Europe also has labor laws that make it expensive and time-consuming to close plants, which has led to significant overcapacity in the auto industry there.
Ford lost $553 million in Europe in the first half of this year, while reporting company-wide net income of $2.4 billionduring the same period. The company expects that the plant closures will bring its European operations to profitability by "mid-decade."
But even with the rising European losses, Ford expects third-quarter earnings per share, excluding special charges, to top second-quarter results. That's a bit better than current forecast from analysts. Ford is set to report results Oct. 30.
Shares of Ford(F) gained 1.6% in midday trading Thursday. Analysts generally applauded Ford's efforts to address overcapacity in Europe.
Ford CEO: 'Europe has a long way to go'
"Are Ford's European problems solved? Definitely not," said Adam Jonas, an analyst with Morgan Stanley. "But it's an important start and could set the tone [that] Ford is demonstrating the vision and industrial courage to make tough decisions today that will pay off long term."
Jonas said other automakers in Europe, including GM(GM), need to be cutting capacity as well.
"The biggest unknown is, can others follow in Ford's footsteps?" he said.