Ford Motor Co. (F) has decided to implement a nine-day production halt at its Romanian plant in September due to weak demand in the European automobile market. The demand for Ford B-MAX, which is produced solely in the Romania plant and sold in Europe, has been hurt by the volatility in the European market, which is recovering slowly. Intensified competition in the B-segment has also affected sales.
Only 31,500 units of the car were sold in the first half of 2014, marking an 18% decline from the prior-year period. Consequently, Ford is halting production at both the Operations Vehicle section and the Engines section for nine days. About 4,000 employees of the plant will be adversely affected due to the decision.
However, this is not the first time that Ford has stopped production at the plant. Temporary stoppage of production has been a regular feature at the plant since last year to adjust production volume. In 2013, Ford stopped production of B-MAX at the plant for 35 days in total, while engine production was stopped for 7 days. In 2014, production of B-MAX has been stopped for 30 days so far. Moreover, Ford may implement further production stoppages in the future, depending on demand.
Ford acquired Romanian automobile manufacturer Automobile Craiova in 2008. The automaker started manufacturing the B-Max model at the plant from 2012. It also produces the EcoBoost 1 liter and 1.5 liters petrol engines at the plant. Ford exports the vehicles produced in the plant to Germany, Italy, Spain and France. However, most of the sales are made in Britain.
At present, Ford carries a Zacks Rank #3 (Hold). Better-ranked automobile stocks include Tesla Motors, Inc. (TSLA), Fox Factory Holding Corp (FOXF) and Gentherm Incorporated (THRM), all of which hold a Zacks Rank #2 (Buy).
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