By on March 16, 2019

After a fiscally damaging year that Ford CEO Jim Hackett implored employees to forget, cuts are coming to the automaker’s workforce, and America won’t be spared. But America can wait, as that region remains a major profit generator. Other regions aren’t, and the automaker’s axe has already fallen in South America.

Now it’s Germany’s turn, with Ford announcing the loss of “more than 5,000” workers in that country.

Ford’s full-year operating profit (before special items) fell 28 percent in 2018, with its European, Chinese, and South American businesses serving as a balance sheet boat anchor. The company’s operations in Europe lost $398 million last year, a complete reversal of the $367 million profit it recorded in 2017.

A major European restructuring plan is already underway, with January bringing news of axed car models, a shuttered French plant, and consolidation of its UK operations. On Friday, Ford raised the spectre of hefty job cuts, and not just for Germany.

The 5,000-plus German cuts are expected to come from “voluntary redundancies and early retirement,” a Ford spokesperson told AFP. “The aim is to cut more than 5,000 jobs in the most socially responsible way possible.”

“This announcement is part of the Ford restructuring announced in January
in Europe with the goal of returning to profitable business in Europe as soon as possible,” the spokesperson continued, without mentioning how those cuts would be distributed. Germany hosts two body and assembly plants (Cologne, Saarlouis), and an R&D center in Aachen. A desirable version of a model Ford no longer offers in America is built in that country.

Of the roughly 53,000 workers Ford employs in Europe, some 24,000 of them are located in Germany. Ford also said more job losses can be expected in the UK, with AFP reporting 1,150 will get pink slips, according to UK union Unite.

[Image: Ford]

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51 Comments on “Ford’s Axe Falls in Germany...”


  • avatar
    FordMan_48126

    Steph;

    Not quite correct; the layoffs have already begun in North America, too. Numerous news outlets have reported this already; see this link here (among others):https://www.freep.com/story/money/cars/2019/03/13/ford-new-job-cuts-salaried-workers/3149196002/

    In North America, at this point the cuts are happening in two areas: back office type areas like accounting, legal, HR, etc. In addition, jobs cuts also have started in the PDC (Product Development Center) campus area; designers and engineering.

    What many do not know is that cuts were made last year in North America IT (mostly by attrition by earlier retirement packages – there were a lot of 30+ year low and middle management types in IT cutting agency/contractors) with a massive reorganization. Last count, 1,000 or more people gone in 2018 , and there is still an effort to have another 300 in IT areas leave by end of 2nd quarter. Target to have all cuts in all areas wrapped up is by 2nd quarter this year.

    • 0 avatar
      James Charles

      Fordman,
      Ford operates closely and in partnership with suppliers and even engineering. How many jobs have been lost in these areas?

      The US manufacturing sector still hasn’t felt the full wrath of the metals tax either and the company tax reduction didn’t deliver the jobs and investment Trump and the others promised and the tax cut is nearly out of steam.

      The US manufactures have some unecessary (Trump generated) head winds to sail against.

      • 0 avatar
        Lorenzo

        The metals headwinds will die down as domestic steel production ramps up. Of course the corporate tax reduction didn’t result in immediate job creation, it takes time to ramp up steel mills that have been closed for years.

        The bottom line is that the steel import tax has caused an increase in domestic steel production, from 81M tons in 2017 to 86M tons in 2018 *overall*. The last four months have seen a production level of 90.6M tons, so domestic steel production is ramping up.

        Right now, the increase in production is displacing imports, but when supply increases, prices will drop. A number of plants are being rebuilt to incorporate more efficient production methods that will increase production at lower cost and lead to lower prices.

        The steel import taxes triggered a process, not an event. A steel industry that once produced 137M tons as recently as 1973 needs time to rebuild from years of lack of investment and modernization.

        • 0 avatar
          James Charles

          Lorenzo,
          Yes, US produced metal will drop in price, but will never be competitive. It only takes a few percentage points difference in costs to be competitive.

          The headwinds will be absorbed in higher costs and passed onto consumers.

          Exports will reduce and the manufacturers dependent on metals will shed far more jobs than is gained in US metal production.

