BERLIN – Ford Motor Co. has launched talks with trade unions in Europe about job cuts that could run into the thousands as it shuts European plants and cancels production of unprofitable models in response to a storm of bad news for global car makers.
The move comes as Ford Chief Executive Jim Hackett has embarked on a broad cost-cutting effort amid a rapidly changing automotive landscape buffeted by electric vehicles and a push toward autonomous driving. In October, the company informed employees of a global reorganization that it said could affect salaried jobs, part of Hackett’s broader push to improve profits and boost its flagging stock price.
The restructuring is also the latest sign that waning demand and weaker profits in Europe, amid concerns around Brexit, trade, the gradual death of diesel engines and an economic slowdown in China, are forcing auto manufacturers to aggressively prune their businesses after years of steady growth.
“We are taking decisive action to transform the Ford business in Europe,” Steven Armstrong, the company’s president of Europe, Middle East and Africa, said Thursday.
The company added that “structural cost improvements would be supported by [a] reduction of surplus labor across all functions – salaried and hourly.” It didn’t quantify the planned job cuts, pending negotiations with European trade unions and governments.
The news comes as Jaguar Land Rover, the British premium car maker, is expected to announce up to 5,000 job cuts as it restructures in the wake of weaker demand in China and a dramatic decline in diesel vehicle sales in Europe.
Ford rival General Motors Co. announced in 2018 that it would close five plants in the United States and Canada, after selling its European business in 2017, to boost profitability and focus investment on new technology.
Ford’s moves come late, but are gaining pace. In December, Ford announced plans to scrap production of the C-Max compact and Grand C-Max sedan at its Saarlouis plant in Germany, cutting back to two shifts from three and eliminating 1,600 jobs. The company also said last month that it would shut down production at its Ford Aquitaine plant in Bordeaux, France.
The company is trying to shore up its European business after Ford Europe reported that losses in the region widened to $245 million in the third quarter.
Ford Europe said that it would target a 6 percent profit margin in the long-term. To get there, the company is aiming to streamline its model offerings, scrapping unprofitable nameplates and investing in models that are high in demand.
The company said that in future, it would offer an electric or hybrid version of every model on offer, as European auto makers ramp up development of electric vehicles.
Ford is reorganizing its European business into three separate groups: Commercial Vehicles, Passenger Vehicles, and Imports.