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Ford Europe to slash thousands of jobs in turnaround plan

Key Points
  • Ford said it will seek to exit the multivan segment, stop manufacturing automatic transmissions in Bordeaux in August, review its operations in Russia, and combine the headquarters of Ford U.K. and Ford Credit.
  • Ford Europe, which currently employs 53,000 people, has struggled to turn a profit, posting a 245 million euros loss before interest and taxes in the third quarter.

Ford said on Thursday it will cut thousands of jobs, exit unprofitable markets and discontinue loss-making vehicle lines as part of a turnaround effort aimed at achieving a 6 percent operating margin in Europe.

The carmaker is under pressure to restructure its European operations after archrival General Motors raised profits by selling its European Opel and Vauxhall brand to France's Peugeot SA.

An employee walks past a Ford logo in the yet-to-be-completed engine production line at a Ford factory on January 13, 2015 in Dagenham, England.
Carl Court | Getty Images News | Getty Images

Ford said it will seek to exit the multivan segment, stop manufacturing automatic transmissions in Bordeaux in August, review its operations in Russia, and combine the headquarters of Ford U.K. and Ford Credit to a site in Dunton, Essex. 

"We are taking decisive action to transform the Ford business in Europe," Steven Armstrong, group vice president, Europe, Middle East and Africa, said in a statement.

Ford's announcement on layoffs came as Britain's biggest carmaker Jaguar Land Rover (JLR) is also set to announce "substantial" job cuts in the thousands, a source told Reuters.

Ford Europe, which currently employs 53,000 people, has struggled to turn a profit, reporting a 245 million euro ($282 million) loss before interest and taxes in the third quarter, equivalent to a negative 3.3 percent EBIT margin.

Armstrong declined to quantify the scale of job cuts, pending negotiations with labour leaders, but said staff reductions would run into the "thousands". 

"Ford aims to achieve the labour cost reductions as far as possible through voluntary employee separations in Europe," the carmaker said in a statement on Thursday.

Armstrong said the company is in negotiations with worker representatives about potential job cuts at its Saarlouis plant in Germany, where 6,190 staff assemble cars, as the carmaker considers discontinuing production of its Ford C-Max model.

"We will migrate out of the MPV segment," Armstrong said, referring to the family vans segment. Ford will focus instead on developing more profitable "crossover" vehicles.

The company is unlikely to develop next-generation diesel engines for smaller vehicles, Armstrong said, explaining that customers have been abandoning the segment more aggressively than anticipated.