          Outside of the US metal will be cheaper, imports containing metal more competitive.

          The US loses out.

      • 0 avatar
        FordMan_48126

        Fair point….i know in my wife’s company (she works at a marketing supplier that has contracts with all the Big Three) they have laid off two people off their Ford account already.

        The rule of thumb generally is that when one of the Big Three layoff, whatever their final number is, the number of other people from suppliers, local dealers, tool & die shops, etc. impacted is a multiple of 2 to 3. Therefore, it is generally assume if Ford lets go of, say 3,000 to 4,000 in Metro Detroit area, the overall impact can be 10,000 + people total. So it is a big deal regardless, and to someone else’ point cutting your way to profitability hurts in the short to long run because even when Ford regains its footing, the other jobs not likely to come back.

        What is different this time around is that there was already a shortage of workers in metro Detroit (just like everywhere else in U. S. now), so some of those people can find work sooner than they would have in 2007-2008 great recession.

  • avatar
    analogman

    Companies usually don’t shrink their way to greatness. Great companies get that way by making great products. You know, the kind people actually want to buy. Like, perhaps, the Falcon, Fairlane, Torino, and Galaxy of days past (the iconic Mustang notwithstanding, the only ‘car’ Ford still sells in the U.S.).

    This will end with Ford becoming the wholly-owned U.S. subsidiary of VW. Both companies will talk crap about ‘synergies’ and what a ‘good fit’ it is. But it will be a sad end to a once legendary and storied name.

    • 0 avatar
      Hummer

      This.

      Though I will add when a company ventures into too many different segments and products it will become unmanageable. International Harvestor for example, sold big rigs, passenger vehicles, tractors, washing machines, refrigerators, book holders, and everything in between. Impossible to stay on top of that many segments. Ford venturing into “mobility” can only stand to hurt it, I suspect Google is getting too big to hold everything together for much more than a decade.

      As you said, products are key, and outside of the Mustang the rest of their cars are horrible forgettable.

      • 0 avatar
        Rocket

        Yeah, the F-Series, Expedition, Edge, Navigator, Ranger and Nautilus are terrible products, and all indications are the new Bronco, Explorer, Aviator, Escape, Baby Bronco and Corsair aren’t going to be competitive, either.

        Yes, I’m being a smartass. If the new models are half as good as they appear on paper, Ford/Lincoln is going to have the strongest US lineup they’ve had in a very, VERY long time.

        • 0 avatar
          EBFlex

          “Yeah, the F-Series, Expedition, Edge, Navigator, Ranger and Nautilus are terrible products, and all indications are the new Bronco, Explorer, Aviator, Escape, Baby Bronco and Corsair aren’t going to be competitive, either.”

          Well the Ranger is a very old truck that Ford hastily put together to the NA market so, you are correct it’s terrible. Most reviews have not been nice, but at least they are honest.

          The Edge is laughably bad, especially the Sport/ST. Same for any vehicle (MKEdge) that uses the Edge 8-speed transmission. That transmission is a joke. Ford took a 6-speed and completely randomly threw in two extra gears.

          The Navigator is overpriced and does not sell well compared to the ancient Escalade, the F-Series is severely outclassed by Ram, the Bronco has been so overhyped that people have forgotten about it and, internally, the program has seen cuts (it’s clear Ford does not want to bring it to market). The Explorer looks just like the old one, brings zero innovation to the segment, yet costs an astounding amount more than the old one. Avaiator is far too expensive for what is just an Explorer in drag. The new Escape looks absolutely awful inside and out and I’m sure the MKEscape will follow. And the Baby Bronco will be the next Ecosport. Cheaply done and poorly executed.

          But yeah, strong lineup.

    • 0 avatar
      Steve203

      “Companies usually don’t shrink their way to greatness. Great companies get that way by making great products.”

      All of the big three are on the same path: pandering to Wall St. The Street wants to see higher transaction prices and higher profit margins, so each company gives itself the Jack Welch treatment, by culling from the bottom up. As lower priced and lower profit products are cut, the average transaction price and profit margin automatically go up. Ultimately, GM and Ford could be selling nothing but the Escalade and Navigator. Wall St would love it.

