Ford, a global automaker, will lay off 3,800 European workers (or 11% of the workforce) over the course of three years to save $3 billion a year.
According to Forbes, the company plans to lay off 2,300 employees in Germany at its Cologne and Aachen engineering and manufacturing plants and another 200 workers throughout Europe. In the UK, Ford intends to fire 1,300 individuals, or 20% of its total workforce.
Over 70% of the layoffs will occur in product development, which has already taken a blow due to Ford's decision to stop producing several of its more specialized vehicles.
In Preparation for EV Portfolio
Ford CEO Jim Farley has confessed the company would not turn a profit from its switch to electric vehicle (EV) manufacturing until at least 2025. Thus, the layoffs are in preparation for an all-electric portfolio in Europe by 2030.
Ford wants to transform its highly lucrative van range to electric cars by 2035. By 2030, the company's whole electric portfolio of passenger vehicles and commercial vans will be available in Europe. The Mustang Mach-E is the company's sole current production EV in the said continent.
Ford will be converting US-developed autonomous cars and plug-in hybrid powertrains to European needs, resulting in the loss of almost all of the jobs at its Dunton's research and development site in Britain.
As the head of Ford Germany and Ford Europe's passenger electric car division, Martin Sanders has said that EVs have rendered the engineering department irrelevant. It is estimated that roughly 13,000 people are employed alone in the Cologne branch.
EV Development Status
Ford's collaboration with Volkswagen to produce EVs based on the German automaker's modular electric drive matrix (MEB) platform has complicated matters in the development field, with the first jointly built EV set for production later this year.
While Ford is preparing for the future and aiming for a 6% operating margin in Europe, its dip to a 2.2% margin for the first three quarters of 2022 cannot be blamed solely on the Russian invasion or the Covid outbreak. Especially when the declared purpose of discontinuing the B-Max, C-Max, S-Max, and Galaxy was to diversify the product line, save costs, and boost profits.
Also, in 2021, it discontinued the Mondeo sedan and wagon, and in 2025, it expects to abandon the Focus mid-sized hatchback venture.
There seems to have been a loss in profitability and market share for Ford in Europe. Twenty years after it was one of Europe's major five automakers, Ford has seen its market share decline from 11% at the turn of the century to 8% in 2011, to 6.9% in 2015, and to 4.6% in 2022.
Ford appears pleased with the fact that 60% of its worldwide sales now originate from the US, despite pulling so many alternatives from its European showrooms.
