Ford closures could affect U.S. suppliers
Ford Motor Co.'s plan to close plants in Europe begins a long, painful road for U.S.-based suppliers if they don't react quickly to the European economic crisis, industry analysts say.
Last week, Ford announced that it will close its Genk, Belgium, plant, which is supported by several U.S. suppliers, including Lear, Federal-Mogul and Visteon.
The plant is expected to close in 2014.
The automaker also said that it will close two plants in England next year: an assembly plant in Southampton, which makes vans, and its stamping and tooling operation in Dagenham.
Lear produces seats for Ford's Genk plant from its own plant in Genk. A Lear spokesman wrote in an e-mail that it is too soon to gauge the impact of the Ford closure.
Federal-Mogul also supplies Ford's Genk plant but doesn't expect to be affected, a spokesman wrote in an e-mail.
But the company did recently announce layoffs of 300 temporary workers in Europe, with plans for more.
Meanwhile, Johnson Controls has announced it is restructuring its European operations because of slowing sales. The supplier declined to specify how many plants will be closed and how many jobs will be affected.
The issue is about overcapacity in Europe as sales are nearing a 17-year low, said Tom Manganello, head of the automotive practice at Detroit area law firm Warner Norcross & Judd.
"There is way too much capacity in the European Union, and the entire auto industry needs to swallow the bitter pill that [automakers] and suppliers did in North America and right-size plants and their entire supply chain," Manganello wrote in the e-mail.
"Those that do so fastest will win, not fail."
Manganello is the brother of Tim Manganello, CEO of BorgWarner, which generates about half its automaker business in Europe.
Mike Wall, director of automotive analysis for IHS Automotive, said Ford's actions will inevitably benefit the supply base.
"By closing the Genk facility, Ford will be in a much better position to weather the downturn in Europe and eventually return to profitability in the region," Wall said.
"A financially healthier OEM base should also benefit the broader supply chain, as well."