THE WEEK THAT WAS: Ford Europe wields the axe
By Graeme Roberts | 26 October 2012
Loss of Transit assembly at Southampton will be a huge blow for 500 direct workers but, despite the pain, is part of an essential restructuring for Ford Europe. Photo shows a 2010 batch of Automobile Association vans; the plant built such van variants until last year
Mindful that around 6,200 of my fellow British and European Union citizens face a bleak future within a year or two - and the unemployment stats cited herein by a Frost & Sullivan consultant today serve only to highlight what jobseekers are currently up against - it has to be said Ford's announcements were hardly unexpected with the only real surprise, for me, being the axing of tooling and stamping at Dagenham though even that makes sense if you are no longer planning on assembling any vehicles in the country.
Firstly, Ford's made clear for over a decade it knows it has too much manufacturing 'footprint' across Europe, including the UK. Here, that goes back a bit - Model T production started at Trafford Park in Manchester over a century ago and Dagenham - built Thameside east of London on the Detroit Rouge River complex's model of raw-materials-in, finished-cars-out - started churning out a huge range of cars from the 1930s. Halewood was opened in 1964 to build the Anglia as part of a Wilson Labour government scheme to address unemployment in regions hit by closures in 'smokestack' industries such as steel, mining and shipbuilding (relatively little is left of any of those industries in the UK nowadays).
Halewood is one of only two of those 1960s 'regional' car assembly plants left operating (the other is GM's Ellesmere Port Astra factory). The others - mostly in Scotland - eventually closed as a result of poor labour relations, unpopular obsolete products from firms struggling to cope with foreign competition - and their automaker owners no longer exist, either.
And, it's fair to say that, over the years, industrial relations at Dagenham and Halewood were hardly sweetness and light as an oft-repeated BBC Four TV documentary (look for it on iPlayer) on Dagenham's history and a recent movie on the trim seamstresses' two-decade fight for equal pay, attest.
Eventually, Halewood, where the last Ford product was the late-'90s Escort, sorted itself out by becoming a very high quality Jaguar (X-type) plant in the [former CEO] Jac Nasser Premium Automotive Group (PAG) days, and later added the Freelander. It is now the home of Freelander and Evoque under Tata Motors' management.
Meanwhile, Dagenham built its last car - a Fiesta - in 2001 and, as with Halewood getting the Freelander, I heard very off the record a history of strained labour relations, while not the deciding factor, did have some influence in the ending of Ford car production in the UK, there being more than enough capacity in Germany and Spain at the time.
Fast forward to now, and today's much leaner Ford Europe operates a UK R&D centre at Dunton - in a sector said by many pundits to be a key part of the future of the remaining UK auto industry - and has a thriving engine operation: Dagenham Diesel Centre which started as a joint venture with PSA and ships engines around the Ford global empire as far as Australia (for the popular Territory SUV spun off the domestic Falcon) plus a petrol engine plant at Bridgend that made many JLR engines when Ford owned it, still does and, so it seems from this report today, will continue to do so, now for Tata, for a while yet.
Over the last five years or so, and especially since the 2008 credit crunch, auto industry observers and management - notably Fiat-Chrysler CEO Sergio Marchionne - have repeatedly said there is simply too much capacity in Europe and some of it just has to go. General Motors, Ford's key rival here, has already made some adjustments and is widely expected to close at least one plant in Germany, having previously axed the long-serving GM Continental factory at Antwerp in Belgium.
Now Ford has made its own hard Belgian decision which affects 4,300 direct jobs, and thousands more in the supply chain and elsewhere. And Southampton, which has made over 2m Transit vans, is to go (another 500 posts) after being progressively scaled back from 75,000 to 35,000 to producing just 28,000 chassis-cab variants of what is soon to be an obsolete model line.
Quite simply, Ford, facing at least a US$1.5 billion loss in Europe this year has, as European chief Stephen Odell made clear yesterday, done its sums, worked out which plants are cheapest and most efficient, and opted to consolidate Transit in Turkey and Belgian large car production in Spain. That's the reality, albeit of little comfort to the 6,500 or so workers facing the sack.
Ford's recent purchase of what started as a Daewoo assembly plant in Craiova, Romania, subsequent conversion to make the B-MAX and the flocking in nearby of suppliers such as Johnson Controls (to supply seats) sends a clear message in the same way as GM's recent large investments in Hungary - production costs are king and we will do what it takes to minimise them, even if it means closing factories in the west. Both companies also have healthy factory 'footprints' in Russia, and Asia, especially China and Thailand, and continue to grow this widened global vehicle sourcing at quite a pace. Ford hopes eventually to see operating profit again in Europe around 2015; GM, not quite so forthcoming, is sure to be planning likewise.
I fear this is not the end, nor even the beginning of the end, to adapt a phrase of the late British prime minister, Winston Churchill. GM still has to make more tough decisions, and, I suspect, so has Ford. And then there's PSA. And Renault. And Fiat...
Have a nice weekend.
Graeme Roberts, Deputy Editor, just-auto.com
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