European Contagion: Ford In Deeper Trouble Than GM

While all eyes are on GM's hemorrhaging Opel, Ford is said to be even more affected by the European contagion. Ford could have to close at least one plant in Europe, analysts say, with Southampton, England, and Genk, Belgium, in the cross-hairs. "By our calculations, Ford's capacity utilization in Europe is even lower than GM's, making it lower than any automaker besides Fiat" Adam Jonas, an analyst at Morgan Stanley, told Bloomberg. "Ford must address its excess-capacity situation with decisiveness to stay ahead of the wave." His colleague Efraim Levy at S&P Capital IQ agrees: "Europe has been a morass for a long time for the American automakers and it will continue to be a challenge. And Ford has a bigger exposure to Europe than GM." IHS Automotive thinks that Ford's capacity-utilization in Europe is higher than GM's: 66 percent to 62 percent. Which doesn't help either, in the business, capacity utilization below 80 percent is bad news and usually means losses. Ford said last month it will report second-quarter earnings that are "substantially lower" because of losses in Europe, Asia and South America. Losses in Europe alone could exceed $1.1 billion for the full year, Morgan Stanley expects. Still, Ford does better than GM in Europe. Says Bloomberg: "While GM has lost $16.4 billion in Europe since 1999, Ford has fared better, earning $1.73 billion since 2007, even while losing money in two of the last three years. Ford of Europe has enjoyed stable leadership under CEO Stephen Odell, who took on the job in 2010 after running Volvo Cars. GM this week named a turnaround expert as deputy CEO of its Opel operations after Karl-Friedrich Stracke ran the unit for less than eight months. from The Truth About Cars http://www.thetruthaboutcars.com

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