Tomahawk, WI 10/30/2013 (BasicsMedia) – Companies often have to make tough decisions where production is concerned. Ford Motor Company (NYSE:F) is the latest company to make a very tough decision, which I think is quite justified. The European automotive industry has not fully recovered from a horrid time it has gone through lately. The most affected types of cars are four wheelers and analysts are still looking for reasons why this scenario has emerged. Ford believes its options are limited and it must stop production of the four wheelers for some time if it is to maintain current growth levels.

Ford to Shut Down for 13 Days

Ford Motor Company announced that it would stop production of the four wheelers in Romania for a period of 13 days. The company will not stop production of these cars only, but also of engines. It will cease the production of its engines for a period of eight days in Romania as well. This seems to be the new trend with Ford’s Romanian plant. This is the third consecutive month where Ford has opted to shut down the production of its cars and engines in Romania, but is necessary in order to cut down on costs if it intends to fulfill its responsibilities to investors.

European nations continue to post poor demand for four wheeler cars, especially those made by Ford. However, the results for cars made by EU companies are much different. The decision is because of the financial crisis of 2008, which affected the entire world. Companies still struggle to turn in good performances despite the reprieve the global economy has enjoyed in the last couple of years. Ford is blamable as well since the genesis of its troubles in Europe started with its decision to purchase Automobile Craiova, which analysts believed was not justifiable at all.

Ford’s Production Levels to Suffer

Ford’s plant in Romania is responsible for the manufacture of close to 370 cars and 1000 engines every single day. If the closure goes ahead as Ford recently announced, I expect this decision to interfere with the production of around 4,800 cars as well as 8,000 engines in total. This will affect income earned by the company’s employees in Romania, but will save Ford in terms of salaries and wages it would have paid to its employees in the country. Ford will cut down on its expenses greatly because of the closures it has announced regarding its Romania operations,

4,000 Romanian Facility Employees to be Affected

Ford’s Romanian facility has employed close to 4,000 workers. The good news for the workers is that they will still receive their wages, only that it will not be the full amount. Ford intends to pay its employees working in its Romanian facility 80% of their wages and salaries while it remains closed for the aforementioned number of days. Ford’s closures are not limited to Romania only, since it has carried out similar undertakings in England and Belgium in the recent past. As long as Europe’s demand for cars stays at the current levels, closures will be the norm.

Based on the above factors, the decision by Ford is quite understandable.

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