Ford To Invest $260M in German Plant

Cologne plant investments would help secure jobs and get the company through the current economic crisis, a German official said Monday.

FRANKFURT (AP) -- Ford Motor Co. said Monday it will cut capacity and costs in its European operations because of weaker demand amid the economic crisis, even while investing euro200 million ($260 million) in its plant in the German city of Cologne.

Ford spokesman Tom Malcolm said no job cuts or layoffs were planned at the moment.

"Cutting capacity, reducing costs and safeguarding our future product plans are essential actions for Ford of Europe to sustain a viable business for the future," said John Fleming, Ford of Europe's chief executive in a statement.

Fleming said the company would "review its manpower needs across Europe" and take "further decisive actions to bring its production capacity in line with significantly decreased industry demand."

The investment in Cologne, announced separately by government officials, would help secure jobs at the plant and get the company through the current economic crisis, North-Rhine Westfalia Minister President Juergen Ruettgers said when announcing the euro200 million deal.

"In the future, even more environmentally friendly motors will be produced in Cologne," Ruettgers said in a statement. "That's a good signal for North-Rhine Westfalia."

At a press conference in Cologne, Ford only confirmed it will invest a "three-digit million" sum in the Cologne plant which employs about 800 people.

Ford is based in Dearborn, Michigan.

In the statement, Ford said its Cologne plant would share production of a new small-displacement EcoBoost gasoline engine with its Craiova, Romania Engine Plant.

The company said its Saarlouis, Germany plant's labor level would be reviewed on a regular basis and that the Ford Kuga, an SUV, and the Ford C-Max model, a smaller multipurpose vehicle, or van-car cross, would not be replaced there when their current production plan expires. The company didn't specify when that would be, but had already announced production cutbacks at the Saarlouis plant.

Malcolm, the Ford spokesman, said the current four day week at Saarlouis would be continued through June as planned, and then the company would review whether increasing shifts would be sustainable.

Meanwhile, the company said its Valencia, Spain plant will move to two-shifts a day from three, and that longer term shift planning will depend on market demand.

Malcolm said employees will rotate on the shifts, so there currently won't be job losses or layoffs in Spain.

Current production of the Fiesta, a compact car, will continue at Valencia while Focus production will be replaced by the next generation of the C-Max. Ford builds the Focus as both a sedan and a coupe.

Ford said last month its sales across all of Europe declined 25 percent in January to 112,000 cars but that it saw a 14 percent increase in January sales in Germany as a result of the German government's "Environmental Bonus" program.

The German government has provided a euro2,500 incentive to car buyers if they scrap a car at least nine years old and buy a more environmentally friendly one.

"I believe the important actions we have announced today -- and which build on previous actions we have taken -- will enhance Ford of Europe's ability not only to survive the ongoing current economic crisis, but to emerge from it as a stronger and more competitive business once the economic situation eventually improves," Fleming said.

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