Newspaper article International Herald Tribune

Ford Expects Deeper Pain in Europe as Crisis Lingers ; Losses Are Set to Triple on Continent as It Tries to Cope with Overcapacity

Newspaper article International Herald Tribune

Ford Expects Deeper Pain in Europe as Crisis Lingers ; Losses Are Set to Triple on Continent as It Tries to Cope with Overcapacity

Article excerpt

Economic conditions in Europe make sales difficult, Ford Motor executives say, and the company sees excess manufacturing capacity there.

Europe's economic troubles are taking a much bigger bite out of the earnings of Ford Motor, which previously largely avoided the hefty losses that dragged down the profits of many of its rivals.

The company said late Thursday that its total international losses would triple in the second quarter, with Europe accounting for the most of the loss. Ford said it had a loss of $190 million in the first quarter in its international operations -- those in Europe, South America and the Asia-Pacific region. Europe was responsible for $149 million of the total.

Ford's chief financial officer, Robert L. Shanks, said in an interview that conditions in Europe were "getting tougher," as manufacturers stepped up discounts to revive sales, which are at their lowest level in more than a decade. "We lost $190 million in the first quarter, and it will be three times greater than that" in the second quarter, Mr. Shanks said at Ford's world headquarters here.

A loss on international operations of $500 million to $600 million in the second quarter would depress Ford's overall earnings for the period. The company previously forecast that international losses in the second quarter would be about the same as in the first quarter.

"We have good results in North America and solid results at Ford Credit," Mr. Shanks said. But "the overall company profits will be substantially lower."

Ford has suffered less from the downward spiral in European vehicle sales than has General Motors, which is planning to close at least one assembly plant on the Continent. But now Ford appears to be facing the same hard choices about plant capacity as other carmakers.

Mr. Shanks said the company had "excess capacity" in Europe but declined to disclose details of any potential plans for reorganization.

"It's too soon to say what we are going to do," Mr. Shanks said. When asked whether Ford would consider closing one of its five assembly plants to better align supply with demand, he said, "We're going to have to develop a plan that gives us an opportunity to do that. …

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