Ford Job Cuts: How Will Its $11 Billion Restructuring Plan Help?

Andrew Cummings
January 13, 2019

Ford has announced it will lay off thousands of people across Europe to boost profitability, and a restructuring of its European business could result in plant closures and the discontinuation of certain models, as consumers move away from diesel cars, and turn towards electric.

"In the last couple of decades, Ford of Europe has never really been sustainably profitable", Steven Armstrong, company vice president and head of its operations in Europe, Middle East and Africa said in a conference call with reporters.

This is because it was widely known that Bridgend's contract to make engines for JLR was coming to an end and that Ford's own plans for a new engine had been scaled right back.

The US carmaker is to abandon the multivan market - vehicles with more than five seats - stop manufacturing automatic transmissions in Bordeaux from August, review its operations in Russian Federation and combine the headquarters of Ford UK and Ford Credit to a site in Dunton, Essex.

Exact details are yet to be outlined and Ford, which sold nearly 7mln cars around the world in 2017, said it would talk to unions about reducing costs.

New all-electric vehicles will be offered for all Ford models, while there will be a more "targeted" line up of models in the future. A Ford spokesman said the carmaker now assumes that any Brexit deal would keep tariff-free trade between Britain and Europe. Europe has been particularly tough for the company because of the key market in the United Kingdom, where the chaos surrounding Brexit has thrown up an additional challenge for the company.

The U.S. headquartered automotive manufacturer Ford is pursuing a US$14 billion global cost-saving plan and has announced plans to cut jobs in Europe.

Ford wants to cut 370 workers at an engine plant in south Wales in the first phase of nearly 1,000 job losses, BBC Wales understands.

Ford is now going to talk to unions about measures to reduce costs.

Many automakers are also bracing for an expected slowdown in global demand for cars, Caldwell says. The company is also in talks with unions about stopping production of its C-Max compact auto at its German factory as well reviewing struggling markets such as Russian Federation.

"We are continuing to invest in the business, especially in electrified cars", said Armstrong. Speculation about the looming partnership between Ford and VW includes the American automaker borrowing or licensing VW's electric vehicle architecture. The companies have only confirmed a commercial vehicle venture together to date.

CEO Jim Hackett, who is under pressure from financial markets, hopes the initiatives will enable Ford to nearly double its operating margin to eight per cent by 2020, compared to 4.4 per cent in the third quarter of 2018.

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