By Victoria Waldersee
BERLIN (Reuters) – Ford plans to cut one in nine jobs in Europe and cut 3,800 product development and administration jobs to cut costs in the region and concentrate engineering know-how in the United States, the company said Automaker continued Tuesday
The US automaker is a leader in Europe’s commercial vehicle market but is struggling to generate strong profits from passenger cars and warned this month that it would be “very aggressive” in reducing manufacturing and supply chain costs this year.
CEO Jim Farley has repeatedly pointed out that electric vehicle (EV) production would require less labor and significant cost reductions to remain competitive.
“There is significantly less work to be done on powertrains that come out of internal combustion engines. We are moving into a world with fewer global platforms where less engineering work is required. That’s why we have to make the adjustments,” said Martin, head of European passenger EV, Sander said on Tuesday.
Around 2,300 jobs will be lost at Ford’s Cologne and Aachen sites in Germany, 1,300 in the UK and 200 in the rest of Europe, the company said, adding it intends to achieve the reductions through voluntary schemes.
The news comes as a blow to unions, who said in late January the worst-case scenario would be to shed 2,500 jobs in Europe in product development and a further 700 in administration.
Nevertheless, the carmaker has promised not to make any redundancies at its locations in Cologne or Aachen before the end of 2032 in order to relieve the employees, said Benjamin Gruschka, Chairman of the Works Council, in a press conference.
“Employees know that the reduced model range will mean fewer jobs in the coming years. The exclusion of redundancies for operational reasons gives security – we don’t throw anyone out,” said Gruschka.
MORE EVs, LESS WORK
Ford, which registered 516,614 new passenger cars in Europe last year – a 4.6% market share according to the European Automobile Association ACEA – plans to ambitiously increase sales of electric vehicles in Europe, targeting over 600,000 by 2026.
So far, the company is selling two all-electric SUVs in the region and one e-transit van, but seven new models are planned by 2024, it announced in March, including two in Cologne and one in Romania.
Ford is spending $50 billion to electrify its lineup, moving to a leaner, higher-priced lineup to offset the rising cost of manufacturing electric cars.
“The decision is really how much do we need – how many engineers, how many people do we need in Europe and how much profile do we need in passenger cars?” Farley told analysts earlier this month, with CFO John Lawler adding engineers in Europe are 25-30% less productive than they should be.
Ford will retain around 3,400 engineers in the region who will build on the core technology of their U.S. counterparts and adapt it to European customers, Martin Sander, head of European passenger electric vehicles and head of Ford Germany, said in a news conference.
Cuts in the UK, amounting to one in five of its workforce, will be made mainly at the automaker’s research center in Dunton, south-east England.
The cuts in Germany correspond to around 12% of the workforce there.
Nothing has changed in the automaker’s electrification strategy, Sander added, with the goal of offering a fully electric car range by 2030 and a fully electric fleet in Europe by 2035.
Ford is due to launch its first EV in Europe later this year, based on Volkswagen’s MEB platform in Cologne, and is considering bringing a Ford platform to Europe, possibly to its Valencia plant, Sander said.
Still, the Dearborn, Michigan-based company said last March that its EV business wouldn’t be profitable until next-generation models begin production in 2025.
Meanwhile, the company on Monday announced plans to invest $3.5 billion in a battery factory in Michigan and create 2,500 jobs.
Ford’s European workforce last saw a wave of job cuts in 2019 and 2020 as the automaker aimed for a 6% operating margin in the region, a target thrown off course by the pandemic, with pre-tax profit margins in Europe in the first nine months of 2022 only 2.2% of sales.
(Reporting by Victoria Waldersee, additional reporting by Joe White; Editing by Kirsten Donovan and Mark Potter)
