Ford will be eliminating 12,000 jobs from its European operations by the end of 2020 in a desperate bid to return to profit.
It’s hard being a European carmaker these days. The strictest emissions regulations in the world have combined with falling demand for passenger cars to make it extremely difficult for anyone to make a profit.
Ford is especially feeling the pinch as they try to simultaneously evolve their combustion engines to meet stricter emissions rules while also developing their own line of electric and hybrid vehicles. That much investment is a big drain on resources and when you’re not selling as many cars it can be a real problem for shareholders.
So Ford is cutting its European operations drastically. According to a new report from Reuters, Ford will close three factories in Russia, France, and Wales, as well as cut shifts at their Spanish and German assembly plants.
After having already sold their Kechnec Transmission plant in Slovakia to Magna earlier this year, this will reduce Ford’s European manufacturing from 24 facilities to just 18 by 2021.
And don’t expect much in terms of political fallout for the move either. “We have largely concluded consultations with social partners regarding restructuring actions,” Ford Europe President Stuart Rowley told Reuters in an interview.
A total of 12,000 jobs will be affected, which Ford expects to mostly be terminated through voluntary work release programs. The vast majority are hourly contract or agency employees, while 2,000 are salaried workers.
The European car market is shrinking, according to analysts. From an initial prospective growth of 1%, that has since been reversed to an expected 1% decline in car registrations. Analysts expect the car market to remain stagnant or shrink even further over the next three years as Europeans increasingly adopt greener forms of transportation.
Ford is looking to achieve a 6% profit margin from its European division, which will involve cutting underperforming models from its lineup and streamlining its operations.