Bloomberg News

Ford Plans 4,000 Temporary Layoffs on Weak Demand in Europe

November 29, 2011

(Updates with analyst comment starting in third paragraph.)

Nov. 24 (Bloomberg) -- Ford Motor Co. will lay off 4,000 workers next year at its assembly plant in Valencia, Spain, as demand slackens in Europe.

The automaker will furlough the employees for 39 days over the course of 2012, Adrian Schmitz, a spokesman for the Dearborn, Michigan-based company’s European operations, said today by telephone. The factory employs 6,200 workers.

“It is certainly a sign of frail demand,” said Juergen Pieper, a Frankfurt-based transport analyst at Bankhaus Metzler. “It’s only likely to get worse. More manufacturers will see sales worsen next year, and this will lead to more job cuts.”

Assembly of Ford’s Fiesta hatchback will stop at the plant next year, with production shifting to the Kuga compact sport- utility vehicle and Transit Connect delivery van. PSA Peugeot Citroen has said it would eliminate as many as 3,500 permanent staff, while Renault SA and General Motors Co. announced the temporary suspension of some car production lines in France and Spain respectively.

The layoffs at the Ford plant will reduce production 34 percent, El Economista reported today.

Weak 2012

“This downtime is related to product changeover at the plant and the expectation that demand will remain weak next year across the European industry,” said Ford’s Schmitz, who’s based at the company’s European headquarters in Cologne, Germany. “The decline in demand in both Spain and Europe is affecting all of the industry.”

Ford has overtaken Fiat this year to become the fifth- biggest automaker in Europe, according to the European Automobile Manufacturers Association, or ACEA. The U.S. carmaker sold 6.4 percent more vehicles in October than a year earlier, while the European market shrank 1.4 percent. Sales in Spain fell 6.7 percent, the biggest decline among Europe’s five biggest car markets.

Ford is better-placed to deal with lower demand next year than rivals Renault, Peugeot and Fiat SpA, while not in as strong a position as Volkswagen AG, Bankhaus Metzler analyst Pieper said.

--Editors: Thomas Mulier, David Risser

To contact the reporter on this story: Alex Webb in Frankfurt at awebb25@bloomberg.net

To contact the editor responsible for this story: Chris Reiter at creiter2@bloomberg.net


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