      • 0 avatar
        NormSV650

        Jack Welch never envisioned battery operated appliances

      • 0 avatar
        DenverMike

        There’s no need to be in every darn segment, is there? The Big 3 were just in too many of them, way more than any others. Or are sedans somehow sacred? Well sorry, is it because they came first? What if pickups came first?

        Isn’t Subaru better off without pickups? What about Mazda (US)? Where’s their dually crew cabs? Where’s their Cab-n-Chassis’? Motorhome van cutoffs? Where’s the outrage?

        • 0 avatar
          Steve203

          “There’s no need to be in every darn segment, is there? ”

          Sloan designed GM to offer a car “for every purse and purpose”. Seems GM had some success with that strategy. The plan didn’t start to break down until compacts and intermediates entered the product line, and every GM division wanted a version of every model every other division had. That made most of the divisions redundant, so Olds, Pontiac, Saturn and Hummer joined all the brands GM had dropped over the years.

          Jack Welch had two strategies that hollowed out GE: first, he said he didn’t want to be in any industry where GE wasn’t first or second, so he started selling off or closing divisions. The second thing he did was fire 10% of the workforce every year. Then he leveraged the company like crazy and underfunded the pension plans to pump up the bottom line. Wall St loved it, for a while. Now people are talking about GE going bankrupt.

          Putting the Welch philosophy to work at the big three, we see the automakers abandoning market segments where they aren’t competitive, and abandoning geographic markets where they aren’t competitive, instead of sharpening their game so they are competitive. It’s probably no accident that Ford lost money in every market in the world except North America. They are taking the easy way out. It will appear to work for them until they have withdrawn from every part of the world except North America, and the foreign brands really get traction in big trucks and SUVs here, and the big three will have no place left to hide.

          How will the foreign brands get enough traction to outcompete the big three in big trucks and SUVs in the US? Because they offer a product “for every purse or purpose”. Someone straight out of High School or college will have a hard time swinging a $50-$70,000 SUV or pickup, so they will end up in a smaller foreign brand model, and when they do move to a big SUV or pickup, they will more likely stay with the brand that has served them well in the past.

          “Isn’t Subaru better off without pickups?”

          Rumor mill is going full blast about an upcoming Subaru pickup.

          https://2020suvs.com/2019-subaru-pickup-truck/

          • 0 avatar
            DenverMike

            If you haven’t noticed, kids right out of high school aren’t buying new cars, no matter how “entry level”. In the extremely rare occurrence they do (and it’s their own money/credit), there’s absolutely no guarantee they be married to the brand when/if they start making real money. They’ll probably go for German or Japanese luxury at that point anyway.

            That kind of antiquated (marketing) thinking doesn’t work anymore. Buyers ‘cherry pick’ what’s best for them at every stage in life, from every brand under the sun, best value, wanted features, etc.

            It’s the same thing with ‘halo cars’. Kids may hit the showroom in droves, drooling over the latest Corvette, but they’ll most likely never buy a GM vehicle, not even used.

    • 0 avatar
      Omnifan

      I remember the same words used about the Daimler – Chrysler “merger of equals.” We all know how that turned out.

    • 0 avatar
      Lorenzo

      Actually, companies DO shrink from time to time, in response to market conditions. The auto industry shed tens of thousands of jobs in the 1950s, only to hire them back when market forces were favorable. Labor laws and union contracts took away companies’ ability to shed their major expenses – labor – in the short term to avoid massive losses.

      That process is part of the free market, but it’s been hamstrung by the desire to reduce or eliminate the short term discomfit of individual workers who are union members who vote. I’ve been laid off and recalled twice by the same company, with my payscale and seniority restored both times I was recalled, and the company is still in business, because it was able to adjust to market conditions.

      • 0 avatar
        Steve203

        “Actually, companies DO shrink from time to time, in response to market conditions.”

        I don’t think the issue is the normal boom-bust business cycle you are talking about. GM has lost over half it’s US market share over the last 40 years. That is systemic failure of GM to compete in it’s core market, over an extended period. Ford has also failed, in it’s core market, but to a lesser degree than GM.

