Ford says EU free trade deals will lead to job losses

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Media captionStephen Odell says more cars will be imported into Europe which will harm the sector

The head of Ford's European operations has warned that jobs will be lost in Europe due to free trade deals with some Asian economies.

Stephen Odell told the BBC that in the past 11 months a new agreement had allowed 450,000 South Korean-built cars to be imported into Europe.

In return, just 75,000 cars made in the European Union had been exported to Korea.

"I believe that existing (deals) are unbalanced" he said.

"There are non-trade barriers for doing business in Korea."

The EU is currently proposing a similar free trade deal with Japan, but Mr Odell says this will exacerbate the problems facing Europe's car industry and cost jobs.

"Japan has over-capacity at the moment of more than two million vehicles," he said. "You add that to an overstretched, over-capacitised Europe - it can only lead to job losses. If you add that into the pot with a 14 million vehicle industry, over time I think something has to happen".

Car sales in Europe have fallen from around 18.5 million a year before the downturn to an expected 14 million this year.

Over capacity

Mr Odell said Europe has the capacity to make more than 20 million cars, which is significantly more than current demand.

Industry analysts say companies will have to close plants because they are making too many cars.

GM is currently reviewing its European operations, leading to concerns about the future of its Ellesmere Port plant in Cheshire.

Mr Odell believes that across the industry tough decisions will eventually have to be made.

"I do believe that if we go through a protracted period of low industry that in the end something will have to happen because you can't keep operating at a loss."

Last week, Ford announced first quarter profits, which were in part dragged down by losses of $149m (£92m) in Europe. The company expects to lose $500m to $600m in Europe this year.

'Balanced' trade

Car sales have been hit as consumers have reined in spending in the face of the continuing downturn and the euro crisis.

Mr Odell's comments on free trade may be seen by some as protectionist. He denies this is the case.

"Ford are an advocate of free trade, but it has to be balanced and fair free trade," he said.

"Europe needs to build things. It needs to engineer things - it needs to employ and train people. It cannot therefore surrender, particularly in unfair, unbalanced trade agreements, its industry."

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