Coverage: Ford to cut 20% of European workforce in cost-cutting drive

Ford will reduce its European workforce by 12,000 as it tries to revive its flagging business on the continent.

William Boston and Mike Colias had the news for the Wall Street Journal:

Ford Motor Co. laid out plans to close factories in Europe and cut 12,000 jobs, or more than 20% of its European workforce, aiming to return to a profit in the region and focus on technologies that are reshaping the auto industry.

The auto maker had broached the revamp of its European operations in January as part of a broader cost-cutting effort, with the company pivoting toward electric vehicles and autonomous driving. Ford, which has struggled to maintain profitability in Europe for years, said Thursday it would shrink its manufacturing footprint in the region to 18 plants from 24 by the end of next year.

The company aims to rely more on imported passenger cars and locally built, higher-margin commercial vehicles for its sales in Europe, where auto makers are now struggling with sluggish consumer demand after years of growth.

The Daily Mail’s Francesca Washtell supplied some details:

Many of the losses will come from the closure of five factories in Russia, France and Britain – where the US car maker will shut its Bridgend plant in South Wales in September next year.

Ford will also close its British headquarters in Warley in Essex, and consolidate operations at its site in Dunton, also in Essex. A total of 3,100 jobs in the UK will go between 2018 and 2020.

This year Ford will shut three factories in Russia, slashing 2,200 roles, as well as a site in Bordeaux, where it employs 1,000.

Ford also announced plans to trim back shifts at some of its plants in Valencia in Spain, and Saarlouis in Germany.

Five thousand jobs will go in Germany in total – the shift cuts will account for around 1,600 of these.

The company, which employs 51,000 staff in its European operations, said these measures would help it return to profit in the coming years.

It is in the midst of a huge turnaround programme and said the cost-cutting would ‘significantly improve’ its full-year results in 2019. 

Stuart Rowley, president at Ford of Europe, said the plant closures and job losses ‘are the hardest decisions we make, and in recognition of the effect on families and communities, we are providing support to ease the impact’.

David Meyer reported on future plans for Fortune:

The restructuring creates three new business groups, covering commercial vehicles, passenger vehicles, and imports.

Ford is already the European market leader in vans and pickups, and it hopes to double its profitability in this segment within the next five years.

The company will also push its passenger vehicle business hard in Europe. It wants to triple its imports in this segment by 2024, with models including an “all-new Mustang-inspired fully electric performance utility” that will appear late next year.

Indeed, Ford seems to be placing a lot of emphasis on the SUV sector, promising three new models in the next five years—all of which will come with an electrified option. “A future family of battery electric vehicles will be assembled in Europe,” the company said.

Europeans have a well-deserved reputation for buying smaller cars, but they are also increasingly buying SUVs—albeit on the more compact side. In fact, SUV sales have recently been offsetting declining sales in more traditional segments.