Ford Europe Cancels "Next Focus" investment

Ford Europe Cancels \"Next Focus\" investment

FORD FURTHER RATIONALIZES ITS BUSINESS IN EUROPE: ANNOUNCES INTENTION TO REDUCE INVESTMENT AT GENK

GENK, Belgium,1 October, 2003 – Ford of Europe announced today its intention to take advantage of the efficiency gains of its flexible manufacturing capability by concentrating production of the next generation Ford Focus in two plants rather than three. This plan would result in canceling investment in new Focus tooling and facilities at Genk, Belgium.

Ford also intends to build the current Mondeo at Genk on a 2-shift, rather than 3-shift pattern beginning in January of 2004. Taken together, the proposed changes would result in a reduction of 3,000 jobs at Genk.

"The automotive market in Europe has deteriorated dramatically since only a year ago," said Lewis Booth, President and COO, Ford of Europe. "With lower industry outlooks, a larger number of competitors, and escalating marketing costs, we must concentrate on maximising our product line-up while minimising our spending."

Sales volumes in the European automotive market are down by over one million units since the original plans for Genk were drawn up, and the C/D segment in particular has seen a sharp contraction in demand, from 13 percent of the market a year ago to 11.5 percent today.

Furthermore, flexible manufacturing technology has improved productivity at Ford plants by up to 15 percent, enabling more available capacity with less investment.

Genk will continue to produce the current Mondeo and to serve as a stamping facility for the family of Ford Motor Company brands in Europe. Genk also remains the preferred location for production of the next generation Mondeo, subject to final review and approval of Mondeo investment plans.

Ford will consult with the Genk Works Council and the Unions on these plans and will work with them to develop a social plan, including an appropriate financial package, to assist employees who may be leaving the Company. Genk employees will also be offered the opportunity to take up new jobs being created at Volvo's Ghent plant in Belgium. It is expected that the affected employees will begin to leave by the end of the year.

"We are initiating these actions at Genk reluctantly, because of the impact it will have on employees," said Lewis Booth. "However, we need to adjust our business to new realities in the European industry. We are taking steps to accelerate cost reductions, while maintaining the new product momentum our business depends on."

The announcement at Genk is part of a series of actions Ford is taking to strengthen its business in Europe, including steps to reduce total salaried costs across Europe, acceleration of variable cost reductions through Team Value Management, increased engineering and manufacturing efficiencies and reductions in operating costs.

"These actions – on top of the improvements in product, quality, market share, and cost delivered over the last three years – will help us become more competitive in an intensely competitive market," said John Fleming, Vice President, Manufacturing, Ford of Europe.

Ford news releases and high-resolution photographs are available on the Ford Motor Company media Web site (http://media.ford.com).