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.]