Yesterday, the auto analysts from Credit Suisse sent out a very interesting note to investors. They highlighted a story in the Wall Street Journal that Ford was working on a ‘restructuring plan’ for its loss-making European operations.  

Although this plan is still being ‘worked on’ a Ford source was quoted as saying it includes the prospect for a plant closure in Europe, thought to be the two facilities in Genk, Belgium, home to the Mondeo, Galaxy and S-Max.   

Officially, Ford told the WSJ that the company was reviewing its European business, and would ‘match production to demand’ as well as paring costs and rolling out new models.   

I have to say this wasn’t a big surprise. I was very suspicious when Ford announced a six month delay for the launch of the new Mondeo - citing quality and production issues. Who on earth launches a mainstream car a year before it is due to go on sale and then raises questions about production line quality? The Credit Suisse chaps had the hard figures on the Genk dilemma. Genk No1 reached its peak Mondeo output back in 2001, when it made 330,000 examples. Genk No2, home of the MPV sisters, peaked in 2007 102,000 units. Last year No1 made just 98,000 Mondeos and No2 just 80,000 MPVs.  

With the European market shrinking fast (sales are down to a 17 year low) and predicted to stay down for some time, it makes perfect sense for Ford to press the pause button on the installation of the new Mondeo and take stock. Clearly, output of Ford’s big car family is dropping below critical mass in Europe.   

The three cars bundled together made just short of 180,000 units last year. Even with when all three are replaced, will they really top that figure? The European new car market is punishing mainstream brands and bigger cars, particularly.  

Last night Automotive News Europe reported that, in the wake of the WSJ report, Genk Union bosses had travelled to Cologne to see Ford Europe boss Steve Odell. Odell refused to give the union any guarantees about the future of Genk, which employs 4000 people, but reportedly Odell claimed he would have said the same to all of Ford’s European plants.   

In July Ford announced it expected to lose £620m in Europe. Morgan Stanley says that Ford Europe is only running its factories at 63 percent of capacity, a good way of losing money.  

Credit Suisse’s best brains speculated that Ford might decide to move Ford’s C-platform production line to its factory in Valencia to build the Galaxy and S-Max. They also pointed out that Ford already builds the Fusion - the new Mondeo’s sister car - at a factory in Mexico. Could the new Mondeo also be made in Mexico?  

Looking at the bigger picture, analysts at Credit Suisse estimate that European carmakers will have to make production cuts of between 10 and 15 percent by next summer (further worsening capacity utilisation), and that the makers do not now expect the European car market to return to its previous highs.   

Yesterday, Renault-Nissan supremo Carlos Ghosn said Europe would suffer ‘many mediocre years’ though he didn’t think Europe’s car making industry faced ‘armageddon’. Personally, where the mass-makers are concerned, I wouldn’t be so sure.