PARIS/DETROIT: Ford Motor Co, which clung to the road with a timely swerve before the 2009 crisis that bankrupted General Motors Co, may now be pulling a similar stunt in Europe.
The Dearborn, Michigan-based automaker is scrapping three European plants and thousands of jobs while its rival appears to be stuck on the starting grid.
The speed of Ford's restructuring plan - and the comparatively slow pace of GM's - has become more important during a protracted slump in Europe's auto market, with sales down another 7.2 percent so far this year.
Both companies unveiled hefty third-quarter losses in the region and warned they could lose a combined $6 billion or more in Europe in 2012-13.
The bad news weighs heavily on GM's troubled Opel unit, which has lost billions of dollars over the past decade, has a long history of ill will with its labor unions, has seen its products and brand image pummelled in the media and has shown the door to all but a handful of its top executives.
More than anything, however, the cost of making cars is simply too high, with too many workers still on the payroll given sagging demand in most of western Europe.
Opel is lagging Ford in Europe because it "totally missed the golden opportunity" to make deeper cuts during the last crisis, said Mirko Mikelic, portfolio manager at Fifth Third Bank, who oversees assets including GM preferred shares and Ford debt.
"Most investors would like to see some capacity cuts" at GM, he said. "It doesn't necessarily have to be the same timing as Ford ... but we hope GM will take similar steps."
The euro zone crisis has exacerbated the auto sector's overcapacity, locking companies into paying high fixed costs to build fewer vehicles. GM and Ford plants in Europe operate at less than 75 percent of installed capacity, analysts say.
Unlike Opel, Ford of Europe now has a clearer path to recovery after announcing 6,200 job cuts with the closure of a major assembly plant and two smaller factories, starting next year.
Ford will shutter a British van factory and associated stamping plant in 2013, with the bigger site in Genk, Belgium to close the following year.
More cuts may follow if these prove insufficient to achieve regional profitability by mid-decade and a 6-8 percent operating margin in the longer term, the company added.
GM, by contrast, has been preoccupied with forging an alliance with struggling French automaker PSA Peugeot Citroen that likely will not generate significant gains before 2016.
Opel is also mired in union negotiations to close a plant in Bochum, Germany - but not until the following year. The latest Opel talks deadline expired as GM published its quarterly results on Wednesday.
Unions announced earlier in the week that negotiations had been extended and may continue into 2013, with no new date set for their conclusion.
'STILL BLOODY OUT THERE'
"We know we are behind," said Steve Girsky, GM vice chairman and interim Opel chief, citing Opel's deteriorating brand image and "poor relations" with German unions.
"It's still bloody out there, but we're making some progress," he told analysts. "Small wins lead to big wins." GM has repeatedly changed tack over Opel since an abortive attempt to sell it in 2009 to a Russian-backed coalition.
The carmaker declined to comment on a Financial Times Deutschland report that it is hiring Volkswagen executive Karl-Thomas Neumann to take over as Opel CEO in mid-2013.
The job has already been vacant for more than three months since the last incumbent was sacked.
indiatimes.com
The Dearborn, Michigan-based automaker is scrapping three European plants and thousands of jobs while its rival appears to be stuck on the starting grid.
The speed of Ford's restructuring plan - and the comparatively slow pace of GM's - has become more important during a protracted slump in Europe's auto market, with sales down another 7.2 percent so far this year.
Both companies unveiled hefty third-quarter losses in the region and warned they could lose a combined $6 billion or more in Europe in 2012-13.
The bad news weighs heavily on GM's troubled Opel unit, which has lost billions of dollars over the past decade, has a long history of ill will with its labor unions, has seen its products and brand image pummelled in the media and has shown the door to all but a handful of its top executives.
More than anything, however, the cost of making cars is simply too high, with too many workers still on the payroll given sagging demand in most of western Europe.
Opel is lagging Ford in Europe because it "totally missed the golden opportunity" to make deeper cuts during the last crisis, said Mirko Mikelic, portfolio manager at Fifth Third Bank, who oversees assets including GM preferred shares and Ford debt.
"Most investors would like to see some capacity cuts" at GM, he said. "It doesn't necessarily have to be the same timing as Ford ... but we hope GM will take similar steps."
The euro zone crisis has exacerbated the auto sector's overcapacity, locking companies into paying high fixed costs to build fewer vehicles. GM and Ford plants in Europe operate at less than 75 percent of installed capacity, analysts say.
Unlike Opel, Ford of Europe now has a clearer path to recovery after announcing 6,200 job cuts with the closure of a major assembly plant and two smaller factories, starting next year.
Ford will shutter a British van factory and associated stamping plant in 2013, with the bigger site in Genk, Belgium to close the following year.
More cuts may follow if these prove insufficient to achieve regional profitability by mid-decade and a 6-8 percent operating margin in the longer term, the company added.
GM, by contrast, has been preoccupied with forging an alliance with struggling French automaker PSA Peugeot Citroen that likely will not generate significant gains before 2016.
Opel is also mired in union negotiations to close a plant in Bochum, Germany - but not until the following year. The latest Opel talks deadline expired as GM published its quarterly results on Wednesday.
Unions announced earlier in the week that negotiations had been extended and may continue into 2013, with no new date set for their conclusion.
'STILL BLOODY OUT THERE'
"We know we are behind," said Steve Girsky, GM vice chairman and interim Opel chief, citing Opel's deteriorating brand image and "poor relations" with German unions.
"It's still bloody out there, but we're making some progress," he told analysts. "Small wins lead to big wins." GM has repeatedly changed tack over Opel since an abortive attempt to sell it in 2009 to a Russian-backed coalition.
The carmaker declined to comment on a Financial Times Deutschland report that it is hiring Volkswagen executive Karl-Thomas Neumann to take over as Opel CEO in mid-2013.
The job has already been vacant for more than three months since the last incumbent was sacked.
indiatimes.com
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