Ford intends to slash one in nine jobs in Europe, which will result in 3,800 roles in product development and administration being axed.
Situation in Europe
The motive is to lower costs in the region and concentrate engineering know-how in the United States.
The U.S. carmaker leads the European market for commercial vans, but has struggled to make strong profits from passenger cars.
To that end it recently issued a warning that it would be “very aggressive” in reducing manufacturing and supply chain expenses this year.
CEO Jim Farley has repeatedly asserted that electric vehicle (EV) production needs less labor and significant cost cuts to remain competitive.
“There is significantly less work to be done on drivetrains moving out of combustion engines.
We are moving into a world with less global platforms where less engineering work is necessary.
This is why we have to make the adjustments,” European passenger EV chief Martin Sander explained.
Around 2,300 jobs will go at Ford’s Cologne and Aachen sites in Germany, 1,300 in the UK and 200 in the rest of Europe, the company said.
It also announced its intentions to achieve the reductions through voluntary programmes.
The news comes as a blow to unions who said in late January the worst-case scenario was 2,500 job cuts in Europe in product development and a further 700 in administration.
Still, the carmaker agreed to no compulsory redundancies at its Cologne or Aachen sites before the end of 2032.
So this comes as some relief to workers, works council chair Benjamin Gruschka said on a press call.
“Workers know that the reduced model palette in coming years means fewer jobs.
The exclusion of operational redundancies provides safety – we are not kicking anyone out,” Gruschka said.
Ford saw 516,614 new passenger cars registered in Europe last year, translating to a market share of 4.6%.
According to European autos association ACEA the company is planning an ambitious ramp up of EV sales in Europe, targeting over 600,000 by 2026.
Till now it has been selling two all-electric SUVs in the region and an e-Transit van with seven new models in the pipeline by 2024.
Two will be produced in Cologne and one in Romania.
Questions to ponder
It is spending $50 billion on electrifying its product range, shifting to a slimmer lineup with higher prices to compensate for rising costs of EV production.
“The decision really is how much do we need – how many engineers, how many people do we need in Europe and how big of a profile do we need in passenger cars?” Farley told analysts earlier this month.
Finance chief John Lawler said engineers in Europe were 25-30% less productive than they should be.
Employees retained and cut
Ford will keep around 3,400 engineers in the region who will build on core technology provided by their U.S. counterparts and adapt it to European customers.
Cuts in the UK, which amount to one in five of the workforce there, will be mostly at its research center in Dunton, southeast England.
The cuts in Germany equate to around 12% of the workforce there.
European passenger EV chief and head of Ford Germany Martin Sander said that nothing has changed in the carmaker’s electrification strategy.
It still aims to offer an all-electric passenger car lineup by 2030 and an all-electric fleet in Europe by 2035.
Ford is set to launch its first EV in Europe built on Volkswagen’s MEB platform in Cologne later this year and is considering bringing a Ford platform to Europe, possibly to its plant in Valencia, Sander said.
Investment + Jobs
Despite these developments the company also said last March that its EV business would not be profitable until the next-generation models begin production in 2025.
Meanwhile, the company announced on Monday plans to invest $3.5 billion in a battery factory in Michigan, adding 2,500 jobs.