Ford could cut jobs and scrap models to reinvigorate European operations

04 September 2018

Ford could cut jobs and scrap models to reinvigorate European operations

4 September 2018

Ford is looking to revive its ailing European business and could axe jobs and vehicle models in order to boost its continental business.

The US manufacturer has often been held back by its European division but has remained committed to the market, unlike domestic rival General Motors, whose sale of Opel and Vauxhall in 2017 signalled its complete withdrawal from the European automotive market.

Ford could shed up to 24,000 jobs and withdraw loss-making models such as the S-Max and Galaxy MPVs and the once-popular Mondeo, according to a report in The Times.

In July, Ford’s chief executive Jim Hackett scrapped a planned capital markets day and said a ‘deep restructuring’  would cost the business $11 billion (€9.5 billion). The European market has been hit in recent months by plummeting diesel sales, while Ford has also been accused of having a weak line-up of vehicles on offer. Brexit has also hit the company hard and should trade tariffs be implemented, this would cause more problems as a majority of the company’s diesel engines are produced in the UK.

The manufacturer lost €63 million on the continent between April and June.

However, the manufacturer has denied the accusations of dropping vehicle models, saying in an emailed statement that the Mondeo remains a core part of its line-up.

“We have upgrades coming for Mondeo later this year, which will see new powertrains as well as exterior and interior updates as well as enhancements to the Mondeo Hybrid range,” the company said.

Job cuts

The Times quotes analysts at Morgan Stanley who believe Ford will axe 12% of its 202,000 workers, mainly in its operations across Europe. Unions and politicians in Westminster and Cardiff have been lobbying the company’s headquarters in Dearborn in a bid to save Ford’s engine plants in Bridgend, South Wales, and Dagenham, east London. Ford has about 12,000 staff in the UK spread across factories, research and development, administration and dealerships.

The review’s outcome, which is not expected for several months, could also advocate shunting some or all of Ford’s European business into a joint venture with that of a rival such as German giant Volkswagen.

During the carmaker’s financial results announcement in July, it was revealed that the company’s highest performing models were the Transit, Kuga SUV and Ford Ranger pick-up.

Jim Farley, Ford’s head of global markets, said commercial vans are earning 13% profit margins for the automaker in Europe. Therefore, Ford is shifting its focus to concentrate on vans and SUVs to hit its long-term target of a 6% margin in the region, he said.

‘Clearly we have to redesign Europe, centring the operations on our profitable LCV business,’ he added. SUVs are also part of that plan. Capital allocation plans now align with the SUV and the LCV business opportunities, Farley said.