Ford closures to mean a demand shift in Europe - solvent producer

26 October 2012 18:23  [Source: ICIS news]

LONDON (ICIS)--Ford Motor Company's proposal to close three of its plants in Europe and shift some of its car production to Spain and Turkey would require paint and solvents companies to adapt to a potential geographical shift in product demand, a major solvents producer said on Friday.

Ford announced on Wednesday that it would close its assembly plant in Genk, Belgium, by the end of 2014.

"Belgium Ford closing a plant is historical, the announcement was exactly 50 years after they laid the first stone. Paint companies will have to adapt themselves and [hence] solvents companies as well," the source said.

On Thursday, Ford went on to announce it would close two plants in Dagenham and Southampton in the UK next year. Ford plans to move its Southampton production to its existing plant in Turkey.

"[There is going to be a] shift in demand from one country to the other. [There will be a] higher need for paints and solvents from the Spanish plant in 2014 [as well as a shift] from the UK plant to Turkey," a source said.

When its European restructuring plans are completed, Ford is expected to improve capacity utilisation in its European operations.

Ford's move will  mean an 18% reduction in European production capacity in Europe. The company said it would eliminate 4,300 positions in Belgium and 1,400 in the UK.

Ford's decision comes against a backdrop of falling car registrations in Europe. From January to September, demand for commercial vehicles fell by 10.7%, according to the European Automobile Manufacturers' Association (ACEA).

"All major markets recorded negative figures: -3.1% in the UK, -4.2% in Germany, -7.7% in France, -25.7% in Spain, -34.6% in Italy," ACEA said.

A second major solvents producer in Europe said: "There is a 15% year on year decline in demand for solvents in 2012, because automotive coatings is the biggest application [for the sector]."

Butyl acetate (butac) prices show a decline of 4% year on year in late October. Butac is used as a solvent in automotive coatings.

By: Cuckoo James
+44 (0) 208 652 3214

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