Ford to cut 14% of European jobs, blaming EV shift challenge, Chinese rivals

10:38 am Wednesday, November 20th, 2024

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By Nick Carey

LONDON (Reuters) -Ford said on Wednesday it would cut around 14% of its European workforce, blaming losses in recent years amid weak demand for electric vehicles, poor government support for the shift to EVs, and competition from subsidized Chinese rivals.

The U.S. automaker is the latest – after Nissan, Stellantis and GM – to cut costs as the industry faces challenges that include EVs that are too expensive for consumers to buy.

Ford said the 4,000 job cuts would be primarily in Germany and the United Kingdom. Globally, the layoffs represent around 2.3% of Ford’s workforce of 174,000.

The measures will be a big blow for Germany in particular, Europe’s largest economy, where the region’s biggest car maker Volkswagen is threatening to close factories, slash wages and cut thousands of jobs to allow it to compete better. 

The country’s deepening political crisis has added uncertainty for companies grappling with growing trade tensions with China and implications of the U.S. presidential election victory of Donald Trump.

Ford said the European layoffs should take place by the end of 2027, pending discussions with unions. The company said 2,900 of the job cuts would be in Germany and 800 in Britain.

The company said it would reduce production of its Explorer and Capri EV models at its Cologne plant in Germany.

Speaking to reporters, Ford Europe vice president Peter Godsell said Ford is experiencing “weaker demand for electric vehicles than we had previously forecast and we continue to have challenges around our operating costs… so we need decisive action to restructure our business.”

He added that Ford hoped the job cuts would address the company’s problems, but said “we certainly can’t rule out” additional measures if market conditions worsen.

Through September this year, Ford’s sales in Europe fell 17.9%, far outstripping an industrywide decline of 6.1%.

Ford also called on the German government in particular to provide more incentives and better charging infrastructure to help consumers transition to EVs. 

Berlin ended EV subsidies in December last year. EV sales in Germany in the first nine months of this year were down 28.6%.

“What we lack in Europe and Germany is an unmistakable, clear policy agenda to advance e-mobility, such as public investments in charging infrastructure, meaningful incentives … and greater flexibility in meeting CO2 compliance targets,” Ford’s chief financial officer John Lawler wrote in a letter to the German government.  

Ford has been undergoing a painful restructuring in Europe, announcing 3,800 job cuts in February 2023. It is closing its Saarlouis plant in Germany next year, with further job cuts.

The European Union has slapped tariffs on Chinese-made EVs, saying they benefit from unfair subsidies from China’s government.    

Marcus Wassenberg, managing director at Ford’s German division, said the move reflected the car industry’s ongoing changes, singling out Germany for its high labour and energy costs. 

He said all German job cuts would occur at Ford’s main site in Cologne, accounting for around a quarter of the factory’s workforce.

(Reporting by Nick Carey; additional reporting by Christoph Steitz in Frankfurt; Editing by Mark Potter and Bernadette Baum)