Ford Slashes 11% Of European Jobs As EV Development Costs Bite

Global auto-making giant Ford will cut 3,800 jobs in Europe over the next three years as part of a push to slash $3 billion from its annual costs.

Ford will cut 2,300 jobs in Germany, at its engineering and production sites in Cologne and Aachen and another 200 throughout the rest of Europe, while another 1,300, or 20% of its workforce, will disappear in the UK.

Ford CEO Jim Farley has already admitted it won’t make money from its pivot to electric car (EV) production until at least 2025, and the cuts are in anticipation of an all-electric lineup in Europe by 2030.

More than 70% of the job losses will come from product development, which has already been hit by Ford’s abandonment of its relatively niche models.

Ford plans to have an all-EV lineup of passenger vehicles and EV or plug-in hybrid (PHEV) commercial vans in Europe by 2030, with the highly profitable van range switching to EVs by 2035. Its only EV available in Europe today is the Mustang Mach E.

The British job losses will almost all come from its Dunton R&D facility, with Ford instead using its soon-to-be leaner German operations to convert US-developed EV and plug-in hybrid powertrains to European demands.

The IG Metall union warned in January that Ford was planning deep job cuts at its German operations, which Ford at the time downplayed.

Martin Sanders, Ford of Europe’s head of passenger electric vehicles and the head of Ford Germany, said EVs left the engineering staff without roles to play. Its Cologne operation alone employs around 13,000 people.

The development situation has been exacerbated by Ford’s tie-up with Volkswagen to build EVs off the German maker’s MEB EV platform, with the first jointly developed EV slated for production later this year.

“There is significantly less work to be done on drivetrains moving out of combustion engines,” Sanders told Ford Today.

“We are moving into a world with fewer global platforms where less engineering work is necessary. This is why we have to make the adjustments.

“We are preparing our organization to compete and win in a region facing unprecedented economic and geopolitical headwinds,” Sander said.

While Ford is undoubtedly prepping for the future, and aiming for a 6% operating margin in Europe, its fall to a 2.2% margin for the first three-quarters of 2022 cannot be blamed entirely on the Russian invasion nor Covid hangovers.

Especially when its stated goal of killing off the B-Max, the C-Max, the S-Max and the Galaxy was to enrich the model mix, reduce costs and increase margins. It also dropped the Mondeo sedan and wagon in 2021, dropped the small Fiesta hatch – a mainstay since 1976 – and plans to kill off the Focus mid-sized hatch in 2025.

Ford already provided strong hints about European job losses in February, with its Chief Financial Officer, John Lawler, suggesting it would be “aggressive” in cutting expenses, while also insisting European engineers were up to 30% less productive than they should have been.

Ford in Europe looks to have lost out on both the margin and the market share equations. From being one of Europe’s big five players 20 years ago, Ford share of the market fell to 11% at the turn of the century, to 8% in 2011, to 6.9% in 2015 (its last year selling more than a million cars) to just 4.6% in 2022.

It is, clearly, the worst of both worlds, with Ford’s only segment leaders being the Australian-developed Ranger pickup and the British-developed Transit commercial van.

Fully 60% of Ford’s global sales now come from the US, and Ford seems fine with that, despite it withdrawing so many options from its European showrooms just as the Chinese car companies arrive en masse and the South Koreans begin to flex their muscles.

It will go from 15 models in showrooms in 2015 – the last year Ford sold more than a million cars in Europe – to just seven next year.

On the flip side, it will introduce four EVs spread across this year and in 2024, as it focuses on larger crossovers and SUVs as it targets 600,000 sales in Europe by 2026 – a far cry from 1.1 million vehicles in 2015.