Here Come Ford's Layoffs: Automaker Outlines Its Euro Restructuring Plan
On Thursday, Ford announced preliminary details of a plan that will ultimately erase thousands of European jobs in an attempt to return the business to profitability. The decision comes after several reports indicated the automaker’s restructuring program will be particularly hard on the region.
The plan now officially includes a slimmer product lineup, which is likely to result in the shuttering of several facilities. The manufacturer also announced a “leveraging” of existing relationships — specifically referencing a potential alliance with Volkswagen Group that would help support Ford in that market.
“We are taking decisive action to transform the Ford business in Europe,” explained Steven Armstrong, group vice president and president of Europe, Middle East and Africa. “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.”
What does Ford think it needs to do to achieve a 6 percent operating margin in Europe? Read on.
Layoffs will be inevitable. However, before those job cuts come, the company says it needs to conduct a comprehensive analysis of the existing business. Ford wants to focus on more profitable vehicles and appears poised to axe passenger vans like the Galaxy and S-Max, concentrating instead on crossover and SUV production.
Formal discussions have already begun between Ford and its European Works Council to end production of the C-Max and Grand C-Max at the Saarlouis Body and Assembly Plant in Germany. But the manufacturer also plans to launch a “strategic review” of Ford Sollers, its joint venture in Russia. Several significant restructuring options for Ford Sollers are being considered by Ford and its partner, Sollers PJSC.
Fortunately, the automaker said its commercial vehicles business has remained “solidly profitable” in Europe, so there’s no immediate danger to the Ford Transit or Transit Connect. But don’t expect either to replace the swath of MPVs that are probably destined for the grave.
Ford also promised widespread electrification across the brand for its European customers. This includes all new nameplates and new versions of existing vehicles. The automaker wants to deliver either a mild-hybrid, full-hybrid, plug-in hybrid or full battery electric option on every model sold in Europe.
The automaker will eventually establish three separate groups in Europe — Commercial Vehicles, Passenger Vehicles, and Imports. Each segment will be refined to maximize profitability. As previously stated, the commercial side of things will focus on growth and strategic partnerships while the passenger segment will probably shrink and eventually mimic Ford’s North American no-car strategy.
And for imports? Ford wants to create “a niche portfolio of imported iconic nameplates for Europe that builds on the heritage of the Ford brand will include Mustang, Edge, and another SUV to be revealed in April, along with an all-new Mustang-inspired full-electric performance utility in 2020.”
As for who will lose their jobs and when, we only have a tiny bit of concrete information at present. The Ford Aquitaine Industries plant in Bordeaux, France, which manufactures small automatic transmissions, is already scheduled to end production in August of 2019. Nothing else is confirmed, but we imagine anyone working at a Ford plant specializing in passenger vans or small diesel engines probably isn’t feeling great about the future.
“We are looking to make a step-change in the performance of the business,” Armstrong told Automotive News in a bit of candidness we can appreciate. “There will be significant impact across the region. We will be looking at all options,” which could include plant closures, he said.
“A review of the manufacturing footprint is part of this process,” Armstrong explained.
Ford also plans to consolidate its UK and headquarters and Ford Credit Europe’s headquarters at the Ford Dunton Technical Center in South East Essex to “improve business fitness” and create a customer-centric technical hub. The automaker said any final decisions will be “subject to union consultation and local approvals.”
[Images: Ford Motor Co.]
A staunch consumer advocate tracking industry trends and regulation. Before joining TTAC, Matt spent a decade working for marketing and research firms based in NYC. Clients included several of the world’s largest automakers, global tire brands, and aftermarket part suppliers. Dissatisfied with the corporate world and resentful of having to wear suits everyday, he pivoted to writing about cars. Since then, that man has become an ardent supporter of the right-to-repair movement, been interviewed on the auto industry by national radio broadcasts, driven more rental cars than anyone ever should, participated in amateur rallying events, and received the requisite minimum training as sanctioned by the SCCA. Handy with a wrench, Matt grew up surrounded by Detroit auto workers and managed to get a pizza delivery job before he was legally eligible. He later found himself driving box trucks through Manhattan, guaranteeing future sympathy for actual truckers. He continues to conduct research pertaining to the automotive sector as an independent contractor and has since moved back to his native Michigan, closer to where the cars are born. A contrarian, Matt claims to prefer understeer — stating that front and all-wheel drive vehicles cater best to his driving style.
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Boy this news makes buying a run down garbage train station seem oh so logical.
There was already a question mark over the Mondeo as soon as the US badged version - Fusion - was axed. The Mondeo used to be Ford Europe's bread and butter, back when a white collar job got you the keys to a bewildering amount of trim options on your Mondeo/Vectra. Work hard and next year your L might turn into an LX with the optional air conditioning! This world is gone, companies can lease BMWs and Mercedes for less than Fords (costs calculated on resale value, of which the German cars keep theirs high - despite a move away from sedans the C class is an occasional visitor to the monthly UK top ten sellers), and taxes on company cars make it less of an attractive benefit when you have to tell the taxman every year. Despite being a useful family car, the Focus has grown to be as big as the Mondeo used to be, and the current model is as large as the old Granada / Scorpio, not easy to park in UK cramped spaces. Everyone wants an SUV with the footspace of a Focus and the height of a Transit that looks like it could cross Africa.