US carmaker Ford on Tuesday announced "the next steps in the transformation" of its European operations, as the auto industry scrambles to meet current EU targets of selling no more new internal combustion engine vehicles by 2035.
Calling Europe a "highly competitive region that is facing significant economic and geo-political headwinds," Ford said the aim was to restructure its operations to create "a leaner, more cost competitive structure."
This would include the "elimination of 3,800 jobs over the next three years," roughly 2,300 at its European HQ in Cologne in western Germany, roughly 1,300 in the UK, and around 200 elsewhere.
"These are difficult decisions, not taken lightly," Martin Sander, General Manager of Ford Model e in Europe, was quoted as saying in the company's press release. "We recognize the uncertainty it creates for our team, and I assure them we will be offering our full support in the months ahead. We will engage in consultations with our social partners so we can move forward together on building a thriving future for our business in Europe."
2,800 engineering jobs to go, 1,000 in administrative functions
Ford said that many of the job cuts were a result of plans to move away from the internal combustion engine, with the majority of the layoffs looming in the engineering sector. That's because electric motors have considerably fewer moving parts and reduced complexity compared to internal combustion engines.
"Paving the way to a sustainably profitable future for Ford in Europe requires broad-based actions and changes in the way we develop, build, and sell Ford vehicles," Sander said. "This will impact the organizations structure, talent, and skills we will need in the future."
Almost three quarters of the planned layoffs will be in engineering, 1,700 in Germany, 1,000 in the UK and another 100 elsewhere on the continent.
Ford said the other job cuts would be to people performing administrative functions, 600 in Cologne, 300 in the UK and another 100 elsewhere.
These figures were all still subject to consultation, the carmaker noted. It also said it intended to achieve the reductions through voluntary programs.
The figures were slightly higher than what trade unions had predicted as a worst-case scenario — somewhere in the region of 3,200 jobs — earlier this year.
Ford said it would retain an engineering organization of approximately 3,400 people in Europe, "focused on vehicle design and development, as well as the creation of connected services."
In total, across Europe in its wholly-owned facilities and consolidated joint ventures, the company employs roughly 34,000 people.
Ford cooperating with rival VW on electric motors
The carmaker had already signaled further cost-cutting efforts early in February when presenting its quarterly results, notably a full-year net loss of $2 billion (just under €2 billion).
Ford had called the performance below expectations and said it was "attributable, in part, to execution issues in an environment with supply chain and production instability, resulting in higher costs and lower-than-planned volumes."
Ford's Chief Financial Officer John Lawler had said at the time that the company would be "very aggressive" in reducing expenses in manufacturing and supply chain operations. He also said that productivity of engineers in Europe had been 25-30% lower than the company thought it should have been.
Last March, Ford had announced investment of roughly $2 billion into the Cologne site.
The company's first all-electric car is scheduled for launch from Cologne in the spring of 2023. However, it's a collaborative project relying on the MEB (modular electric drive matrix) platform underpinning Volkswagen's ID4, among other models in the group.
Carmakers borrowing and sharing base platforms for cars — which are then packaged, branded and sold under different badges and with different bodies — has become an increasingly common practice in recent decades. It looks set to continue, if not intensify, as producers rush to build electric cars with good enough range for versatile use.
Meanwhile, Ford's Cologne factory will stop producing its small car the Fiesta by the end of June. It was produced in Cologne in various iterations since 1976. The company plans to halt production of two other models, the S-Max and the Galaxy minivans, in Valencia in Spain by April of this year.
Ford first moved to Cologne in 1930, attracted by the then-mayor of the city, Konrad Adenauer, who would go on to become West Germany's first post-war chancellor after World War II.
With roughly 15,000 staff, it is the second largest private-sector employer in the city of just over 1 million people, after Lufthansa.
Last year, Ford also announced roughly 3,000 job cuts in North America and India, again citing restructuring towards more electric production as a core driver for the move.
