Ford Motor Co. says it has to make a strong move to avoid heavy losses overseas.
The company says it will stop manufacturing some models and hasn’t ruled out closing some factories. A spokesperson expressed hope that job cuts could be achieved by “voluntary means.”
The move, announced on a media call, is part of a larger restructuring plan devised after Ford saw net losses in 2018 in Europe and Asia.
The US carmaker announced the changes on Thursday, framing the restructuring as part of a global overhaul that the company has said will cost $11 billion.
Ford (F) said it would end production of some unprofitable models and shift its strategy in difficult regional markets including Russia.
The carmaker said it would proceed with plans to close a transmissions plant in France, and it has started negotiations with unions about halting production of the C-Max compact car at a factory in Germany.
“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.
“We want to be a net contributor of capital and not a net detractor,” Armstrong told journalists on a later call, referring to Europe’s financial contribution to U.S. parent Ford Motor.
Asked whether the revamp could include plant closures in Europe, Armstrong said: “A review of the manufacturing footprint is part of this process.”
The potential outcome of the move is shrouded by the looming consequences of a “hard Brexit” and ongoing trade tensions overseas.
Ford’s announcement on layoffs came as Britain’s biggest carmaker Jaguar Land Rover (JLR) is also set to announce “substantial” job cuts, a source told Reuters.
Armstrong said any layoffs and plant closures at Ford would be subject to the outcome of formal negotiations with labor representatives, adding that he hoped that job cuts could be achieved by “voluntary means”.
Unite, Britain’s biggest trade union said it was engaging with Ford in an effort to safeguard jobs.
The cost-cutting plan has not been adjusted to account for the possibility of a ‘hard’ exit by Britain from the European Union without securing tariff-free cross-border trade, Armstrong said.
No matter what Brexit plan comes to fruition, many Ford employees will have to find new jobs.
Ford Motor Co. said it will cut thousands of jobs, weed out slow-selling variants and potentially close entire factories in Europe, as the carmaker’s global cost-cutting drive targets a region that has been a drag on earnings for years.
The manufacturer, which employs some 54,000 workers across the region mainly in Germany, the U.K. and Spain, will also review its joint venture in Russia, part of a host of measures that Steven Armstrong, Ford’s head of Europe, called a “step-change in the performance of the business.” He didn’t specify the number of possible job cuts and said that plant closures are an option to streamline the operations.
“There’ll be significant impact across the region,” Armstrong said. “This isn’t a one or two year issue. We have had periods of profitability but not on the level it should be.”
Ford officials remain upbeat, however.
Ford plans to introduce electrified options on all new vehicles going forward, starting with the all-new Ford Focus that just launched. The automaker also will grow its SUV lineup in Europe.
Ford officials said they’ll double-down on commercial vehicles and “leverage relationships” like a potential partnership with Volkswagen AG to support commercial vehicle growth. Ford and Volkswagen have since June been in discussions for a sweeping global partnership on several areas of the auto industry, including commercial vehicles, electrification and autonomous vehicles.
The automakers could make an announcement about the partnership talks next week at the Detroit auto show.
Armstrong said a highly profitable commercial vehicle business — led by the Transit van — is one of the only reason Ford didn’t end its European business entirely. Ford would benefit from increased production scale in Europe by way of the Volkswagen partnership, Armstrong said. Ford could also use the partnership to broaden its European product range, he said.
Many are concerned about the global automotive market, with problems hitting all carmakers.
The news comes as rival Jaguar Land Rover (JLR) is set to announce it is cutting up to 5,000 jobs from its 40,000-strong UK workforce.
Management, marketing and administrative roles are expected to be hardest hit, but some production staff may also be affected.
The layoffs are part of a £2.5bn cost-cutting plan amid what industry insiders have called a “perfect storm”.
They mean a downturn in Chinese sales, a slump in diesel sales and concerns about UK competitiveness post-Brexit.
Ford eschewed social media in announcing the move. It made its way onto online platforms anyway, with some calling the news “bleak”:
The drumbeat to earnings season is getting bleaker. Ford is cutting thousands of jobs, https://t.co/mDEK04t2AR. Jaguar says it too is downsizing. And now Macy's cuts its earnings view, causing its shares to plummet 15% in pre-market trade.
— Lisa Abramowicz (@lisaabramowicz1) January 10, 2019
Ford this morning also announcing that it will cut jobs across Europe under plans to slash costs.
Includes plans to consolidate services at its Technical Centre in Dunton in Essex subject to union consultation. pic.twitter.com/lgXpdXyaSc
— Tom Boadle (@TomBoadle) January 10, 2019