Ford expect to make major losses in Europe 0

Ford has announced that they expect to make losses of between $500 million and $600 million in Europe this year. It seems that General Motors are not the only American company to underperform in the European region and register mind blowing losses, Ford will soon join the club.

The announcement was made by Lewis Booth, Ford’s Chief Financial Officer who is set to retire soon.

Customer confidence low

Europe’s Euro Zone crisis is having a negative effect on the worldwide automotive industry amongst others. Already Ford’s pre-tax losses in Europe for the first quarter are expected to be more $190 million, which is what Ford lost in the last quarter of 2011. Customer confidence is extremely low at present in Europe. Banks are unwilling to lend money for car purchases at present. This will push sales down further.

American operations will make up for losses

Despite the anticipated European annual loss, Ford still expect to beat or equal the tremendous profit made last year, which totalled $8.8 billion. If European operations were making a profit, the company’s overall profit would reach even higher record levels. Ford are pushing to stop losses being made in the region as they are clearly unwanted. According to Lewis Booth, patience is the key in turning fortunes around.

Europe more difficult than expected

Lewis Booth said that operations in Europe will prove more difficult than expected. He said “We’re going to have a tougher time in Europe than perhaps we anticipated at the beginning of the year. We think Europe’s much more likely now to be at the bottom end of the scale we talked about, in the range of 14 million”

Capacity cut

Production capacity will have to be cut. This will see a loss of jobs and potential closure of European plants.

Can Lewis Booth do it again?

When Mr Booth took over, Ford was recording losses of $14.8 billion. Their share price fell to $1.26 at that point. He managed to play a major part in turning losses around. His previous role was running Ford Europe’s operations. He certainly has all the credentials to turn the company’s fortunes around.  His history in the automotive industry and working with Ford shows that Mr Booth knows the company inside out. Bill Ford mentioned back in 2009 that he knows the company more than any other executive in the company. Is Lewis Booth able to turn this around?