Ford to cut jobs, idle plants, change lineup in Europe

Ford to cut jobs, idle plants, change lineup in Europe
Ian Thibodeau, The Detroit News Published 6:08 a.m. ET Jan. 10, 2019 | Updated 6:27 a.m. ET Jan. 10, 2019

Ford Motor Co. will attempt to turn around its unprofitable European business by cutting salaried and hourly workers, ending production at plants in France and Germany, eliminating less-profitable vehicles like the C-Max from the lineup there, and possibly exiting a Russian joint venture.

The developing plans are part of CEO Jim Hackett’s ongoing global restructuring of the Dearborn-based automaker — expected to also affect Ford salaried employees in North America. Hackett and his executives plan to spend $11 billion to fix struggling sections of the company abroad and cut costs in the U.S.

Europe has been a tough market for foreign brands in recent years. Lagging profits prompted General Motors Co. CEO Mary Barra to sell off the company’s European business in 2017. Ford has lost hundreds of millions in Europe in recent years. Through the third quarter of 2018, Ford had lost $119 million there.

Ford employs roughly 54,000 people throughout its European operations. News of Ford’s pending job cuts comes the same day United Kingdom media is reporting Jaguar Land Rover could announce up to 5,000 job cuts amid uncertainty about Brexit, the U.K.’s looming departure from the European Union.

Brexit has also hit Ford’s wallet in the last year.

“We are taking decisive action to transform the Ford business in Europe,” Steven Armstrong, group vice president and president, Europe, Middle East and Africa, said in a statement. “We will invest in the vehicles, services, segments and markets that best support a long-term sustainably profitable business, creating value for all our stakeholders and delivering emotive vehicles to our customers.”

Part of the plans for Europe mimic that which Ford announced in April for North America: getting the product lineup better in line with what customers want. In the U.S., Ford is cutting all sedans from the lineup in favor of more SUVs and crossovers. The automaker also plans to reduce complexity of existing products and pump money into already-profitable vehicle lines.

SUVs are also growing in popularity in Europe. Ford’s European lineup lags the competition there. The automaker will end production of the C-Max and Grand C-Max at its Saarlouis Body and Assembly Plant in Germany to pull back from a shrinking compact multi-purpose vehicle market.

Ford plans to introduce electrified options on all new vehicles going forward, starting with the all-new Ford Focus that just launched. The automaker also will grow its SUV lineup in Europe.

Ford officials said they’ll double-down on commercial vehicles and “leverage relationships” like a potential partnership with Volkswagen AG to support commercial vehicle growth. Ford and Volkswagen have since June been in discussions for a sweeping global partnership on several areas of the auto industry, including commercial vehicles, electrification and autonomous vehicles.

The automakers could make an announcement about the partnership talks next week at the Detroit auto show.

Ford had previously announced plans to close its Ford Aquitaine Industries plant in Bordeaux, France, which builds transmissions. That plant will close in August 2019. The automaker is in discussions with European labor unions regarding the Saarlouis plant.

Ford officials are still working through plans for Europe, according to a Thursday news release. Bloomberg reports that Ford is reviewing the “efficiency” of its plants, and could adjust its footprint in the region. Bloomberg also reports thousands of jobs cuts are expected.

The automaker did not give a target number for the amount of workers it expects to cut in Europe. Ford said it plans to consolidate its UK headquarters and Ford Credit Europe headquarters at the Ford Dunton Technical Center.

The automaker did not specify its plans for Ford Sollers, a joint venture in Russia, but said officials are “undertaking a strategic review” of the joint venture, and expects a decision on its future in the second quarter of the year.

Ford is targeting a 6 percent earnings margin over the long term in Europe. The automaker reported a negative 3.3 percent margin there in the third quarter of 2018. In the first quarter of the year, when the automaker made $119 million in Europe, it reported a 1.3 percent margin.

Ford will report fourth-quarter earnings on Jan. 23 in Dearborn.

Ford officials expect to detail plans for the global restructuring, including whatever job cuts to be made in North America, by the second quarter of 2019.

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