        Surprisingly, FCA’s market share has been relativity stable in the mid to upper teens over the same period. While GM is closing plants and laying off tens of thousands of people, FCA has managed to introduce new models that have picked up the slack from the discontinued models and kept all it’s plants humming.

        • 0 avatar
          Lorenzo

          Believe it or not, GM’s production has varied little over time, but the market has expanded.

          In 1955, GM built 3.7 million cars and trucks out of 7.4 million, a 50% share. in 2017, GM built 3.7 million cars and trucks, but it’s market share dropped to 21%.

          In 1955 there were no Toyota or Nissan imports, and VW’s bug didn’t take off until the 1960s, while MB, BMW and other imports were tiny.

          Today, imports are a major portion of the market, and both Ford and FCA made far more trucks – and Jeep never sold anywhere near a million copies before.

          GM’s biggest problem today is that it sold only 2.95 million vehicles in the US in 2018 and has over 800,000 unsold vehicles on it’s lots. GM’s VP of sales should be fired, but as Peter deLorenzo keeps pointing out, they don’t have one to fire.

    • 0 avatar
      George B

      analogman, none of the Ford products you list were great even relative to their peers. They didn’t perform that well and had severe rust problems. The Mustang has evolved into a higher quality higher performance model that sells at a higher price point. The current Focus and Fusion are objectively better than past Ford compact and mid-size cars and they’re better than the cars their domestic rivals made in those categories. What’s different is consumers have more car choices than ever before and the Focus and Fusion are too expensive to build relative to what US consumers will pay.

      • 0 avatar
        SC5door

        No, consumers have choices like the Accord which is a better performing car. Ford has also decided that they would cost cut the hell out of the Fusion—take a look inside of the 2018 and 2019 models in Titanium trim—cheap black plastic all around the center stack, single note horn, no more engine cover and cheaper leather on the seats.

  • avatar
    carguy

    The truth of the matter is that Ford and GM are in retreat in every market they compete in. Abandoning cars in North America was primarily because they could compete against Toyota, Honda and Kia/Hyundai and less about the declining care sales. So they retreated to trucks and SUVs. For trucks they are still looking good but they will get their butts kicked in the CUV segment also. If the best they can do is the Edge and Equinox then we expect a lot more layoffs.

    • 0 avatar
      jatz

      “they will get their butts kicked in the CUV segment also”

      By Mitsubishi! Tora-Tora-Tora!

    • 0 avatar
      James Charles

      carguy,
      It appears the Big 3 are very reliant on large pickups and their related stablemates, the big SUVs. These are great vehicles ….. in the US market. The will not sell globally because they are not viewed as prestige or luxury.

      Small vehicles the Big 3 struggle to produce in the US competitively enough for export.

      For the Big 3 to survive there is a requirement for US regulations andprotection supporting mediocre large vehicle production to gradually be phased out. This will force the Big 3 to become competitive.

      The Big 3’s global business model lagged global competitors. There is too much control, hence micro management within the pillars of management.

      BMW and Mercedes Benz seem to be able to export successfully from the US, why can’t GM and Ford. The Asian manufacturers seem to be able to operate around the world more competitively than GM and Ford.

      The Big 3 have become reliant on large highly protected vehicles in the US. This has bred an unhealthy competitive vehicle market in the US. This doesn’t mean the rest of the world sucks, it means there are structural challenges confronting the Big 3.

      The US, the land of pickups could profit a lot more globally, if they produced what the world wants competitively.

      • 0 avatar
        DenverMike

        @BAFO – Buyers around the globe buy what they’re forced to by high taxes and tariffs, not necessarily what they “want”.

        Consequently US exclusives, basically the biggest sellers in the US (and gaining ground domestically), including those by Toyota, Honda, Nissan, Hyundai, etc, are basically banned or reduced to niche status, especially in Europe.

        Bigger vehicles by Toyota, Honda, Nissan, Hyundai, etc, are just as “protected” as any others. In other words they’re not “protected”, or can you elaborate…

        For the love of god, you’ve been screaming about all the “protection”, but scamper off when questioned, every_single_time.

        Unless US automakers design and build cars specifically for Europe and related markets, their taxes, tariffs, etc, what chance do they really have?

