Ford in talks to shutter U.K. engine plant

Ian Thibodeau
The Detroit News
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The Ford engine plant near Bridgend, south Wales, Thursday June 6, 2019. The Ford engine plant in Bridgend that employs 1,700 people is "economically unsustainable" and will close next year, the carmaker announced Thursday, blaming declining sales of gasoline engines and the end of a contract with Jaguar Land Rover.

Ford Motor Co. is moving to close its Bridgend Engine Plant in the United Kingdom by 2020 as the automaker restructures its European business operations. 

Employing 1,700, the 60-acre site is one of two Ford engine plants in the U.K. The automaker said Thursday that it had started consultation with its unions concerning the "potential closure." The closure would cost Ford $650 million in pre-tax charges, the automaker said, most of which would be recorded in 2019.

Closing the plant would be "a real hammer blow for the Welsh economy and the community in Bridgend,"  Jeff Beck, regional organizer for the GMB union, told the Associated Press. 

The Blue Oval in January announced plans to revive its unprofitable European business by cutting salaried and hourly workers, possibly ending production at plants in France and Germany, eliminating vehicles like the C-Max and restructuring a Russian joint venture. The move to shutter Bridgend in South Wales "is part of the company's strategy to create a more efficient and focused business in Europe."

"Creating a strong and sustainable Ford business in Europe requires us to make some difficult decisions, including the need to scale our global engine manufacturing footprint to best serve our future vehicle portfolio," said Stuart Rowley, president, Ford of Europe, in a statement. "We are committed to the U.K.; however, changing customer demand and cost disadvantages, plus an absence of additional engine models for Bridgend going forward, make the plant economically unsustainable in the years ahead."

The move to close the Bridgend plant comes after months of Ford executives warning that Britain's hard exit from the European Union, or "Brexit," could imperil the automaker's operations there. Closing Bridgend would leave one engine plant in the U.K.: the Dagenham Engine Plant, where roughly 1,800 people work, according to the company website.

Rowley, however, said in a call Thursday that Ford's decision to close Bridgend "has nothing to do with Brexit" — and the automaker would have made the same decision regardless of the Brexit outcome.

The automaker ended vehicle assembly in Britain in 2013 when it shut down its Southampton operation. Ford said Thursday the Bridgend plant would face "a cost disadvantage" compared to other Ford facilities because it's losing engine production there for Jaguar Land Rover, and because demand is declining for the new Ford engine it builds there for the Fiesta ST.

Ford will build the 1.5-liter engines for European production at an existing plant in Mexico once Bridgend closes, Rowley said. The engine plant would shutter completely by September 2020. The automaker is proposing a separation program from employees, which includes helping them find new jobs at other Ford sites.

"As a major employer in the U.K. for more than a century, we know that closing Bridgend would be difficult for many of our employees," Rowley said. "We recognise the effects it would have on their families and the communities where they live and, as a responsible employer, we are proposing a plan that would help to ease the impact."

The Bridgend decision also comes less than a month after Ford began a final round of white collar layoffs in North America. The automaker said in May that it would spend the less than a month dismissing the last 800 of 7,000 total employees as part of a global effort to trim its salaried headcount. 

Ford plans to spend $11 billion over the next few years to implement a global restructuring. The automaker also is in the process of cutting $25.5 billion in costs from engineering and other areas of the company.

Europe has been a tough market for foreign brands in recent years. Lagging profits and the need for yet more investment to remain competitive prompted General Motors Co. CEO Mary Barra to sell the company's European Opel and Vauxhall business in 2017 to Groupe PSA SA of France. Ford has lost hundreds of millions in Europe in recent years, including $398 million there in 2018, despite being one of the best-selling brands in the United Kingdom.

Ford employs roughly 54,000 people throughout its European operations. Ford officials declined then to give an estimate of the expected headcount reduction there. The automaker said Thursday it would cut 5,000 jobs in Germany, and more than 500 salaried jobs in the U.K.

The Bridgend decision is the last "significant element" of Ford's European restructuring, Rowley said: "We are very much on track." 

Ford had previously announced plans to close its Ford Aquitaine Industries plant in Bordeaux, France, which builds transmissions. That plant will close in August. The automaker is in discussions with European labor unions regarding its Saarlouis plant in Germany.

Ford's plans for Europe include leaning on its highly-profitable commercial vehicle business there. The automaker also stands to benefit from increased production scale in Europe with a Volkswagen partnership. That partnership could also be used to expand Ford's product offering.

The Dearborn-automaker plans to consolidate its U.K. headquarters and Ford Credit Europe headquarters at the Ford Dunton Technical Center.

Twitter: @Ian_Thibodeau

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