Ford Europe set to slash thousands of jobs

Ford logo

Ford logo

Tata-owned JLR TAMO.NS , based in central England, said it will cut 4,500 out of 42,500 jobs, while Ford F.N said it will slash "thousands" of jobs as part of an overhaul that could result in plant closures and the discontinuation of some models. Ford of Europe, based in Cologne, Germany, has 53,000 people working for it directly and 68,000 when joint ventures such as those in Russian Federation and Turkey are included.

Ford said it will seek to exit the family vans or MPV segment, review its operations in Russian Federation, and combine the headquarters of Ford U.K. and Ford Credit to a site in Dunton, Essex to achieve a 6 percent operating margin in Europe.

"We are looking to make a step-change in the performance of the business", said Steve Armstrong, Ford's head of Europe. "There will be significant impact across the region. We will be looking at all options", which could include plant closures, he said.

It is not clear how many jobs the auto giant is planning on cutting.

He said the scale of the restructuring assumed that Britain would leave the European Union as scheduled on March 29 with a negotiated deal defining trading relations.

"If Brexit went in the wrong direction we would have to have another look, to mitigate that", Armstrong said.

Ford lost $245 million in Europe in the third quarter as sales slumped in Turkey and Russian Federation. An improvement in management structure, announced in December, already is underway through Ford's redesign of its global salaried workforce, which the automaker says will improve the agility of the organization.

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Ford of Europe is targeting a 6 percent EBIT margin longer term, with returns in excess of the cost of capital for each business group. The company did not give a time frame for the target.

Ford said it will seek to exit the multivan segment and focus on developing more profitable "crossover" and sports utility vehicles, and will stop manufacturing automatic transmissions in Bordeaux in August.

The company was in negotiations with worker representatives about potential cuts at its Saarlouis plant in Germany, where 6,190 staff assemble cars, as the carmaker considers discontinuing production of its Ford C-Max model.

"We are continuing to invest in the business, especially in electrified cars", said Armstrong.

The company said it would shift to more electric models and that every model from now on will have a battery version, whether a hybrid that combines internal combustion and battery power or a battery-only version.

The automaker, which now employs 53,000 people in Europe, has struggled to turn a profit, posting a 245 million euros ($282 million) loss before interest and taxes in the third quarter, widening from $192 million a year earlier, and equivalent to a negative 3.3 percent EBIT margin.

Ford aims to achieve the labor cost reductions, as far as possible, through voluntary employee separations in Europe and will be working closely with social partners and other stakeholders to achieve this objective. The companies have only confirmed a commercial vehicle venture together to date.

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