By Victoria Waldersee
BERLIN (Reuters) – Ford plans to cut one in nine jobs in Europe, axing 3,800 roles in product development and administration as part of a drive to lower costs in the region and concentrate engineering know-how in the United States, the automaker said on Tuesday
The U.S. carmaker leads the European market for commercial vans, but has struggled to make strong profits from passenger cars, and warned this month it would be “very aggressive” in reducing manufacturing and supply chain expenses this year.
CEO Jim Farley has repeatedly flagged that electric vehicle (EV) production would require less labour and significant cost cutting 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 said on Tuesday.
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, adding it intended 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, providing 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.
MORE EVs, LESS LABOUR
Ford, which saw 516,614 new passenger cars registered in Europe last year – a market share of 4.6%, according to European autos association ACEA – is planning an ambitious ramp up of EV sales in Europe, targeting over 600,000 by 2026.
So far, it sells two all-electric SUVs in the region and an e-Transit van, but seven new models are in the pipeline by 2024, according to plans announced last March, including two produced in Cologne and one in Romania.
Ford is spending $50 billion on electrifying its product range, pivoting to a slimmer lineup with higher prices to compensate for rising costs of producing electric cars.
“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, with finance chief John Lawler adding engineers in Europe were 25-30% less productive than they should be.
Ford will retain 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, European passenger EV chief and head of Ford Germany Martin Sander said on a press call.
Cuts in the UK, which amount to one in five of the workforce there, will be mostly at the carmaker’s research centre in Dunton, southeast England.
The cuts in Germany equate to around 12% of the workforce there.
Nothing has changed in the carmaker’s electrification strategy, Sander added, with the goal of offering an all-electric passenger car lineup by 2030 and an all-electric fleet in Europe by 2035 still in place.
Ford is due 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.
Still, the Dearborn, Michigan-based 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.
Ford’s European staff last saw a wave of job cuts in 2019 and 2020 as the carmaker pursued a 6% operating margin in the region, a goal thrown off course by the pandemic, with pretax profit margins in Europe in the first nine months of 2022 at just 2.2% of sales.
(Reporting by Victoria Waldersee, additional reporting by Joe White; Editing by Kirsten Donovan and Mark Potter)