The new Ford Transit Custom the first of four new commercial vehicles Ford plans to introduce over the next two years to overhaul its van offering.

Ford has confirmed that it is to close its UK Transit plant at Southampton and another UK manufacturing operation at Dagenham.

Following from yesterday’s announcement that it would close its plant in Genk, Ford has confirmed that its Southampton and Dagenham plants are also to close as part of a wide-ranging reorganisation intended to mirror the success of its North American reorganisation and return Ford Europe to profitability.

Ford Europe is currently expected to post a £930m loss in 2012.

What’s closing?

Ford currently makes Transit chassis cabs at its Southampton plant but the majority of Transits are now built in Turkey, and the Southampton factory only produced 28,000 vans last year — far below the normal capacity for such plants.

The closure at Dagenham will only affect stamping operations — the larger diesel engine plant at the same location will remain open.

Both Southampton and the Dagenham stamping facility will be shut in the next year.

Why’s it happening?

The European automotive industry is suffering from excess capacity. Ford’s plant closures are unlikely to be the last. As I’ve reported many times in recent months, demand for new vans has fallen since 2007. Similarly, Ford’s figures show that demand for cars in Western Europe has fallen by 20% over the last five years and Ford expects industry-wide sales to be flat, at best, next year.

Ford is losing money and needs to return to profitability — something it has already managed to do successfully in North America, where the car industry was suffering from a similar excess of capacity.

Unfortunately, it can make enough vehicles to meet demand with fewer factories than it has at present — and with no imminent sign of a major recovery, that’s what it’s going to do. Ford hopes it can limit redundancies to 1,100 by relocating 300 affected staff, but the closure will no doubt have a wider knock-on effect.

In France, the government has taken the opposite approach and offered Peugeot Citroen a £5.55bn state financing package on the basis that it puts back the planned closure of its Aulnay plant near Paris, which would save 6,500 jobs. However, this deal is not yet done and you could argue that it isn’t a great solution — more debt plus excess capacity isn’t likely to help Peugeot to return to profitability. What’s more, it is only three years since the French government last tried to bail out its car industry, when it provided Peugeot and Renault with €6bn of low-interest loans.

Given this, Ford’s sharp, decisive approach may well prove to be best in the long run, despite the job losses it will cause.