Ford’s current problems in Europe – deteriorating financial results and poor sales – are well known. Already, action has now been taken to address some of the difficulties, but more action is imminent. Dagenham is firmly in the firing line as Ford looks to rein in its costs..

Ford’s Dagenham plant has been the subject of closure speculation for years and it is well known that Ford has not invested in Dagenham the way it has in other plants. The apparent reluctance to invest has kept that speculation going in spite of the assurances that have been given at various times.

The background to Dagenham’s plight is not at all helpful. In the first quarter of 2000, Ford continued to lose market share in Europe. Ford’s poor market position in Europe is in part due to unfavourable product cycles. Two of Ford’s high volume model ranges – the Fiesta and the Mondeo – are fairly near to full replacement. Sales of both ranges have flagged in the run-up to replacement. Mondeo managed an estimated 230,000 units in Europe in 1999 against 311,000 in 1998; the Fiesta 311,000 against 384,000. Niche models like the Puma and the Ka have also passed their initial sales surge. The relatively young Focus range has been well received, but is competing in a tough segment with other relatively young models, such as the Opel Astra and VW Golf. Most shockingly, Ford has decided not to roll out its own ‘compact minivan’ off the current generation Focus platform. That fast-growing segment is seeing a proliferation of products and GM has achieved considerable success with its Zafira, which is built on the Astra platform. Engineering costs and delays had apparently driven the decision, which may yet prove strategically mistaken.

Dagenham is a Fiesta producer in direct competition with Cologne – a plant that has seen very much greater investment in recent years. Ford has opted to reduce output at its Dagenham (UK) plant. At least 1,500 jobs will go as production is halved with the loss of one of the plant’s two production lines. If that is broadened to embrace the other production line too, then that figure doubles – at least. Additional jobs on the diesel engine making side will help to soften the blow, but effectively ending vehicle assembly at Dagenham takes Ford out of volume car-making in the UK and is a very significant step. Cologne has in recent years seen considerable investment, in part to offset high German labour costs. Look for a formal announcement on Dagenham later this week.

Elsewhere in Europe, plant-product mix issues remain for Ford. The controversial decision not to go ahead with a Focus-based MPV could spark a similar rationalisation of European production on the Focus (CW170) platform. Saarlouis (Germany) and Valencia (Spain) are the plants in question. It is not too difficult to envisage scenarios in which Spain could win out on cost grounds, with the next Ford Ka moved out of Valencia to one of the two Fiesta sites (which would make sense, as it shares platform). Similarly, Ford Transit production could be usefully consolidated at one site, against the present two (Southampton (UK) and Genk (Belgium)).

The year 2000 looks like being another difficult one for Ford in Europe. However, looking further out, there are some positive product actions which will be lifting sales – especially in 2001, when Ford can look forward to recovering share. Crucially, the Mondeo and Fiesta ranges will be renewed in 2001. Also, Ford will benefit from steadily rising Jaguar sales – the S-Type will be joined by the X400 ‘BMW 3 Series fighter’ in 2001. In addition, Ford looks to be in line to take over Land Rover and that will have a beneficial impact on Ford’s group sales. Wider synergies could also be very significant in the future.