Its crunch time for a decision on where the next Mondeo will be assembled in Europe. That decision may have been rolled into a bigger one on Fords European manufacturing footprint.

It's crunch time for a decision on where the next Mondeo will be assembled in Europe. That decision may have been rolled into a bigger one on Ford's European manufacturing footprint.

Timing for the start-up of European production on the next generation Ford Mondeo is a 'critical variable' in the company's decision-making over its European capacity footprint, according to an analyst at LMC Automotive.

The model was unveiled last month at the Paris Motor Show as part of Ford's product-led strategy to hold its sales up in the challenging European market. And just last month it seemed that Ford was going ahead with plans to make the model in Genk, Belgiun, from the autumn of next year (now thrown into doubt ahead of a planned announcement on Genk's future tomorrow). 

However, while some slipping of the timing on the Mondeo may have (intentionally or not) created space for Ford to have a rethink, a decision needs to happen imminently and could also have pushed Ford to consider closing Genk – an assembly plant with a very low rate of capacity utilisation under existing production plans.

The schedule for the installation of new tooling for the next Mondeo and the lead time ahead of commercial production means that Ford needs to decide now whether to put the model into Genk or make it at an alternative plant.

“Our understanding is that the timing on the start of European production for new Mondeo has slipped from April to September of next year,” says Arthur Maher, LMC analyst. “That means that Ford really has to decide now on where it will locate that model. It may be a decision that has been rolled into a wider reassessment of the company's European manufacturing footprint in the context of projected rates of capacity utilisation across Ford's European production network over the next few years and given the forecast continued weakness of the European car market.”

The position of Genk looks bleak according to LMC's analysis of the plant's output and rate of capacity utilisation.

LMC estimates annual capacity at Genk of around 270,000 units. However, production last year totalled just 178,127 units (to yield a 66% rate of capacity utilisation). This year capacity utilisation at Genk is forecast to decline further to around 50% as production falls to around 134,000 units. On current plans LMC forecasts capacity utilisation at Genk to fall further in 2013 and it is projected at a level of just 50% in 2017. LMC estimates that capacity utilisation needs to be around 80% for a plant to be 'rule of thumb' healthy and around the point of break-even.

See also: BELGIUM: Twitchy Europe unions eye Ford Genk meeting

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