Ford moves to cut inventory

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Ford is making a strategic shift to reduce vehicle inventory at its European dealerships, following the massive restructuring announced earlier this week that involves the closure of the Transit plant in Southampton and the assembly plant at Genk in Belgium.

The group needs to stem losses of $1.5bn in Europe this year. This includes more than $400 million related to dealer stock reductions, and about $100 million of accelerated depreciation associated with planned manufacturing footprint actions. The group said that compared with prior guidance, the higher loss was explained primarily by the strategic destocking actions being taken in the fourth quarter.

Ford said it had maintained relatively lean stocks,  bbut recent improvements in vehicle logistics and IT systems had sped order-to-delivery, enabling it to reduce vehicle inventory.

“The new business practice will have a long-term positive effect on profits for both Ford and dealers, while customers will benefit from fresher vehicle inventories, quicker delivery and improved resale values,” it said.

Southampton has been the home of the Transit for most of its life. It was launched in 1965 and was originally made at Ford’s truck plant at Langley. It quickly outgrew that site and moved to Southampton.

The Transit van has been credited with contributing to the demise of the Quantity Licensing system that existed in the UK up until 1968. Under quantity licensing, the number of companies able to operate commercial vehicles was controlled.

The Transit was the first vehicle that didn’t fall within the licensing regulations that could enable unlicensed operators to challenge the established licensed  hauliers for certain loads.

In 1968, quantity licensing was replaced by the current quality licensing system.

Production of the Transit will now be moved to  Ford Otosan in Kocaeli, Turkey, in 2013

Ford will also close a stamping and tooling operation at Dagenham.

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