its 2013 sales expectations for Europe. It will lose $2bn (£1.25bn) on the Continent, it says, up 25% from the prediction it made just a few months ago.
But chief financial officer Bob Shanks isn’t taking this hit to the balance sheet lying down – he plans to close plants and introduce new, more European models (MT predicts a zippy little number, reminiscent of the old Renault Clio – ‘Papa!’ ‘Nicole?’) in order to slow the sales decline. ‘The business environment remains uncertain, and Ford will continue to monitor the situation in Europe and take further action as necessary,’ reads the company statement.
However, Ford predicts that overall global operating profit won’t decline in 2013. Worldwide, after all, the firm isn’t doing too badly. Sales for 2012 are up 7.5%, and while most of the gains have come from Ford’s North American business, where margins stand at an impressive 8.4%, the Asia Pacific and Africa regions are also growth markets for the carmaker; Ford boosted turnover by 41% in these territories back in 2011.
However, all this is very bad news for Ford’s workers in Europe and in the UK. The company made 1,400 Southampton workers redundant only last October, and it’s likely that further job cuts will follow. The eurozone's fragile economies may not be getting the column inches they were a few months ago, but growth is still a long way off, and the increased strength of the euro only makes it harder for foreign firms to run operations there.
Let’s just hope Ford takes more care with its redundancy plans than Peugeot, which has been hauled up in front of a judge over claims it failed to consult fairly with employees. Some 8,000 Parisian staff could yet keep their posts if the French courts get their way. So, Ford best watch its step. As everyone knows, the hardest place in the world to fire your staff is in La Belle France…