Ford sees $1.5B European loss, shuts plants

• Ford's forecast loss in Europe is much bigger than early estimates
• Two U.K. plant closings part of 'aggressive restructuring'
• Closings will affect about 5,700 employees

Ford Motor dramatically boosted its forecast of loss in Europe this year to $1.5 billion, from $1 billion it projected three months ago, which was double the forecast Ford made earlier in the year.

Thus, Ford now expects to lose three times as much in Europe as it originally forecast.

What's more, it foresees "substantial losses" next year, too. And no profit in Europe until "mid-decade."

U.S. investors disliked the news. Ford shares blipped a few cents after the announcement, but then shifted to reverse and headed down in morning trading.

Ford says it must cut European production capacity 18%, and next year will shut its Southampton vehicle assembly plant and Dagenham tooling and stamping operations in the U.K.

The striking announcement comes atop Wednesday's plan by Ford to close its Genk, Belgium, factory in 2014.

CEO Alan Mulally says the automaker will "aggressively" restructure European operations, saving Ford $450 to $500 million a year.

"We will address the crisis in Europe with a laser focus on new products, a stronger brand and increased cost efficiency," Mulally said Thursday in outlining Ford's steps to halt losses in Europe.

"We recognize the impact our actions will have on many employees and their families in Europe, and we will work together with all stakeholders during this necessary transformation of our business," he said.

Ford says about 5,700 people work at the three plants targeted for closing.

The European market is shrinking. Ford expects to sell 14 million new vehicles this year, weakest since 1994. That's down from about 18 million last year, on a continent that could manufacture 22 million vehicles a year.The automaker doesn't foresee a return to 15 million until mid-decade.