Ford to cut jobs, vehicles as part of Europe turnaround
Ford Motor Co. will trim back hundreds of employees in Europe in the coming months and will discontinue certain slow-selling vehicles there as the automaker continues to transform its European business unit in an attempt at making consistent profits.
Starting Wednesday, Ford will offer its roughly 10,000 salaried employees in Europe a “voluntary separation program” as it looks to save $200 million a year in administrative and selling costs. Ford said it expects hundreds of employees to take the buyout in the coming months.
The automaker also plans to introduce seven new vehicles in Europe this year with a focus on SUVs, performance variants and more upscale trim levels that generate higher profits. Ford said it will eliminate less profitable vehicles over time, but executives would not say how many, what type or when.
“Our plan’s about creating a vibrant and sustainable business,” Jim Farley, head of Ford’s Europe, Middle East and Africa regions, said in an interview. “Making $259 million in Europe last year was nice, but we’re just getting started.”
The automaker turned a profit in Europe last year for the first time since 2011 and grew sales 10 percent after spending recent years closing three plants, scaling back employees and updating many of its products. Farley said, long term, Ford envisions the European market will grow modestly and it can reach profit margins of between 6-8 percent.
Despite recent troubles in Russia, Farley reiterated Ford’s commitment to remaining there. While competitors like General Motors Co. have pulled out of Russia, Ford envisions it as a 1.5 million vehicle market, and recently opened a new engine plant there.
“We think we’re very well positioned,” Farley said. “Yes, we’re making a lot of adjustments on the ground, but we really feel this is critical for our European business.”
Ford plans to introduce seven new or refreshed vehicles in Europe this year, including the Focus RS performance hatch and the new Kuga and Edge SUVs. It will launch five new vehicles to compete in the SUV and crossover space in the next three years, starting with the new Edge in the second quarter of 2016.
Ford also said it plans to expand its upscale Vignale line from one model today – the Mondeo Vignale – to at least five Vignale models by 2017.
“We’re trying to compete in higher-priced parts of the market,” Farley said.
Farley said Ford’s performance lineup – vehicles like the Focus RS, Focus and Fiesta ST and Mustang – are a strength in Europe.
“This is exactly the type of product I think is typical of where Ford’s at its best,” Farley said. “We’ve had a long legacy, but we’ve never had the lineup we have today.”
Sales of Ford’s performance vehicles were up 60 percent in Europe last year and the automaker forescasts selling more than 40,000 performance vehicles in 2016.
“This is a big business for us,” Farley said. Transaction prices are high and it’s an area we can compete with the premium brands. It’s a really healthy part of our lineup.”