BERLIN -- Ford plans to cut 3,800 product development and administration jobs in Europe in the next three years, the company said, citing rising costs and the need for a leaner structure as it pivots production to electric vehicles.
The reductions amount to about 11 percent of the automaker's European workforce, with Germany and the UK hardest hit.
Ford leads the European market for commercial vans, but has struggled to make strong profits from passenger cars, and warned this month it would be "very aggressive" in reducing manufacturing and supply chain expenses this year.
About 2,300 jobs will go at the carmaker's Merkenich-Cologne and Aachen sites in Germany, 1,300 in the UK and 200 in the rest of Europe, Ford said, adding that it intends to achieve the reductions through voluntary separation programs.
Germany: Product development 1,700; Admin functions 600; Total 2,300
UK: Product development 1,000; Admin functions 300; Total 1,300
Rest of Europe: Product development 100; Admin functions 100; Total 200
Total: Product development 2,800; Admin functions 1,000; Total 3,800
Source: Ford Motor
The Merkenich engineering center, along with the research center in Aachen, develops a large part of Ford's European passenger car range.
Cuts in the UK amount to one in five of the workforce there. They will be mostly at Ford's research center in Dunton, southeast England, where engineers work on light commercial vehicles.
Ford will retain about 3,400 engineers in Europe who will build on core technology provided by their U.S. counterparts and adapt it to European customers, said Martin Sander, head of the automaker’s electric-vehicle business in Europe.
Kerrigan Advisors’ proprietary annual OEM Survey of over 100 executives reveals that the majority of respondents are worried about the financial impact of Chinese automakers’ growing global market share, and most expect that the EV transition to be slower than expected. The survey also queried executives on their outlooks for dealership valuations and profitability, as well as their expectations for the future of dealer networks and facility requirements.
"There is significantly less work to be done on drivetrains moving out of combustion engines. We are moving into a world with fewer global platforms where less engineering work is necessary. This is why we have to make the adjustments," Sander said on Tuesday.
Nothing has changed in Ford's electrification strategy, Sander said, and its goal of offering an all-electric fleet of passenger cars and light commercial vans in Europe by 2035 still in place.
Ford agreed to no compulsory lay offs at its Cologne or Aachen sites before the end of 2032, providing some relief to workers, works council chair Benjamin Gruschka said on a press call.
"Workers know that the reduced model palette in coming years means fewer jobs. The exclusion of operational redundancies provides safety - we are not kicking anyone out," Gruschka said,
Ford aims to make its passenger car lineup in Europe all-electric by 2030 and it expects two-thirds of commercial van sales to be all-electric or plug-in hybrids by the same date.
The company is due to launch its first all-electric vehicle in Europe built on Volkswagen Group's MEB platform in Cologne later this year and is considering bringing a Ford platform to Europe from the U.S., possibly to its plant in Valencia, Spain, Sander said.
Ford is discontinuing the Fiesta small car, a mainstay of its European lineup since 1976, at the Cologne factory. It will drop the Focus in 2025 after ending production of the compact at its plant in Saarlouis, Germany, with no plans to produce other vehicles there after that.
The company is in talks with potential buyers of the plant, including China’s BYD, according to people familiar with the matter.
"We are preparing our organization to compete and win in a region facing unprecedented economic and geopolitical headwinds," Sander said.
Ford's European staff last saw a wave of job cuts in 2019 and 2020 as the automaker pursued a 6 percent operating margin in the region, a goal thrown off course by the pandemic, with pretax profit margins in Europe in the first nine months of 2022 at just 2.2 percent of sales.
The automaker signaled more cost cutting on its results call in early February, and Chief Financial Officer John Lawler said it would be "very aggressive" in reducing expenses in manufacturing and supply chain operations. Lawler also said at the time that productivity of engineers in Europe was 25 to 30 percent lower than it should be.
Ford is also trimming jobs in the U.S. as CEO Jim Farley targets $3 billion in annualized savings while investing more than $50 billion in EVs through 2026.
Ford employs about 173,000 employees globally and had about 35,000 positions in Europe as of the end of last year, with Cologne its biggest plant with some 14,000 workers.
In the UK, the company has about 7,000 direct employees, making diesel engines in Dagenham, transmissions in Halewood and at Dunton.
Ford said last March that its EV business would not be profitable until the next-generation models begin production in 2025.
Ford sold 516,614 new cars in Europe last year for a market share of 4.6 percent, according to industry association ACEA. The company is planning an ambitious ramp up of EV sales in Europe, targeting over 600,000 by 2026.
So far, it sells two all-electric SUVs in the region and an e-Transit van, but seven new models are in the pipeline by 2024, according to plans announced last March, including two produced in Cologne and one in Romania.
Reuters and Bloomberg contributed to this report
