The worst is yet to come for Europe’s troubled automotive industry which needs to have a better balance of production with true demand rather than artificial demand, Ford chief financial officer Bob Shanks warned in an interview on Jan.29.
“But there seems to be unwillingness or inability on the part of many of the players, both government and companies, to do what it takes to create a healthy environment for the industry,” he said after Ford released 2012 results which were badly hit by a $1.8 billion loss in its European unit and warned that it will lose another $2 billion this year as demand for vehicles continues to fall, the euro strengthens against the dollar and Ford faces heavy restructuring costs.
‘Machine is broken’
Ford forecasts that European vehicle sales will fall to the “lower end” of 13 to 14 million vehicles this year from 14 million last year. However, unlike Fiat-Chrysler chief Sergio Marchionne, who spoke alarmingly at the Detroit auto show that “the machine is broken” in Europe, Shanks believes there is still hope.Ford announced plans in October 2012 to close two plants in Britain and one in Belgium as part of a massive shake-up that includes the loss of 13 percent of the US automaker’s European workers, some 6,200 jobs. Ford’s net profit fell sharply to 5.7 billion in 2012 from $20.2 billion in 2011.