        Except it’s totally ignorant to feel BMW and Merc somehow have it just as “tough” exporting from the US to global locations, especially Europe..

        Why not just bring up USA/NA built Civics and Accords are easily imported into Japans, SO WHY NOT F-150s??????????

        • 0 avatar
          James Charles

          DenverMike,
          Ford and GM produce vehicles within countries OUTSIDE of the US and are FAILING to be competitive within IDENTICAL design, taxes, etc regimes.

          GM and Ford in the EU are treated the same as VW, BMW, Renault, Toyota, Honda, etc. There is NO special taxes on US vehicle manufacturers in the EU.

          So what is your argument?

          GM and Ford have a poor business model that is outdated within the US and globally.

          After that poorly researched comment from I’ll say goodbye. You have again managed to show your lack of knowledge.

          It seems every comment you submit is inaccurate.

          No one can write as you do and be as stupid. I think you are a troll.

          This time I will definitely not reply to one of your trolling attempts.

          TO THE MODERATORS.
          Can you please advise Mr DenverMike to stop trolling. He doesn’t put forward opinion, its trash.

          • 0 avatar
            DenverMike

            @BAFO – Ford and GM have routinely failed at building cars overseas “profitably”. But when Toyota and Honda fail in Europe also, what does that tell you?

            Except Ford and GM fail at selling small cars profitably in the US too. But we weren’t talking about those. What you where babbling about above (and other things you won’t backup) is the non acceptance of US models, globally, especially Europe, and most of those US only “exclusives” are by Toyota, Honda, Nissan, etc.

            So again, what does that tell you (or a rational person)?

      • 0 avatar
        George B

        James Charles, Ford lost their way on mass market cars when they switched from Mazda platforms to One-Ford European platforms. The Fusion, Focus, and Fiesta are objectively good cars, better than the ones they replaced, but the Ford brand has zero prestige to justify the higher price necessary to make a profit. The Toyota Camry and Corolla are cost-optimized dull appliances, but Toyota designed and built them to be profitable at the price points American consumers would pay.

        The manufacturers that are the most successful in the US build profitable large vehicles. Not just the domestics, but Toyota, Honda, and Nissan all build relatively large cars, minivans, and SUVs. They all offer pickup trucks with >48 inches between the wheel wells because that bed width is really useful for hauling building materials in the US. The US plus Canada and Mexico is a large automotive market.

    • 0 avatar
      NormSV650

      I guess you missed this from 2018

      “…GM will release 20 new all-electric vehicles by 2023, two of which will arrive in showrooms in the next 6 months. According to a press release accompanying the announcement, this score of EVs will be propelled by electric systems featuring either batteries or fuel cells.”

      • 0 avatar
        James Charles

        Norm,
        You need someone to sell these EVs to, it appears the public has less interest in EVs than cars and I don’t foresee the US Government handing out much for EV adoption.

        You not only need the right product, you also need a competitive industry. GM and Ford need to restructure to compete against global manufacturers. The US vehicle market is shrinking proportionally everyday against the competition.

        EVs will not save GM.

  • avatar
    jatz

    F-150 is God, Escape is a perennial leader in CUVs, Explorer always a 6-figure seller since 2011 for SUVs and their commercial van line is gobbling up that segment.

    All that’s gangrenous is sedan sales (as with everyone else) so they’re appropriately amputating. I’m not seeing the grim reaper behind the blue oval.

    • 0 avatar
      MoDo

      Europeans are swaying more and more toward CUV’s and SUV’s as well so Ford can right the ship if they make the right choices. Jeep is doing well over there with small Jeeps with more to come. Sedans are dead – they cut their losses for a reason.

    • 0 avatar
      mike978

      The CR-V, RAV4 and Rogue all sell as well if not better than the Escape. So Ford is not leading in that segment. They do well in large SUVs and trucks. Hardly the road to long term success. Even in trucks Toyota leads in compact trucks, which Ford stupidly gave them by leaving the old Ranger to linger then die without replacement.

      • 0 avatar
        jatz

        “Escape is a perennial leader in CUVs”

        Note: “a”, not “the”.

