While Ford is benefiting from the modest recovery of the European auto market, the president of its operations in the region remains wary that some underlying economic weaknesses still pose a threat. Ford of Europe President Stephen Odell warned that Europe has not recovered as an economy as fast as other parts of the world.
He noted that that there is also the debate on how to address the unemployment situation in Europe. Some countries in Europe, especially those in the south like Spain and Greece, are continued to be hounded by high unemployment issues – with rates soaring around 25 percent.
Likewise, the auto industry in Europe still faces excessive capacity issues – something that Ford has taken steps to address. Ford is shutting down three sites in Europe and has cut installed annual capacity by 350,000 units.
The plan -- announced in late 2012 -- is modeled on former chief executive Alan Mulally’s recovery plan credited with resurrecting the carmaker to profitability in North America. Odell said that Ford has taken actions necessary its capacity utilization to a level where the carmaker can have sustainable profitability in Europe.
In a separate interview, Odell told Automotive News Europe that the European market remains laden with excessive capacity, noting that while the market only sold 14 million units, it has 20 million units of capacity. He remarked that he could further cut capacity at Ford if circumstances call for it.
He remarked that if the economy in Europe changes, Ford will do what it believes is necessary since one of its key requirements is to “right-size capacity.” Ford posted a 6.6-percent surge in sales in the region in the first half of 2014, outpacing an industry that grew 6.3 percent.
Despite that, Ford’s European market share was still flat at 7.9 percent. Ford is currently engaged in a new-product offensive in Europe that eyes the rollout of 25 new vehicles in the next five years. [source: automotive news - sub. required]