Ford Reduces European Workforce

Last month Ford announced the closure of an engine plant in South Wales as part of a drive to close unprofitable operations. 2,000 workers will be affected and they built an EcoBoost motor for the company. It is one of the largest employers in the small town of Bridgend and its closure will affect the town quite badly.

Ford had invested over £300m in the plant over the last five years and it had been described as “world-class”. It will be a slow death for the factory because the team that makes a 1.5 litre motor for the parent company will shutter in February next year whilst the other teams that make engines for Jaguar Land Rover will lose their jobs in September of 2020 when that contract comes to an end. Despite the factory assembling up to 20% of the engines used in British automotive vehicle assembly, Ford decided not to use the factory for newer engines that are to come on stream.

Most of the new power-plants are hybrids and later full electric units will be used in Ford products. Rather than retooling the Bridgend plant, Ford will buy in this technology from other sources and will also try and sell more imported vehicles into Europe – from Asia and the US – that are fully built.

Bridgend isn’t the only factory to close, plants in Germany, France and Russia are also being closed as the company follows its US parent and refocuses on commercial vehicles and moves away from passenger car production. Six factories will go, leaving 18 left, resulting in the loss of 12,000 jobs in total which equates to 20% of the European workforce. Russia will see three plants shuttered (according to the Financial Times), which will be a massive blow to that economy, another engine plant in Slovakia will go as well as a transmission plant in France. The changes in mobility, specifically the push to electric power, reduces the need for large internal combustion engines and heavy gearboxes.

Assembly shifts are being reduced as well to reduce the volume of vehicles being assembled and it is not just the factory workers being targeted, management and operational staff are also losing their jobs with offices being merged in the UK and losses across Europe.

Ford lost $800m last year outside of the US and will spend another $600m on restructuring costs. The plan is to try and get the European division to profitability – the target is 6%. They have seen the PSA Group do that, prior to buying Vauxhall/Opel, so they know it is possible, however not without huge cost trimming that affects the local economies and could push buyers away from the brand.

Finally, Chinese and Latin American operations are also being assessed for further cost reductions. This is a critical time for the success of the business globally.