Ford Europe To Cut Output Capacity, Costs

US automaker Ford’s European division said Monday that it is reducing its production capacity in line with significantly decreased demand, and will take additional measures to trim costs, including at its new manufacturing plant in Craiova, southern Romania.

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"Cutting capacity, reducing costs and safeguarding our future product plans are essential actions for Ford of Europe to sustain a viable business for the future," said John Fleming, Ford of Europe Chairman and CEO.

“We are realigning not only our current production requirements but also our future sourcing plans to meet our business needs,” Fleming also said.

The actions announced today primarily affect Ford's manufacturing operations in Germany and Spain, and at its new manufacturing facility in Craiova, Romania, Ford said.

Ford said the European market demand is unlikely to improve significantly for some considerable time.

"We considered all the options but decided the best approach in the present circumstances was to re-balance production across our plants in line with the market decline," Flerming said.

Global carmakers were hurt in recent months by dwindling demand, as the economic outlook worsened.

Ford Europe said it has already taken some actions to face the market decline, but, as the market has continued to weaken substantially, further measures are needed.

Despite the output cuts announced, Ford re-affirmed its commitment to manufacturing in Germany, Spain and Romania.

It also said the German engine plant in Cologne will share the production of a new, small-displacement EcoBoost petrol engine with the Craiova plant in Romania, while the factory in Valencia, Spain, will produce a new 2.0-litre version of Ford's EcoBoost petrol engine.

"Ford of Europe must return to sustainable profitability as soon as possible. We will do whatever it takes to ensure the continuing viability of our business, and further actions can be expected," Fleming said.

In March 2008, Ford paid EUR57 million for a 72.4% stake in Romania's Automobile Craiova assembly plant. Ford said in February it would invest EUR1.2 billion in its Romanian factory.

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