Ford to close six European plants as part of global cut

Ford will eliminate about 20% of its workforce in Europe and close six factories in a sweeping overhaul aimed at reviving the money-losing region as the company also moves to prepare for the future of electric and self-driving cars.

The restructuring, which has been announced piecemeal, will involve reducing its manufacturing footprint in Europe to 18 facilities by the end of 2020 from 24 at the beginning of this year.

Germany, the UK and Russia will be hardest hit by the cuts, which total about 12,000 regular staff as well as workers employed at joint ventures, Ford said.

“Separating employees and closing plants are the hardest decisions we make. We are moving forward and focused on building a long-term sustainable future,” said Stuart Rowley, Ford’s president of Europe.

The cutbacks are a key part of chief executive Jim Hackett’s $11bn (€9.67bn) restructuring, which also includes 7,000 salaried job cuts worldwide. Hackett is trying to boost Ford’s bottom line by exiting the slow-selling sedan market in the US to focus on high-profit sport-utility vehicles and trucks.

In Europe, where Ford is the top selling brand in the UK, the carmaker also is backing away from the traditional passenger-car business to focus on commercial vans and trucks.

“We have a winning hand in Europe and it’s called commercial vehicles,” then-chief financial officer Bob Shanks said at a May Goldman Sachs conference in New York.

We’ll have a smaller portfolio of passenger vehicles.

Ford is cutting costs as it pours billions into electric and self-driving cars that are seen as the future of the car industry. The company is close to sealing a deal with Volkswagen to join forces to develop these vehicles.

In Europe, Ford has struggled for years in the crowded and mature market.

Given its strength in the UK, the carmaker has been particularly hard hit by falling car sales there as a result of uncertainty surrounding the country’s exit from the EU. Underscoring the industry’s woes, the European carmakers’ lobby group lowered its forecast for the region, predicting that deliveries will likely fall 1% this year.

That compares with a previous prediction of 1% growth. Ford’s European sales in May fell 8.3%, according to data from the ACEA industry group. Ford’s stock is down 11% in the past 12 months.

Bloomberg