        “They do well in large SUVs and trucks. Hardly the road to long term success.”

        In the long term, we’re all dead.

    • 0 avatar
      ajla

      If you want to know the issues at Ford, pay more attention to the profit margin, overall profitability, and international markets rather than the overall product sales in the US.

      Like you wrote, Ford has several vehicles that (at the very least) are among the segment leaders in North America. That’s all good news and I don’t expect that to change.

      However, in some areas Ford is getting absolutely shredded. They reported a $1.54B loss on their Chinese operations in 2018 (compare that with GM that had $2B of equity income in China for 2018). Europe was a $400M loss for Ford. South America was a $680M loss. The Mobility Solutions pogostick and unicycle division was a $680M loss. The end result of all this is that Ford’s profit margins don’t look attractive for investors compared to other automakers, despite having the gonzo sales for the F-Series.

    • 0 avatar
      Whatnext

      Except other automakers are able to offer those products Ford is cutting, so there is a big swath of people who will never visit a Ford showroom now. Toyota and Nissan offer full-size pickups, plus every other segment. Hyundai, KIA and VW are just a full-size pick-up away from the full range.

      Ford is falling behind. Sergio was right. The auto industry needs to consolidate, the way the US airline industry did, with less players offering the same thing.

  • avatar
    Steve203

    I think it’s pretty clear the Saarlouis plant is a goner.

    The MPV market is shrinking rapidly in Europe. The Fiesta based “B-Max” was dropped a while back. Late last year, Ford dropped the Focus based “C Max”. The Focus and C-Max shared Saarlouis. With the dropping of the C-Max, 1 shift was cut at Saarlouis, cutting about 1600 of the 6190 existing staff, leaving about 4500, pretty close to Ford’s target of 5,000 heads to be chopped.

    The Valencia plant builds the Kuga (Escape), Transit Connect, Mondeo (Fusion) and the S-Max and Galaxy MPVs. Kill the S-Max and Galaxy, because MPVs are dying anyway, kill the Mondeo because Ford isn’t developing that line anymore anyway, the Transit Connect is set to become a rebadged, Polish built, VW Caddy, and that will probably clear enough capacity at Valencia to move in the Focus and close Saarlouis.

    Add in staff cut at the plants that make the engines and transmissions used by the Mondeo, S-Max and Galaxy and you will probably have 5,000.

    • 0 avatar
      James Charles

      Steve,
      Lower wages in Spain might see Valencia fair better then the UK and Germany.

      Valencia also produces engines for Ford globally.

      • 0 avatar
        Steve203

        “Lower wages in Spain might see Valencia fair better then the UK and Germany.”

        Romania is even cheaper, but I doubt the plant there has enough capacity to build both the Ecosport and take over Fiesta production from Cologne.

        Dagenham Assembly closed in 2002. Ford still builds engines, transmissions and other parts in the UK, but, with the inability of the Brits to organize a smooth withdrawal from the EU, the future of any subassembly plant in the UK that exports all it’s product to assembly plants on the continent, is questionable.

  • avatar
    tylanner

    The only outlet of meaningful growth for GM/Ford was Europe and Asia….but the realities of the marketplace are changing and while it looks pretty dire these corporations are scrambling to maintain a good revenue/expense ratio. Staying afloat at $20B gross profit is a not so bad problem to have. But this only goes two ways….a very slow but still profitable death cutting the margins to protect revenue or….you shift the entire business to a new market through acquisitions or innovation markets…

    Google or Facebook on the other hand can exponentially increase profits with almost no or net-negative material footprint increase.

    The big three are all colliding with each other and also with the technology market in general. This path looks like more mergers, more automation and job cuts.

  • avatar

    GM and Ford just can’t compete with engineering level in Europe. As for Hackett he maybe even more clueless than Barra.

  • avatar
    jacob_coulter

    This is not the sign of a growing, vibrant company. I had a small stock position in Ford that I dropped. Just seemed like dead money to me.

  • avatar
    Jeff S

    “This path looks like more mergers, more automation and job cuts.”

    I couldn’t have said it any better. Perfect summation of what is happening with GM, Ford, and FCA.


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