Europe Drives Ford Profit Dip

Ford was in the spotlight this past Wednesday, July 25, as a conference call was held to discuss the second quarter results of the company and the picture was not pretty. The Michigan based auto maker showed that it had a massive drop of 57% in it profits because of the ongoing economic downturn in Europe. Ford’s management warned that even though the company was doing well within North America, the losses in other areas of the globe, especially Europe, were not looking good. The company expects the situation in the European market to stay tumultuous for several more years.

Ford showed that it had put together $1.04 billion in profit for the second quarter which was less than half of its previous profits of $2.4 billion from 2011. The biggest contributor to the large drop in earnings was a $404 million loss in Europe. The EU was not the only area Ford had taken a hit internationally and the numbers showed a minor loss in the Asian market and a major shortfall in earnings in South America which cut in to Ford’s overall revenue by dropping it by 6.2%.

Ford is not the only one facing issues in the European auto market. Figures show that car sales all over Europe have dropped for the last four years and analysts expect the downward trend to continue this year also. Manufacturers like Peugeot, Daimler and GM all have shown weak sales this year in the EU and many have plans to shut down plants to help reduce costs.

Manufacturers are facing issues with over staffed factories that do not have enough orders in Europe to keep workers busy. Ford’s management has vowed to look at all options and strategies including shutting down plants to help recover in Europe. With a bleak outlook in the EU, Ford has already cut all temporary staff and has reduced working hours of full time employees to try and keep costs down.

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