Ford of Europe Cuts Production, Echoing Cuts in North America

(MoneyWatch)  Ford of Europe announced production cuts, reflecting the ongoing auto sales downturn that is becoming more or less global.

Ford's European sales were 107,800 units in February, down 18.5 percent from the year-ago month. Its January sales in Europe were down 24.6 percent. "Cutting capacity, reducing costs and safeguarding our future product plans are essential actions for Ford of Europe to sustain a viable business for the future," said John Fleming, Ford of Europe chairman and CEO.

"We have already taken a number of actions but, as the market has continued to weaken substantially, we are now taking additional necessary actions," he said in a written statement on March 16.

For instance, Ford said it will reduce its factory in Valencia, Spain, to two-shift operation, instead of three, starting May 1. The plant builds the Ford Fiesta and the Ford Focus. On the positive side for that particular plant, Ford also announced it will manufacture the next-generation Ford C-MAX there.

Based on the Ford Focus, the C-MAX is a small minivan ?€" tiny, by U.S. standards. First introduced in 2003, the C-MAX got a facelift in 2007. That implies the next-generation replacement is due by 2011.

Ford also said on March 16 its plant in Saarlouis, Germany, will stick to a shortened work week, which was implemented earlier.

Ford has a lot riding on its European operations. The company's long-term strategy includes offering small cars in North America that are developed in Europe, like the upcoming Ford Fiesta and a redesigned Ford Focus.

Sharing products, engines and parts across global markets would allow Ford to buy parts in bigger quantities and spread costs over a bigger number of units. GM is pursuing a similar strategy. So is Chrysler, through its proposed partnership with Fiat.

Cost savings are essential. The new cuts for Ford of Europe are mild compared to North America, where Ford cut its second-quarter production plan almost 40 percent, to 425,000 cars and trucks.

Photo: Ford Motor Co.