Business Essentials for Professionals


Ford Will Lay Off Up To 3,200 European Workers, According To A Union That Has Vowed To Fight Back

Ford Will Lay Off Up To 3,200 European Workers, According To A Union That Has Vowed To Fight Back
The United States-based automaker Ford Motor Co will be cutting down up to 3,200 jobs throughout its operations in Europe and moving development work for some of its products to the United States, according to Germany's IG Metall union, which has threatened to call a strike if the company goes ahead with the planned job cuts.
Rising battery material costs and projected slowdowns in the US and European economies are putting pressure on automakers to cut costs. Analysts say Tesla Inc's EV price war, which began earlier this month, has increased the pressure.
According to IG Metall, the company plans to cut up to 2,500 jobs in product development and 700 in administrative roles, with German locations being the most affected.
Workers at the American automaker's Cologne plant, which employs approximately 14,000 people - 3,800 of whom work at a development center in the Merkenich area - were informed of the plans at works council meetings on Monday.
Ford's spokesperson in Germany declined to comment, referring to a Friday statement in which the company stated that the transition to electric vehicle (EV) production necessitates structural changes and that more information would be provided once plans were finalized.
According to a spokesperson at the automaker's headquarters in Michigan, talks with the German works councils are ongoing, and the company needs to be "more competitive" as it transitions to EVs. He would not discuss specific job plans.
Ford announced a $2 billion investment last year to expand production at its Cologne plant in order to produce an all-electric model for the mass market. The Ford Fiesta, as well as engines and transmissions, are currently manufactured at the plant.
As part of a major EV push on the continent, the carmaker, which employs approximately 45,000 people in Europe, is planning seven new electric models, a battery assembly site in Germany, and a nickel cell manufacturing joint venture in Turkey.
It also has a six-year agreement with Volkswagen to produce 1.2 million vehicles on the German automaker's MEB electric platform.
That collaboration continues, according to Ford and Volkswagen representatives, though Ford's US spokesperson added that Volkswagen's role in Ford's next generation of European electric vehicles is still unknown.
It did, however, warn in June of "significant" job cuts in the near future at its factory in Spain and its plant in Saarlouis, Germany, as the shift to EV production meant fewer labor hours were required to assemble cars.
For the first nine months of 2022, Ford's pretax profit margins in Europe were 2.2% of sales, far below levels in North America. It also issued a warning in October about Europe's deteriorating economic conditions.
"If negotiations between the works council and management in coming weeks do not ensure the future of workers, we will join the process," IG Metall said.
"We will not hold back from measures that could seriously impact the company, not just in Germany but Europe-wide."
Ford shares were up 3.9% to $12.89 in New York on Monday afternoon. General Motors Co shares rose 3.1% to $36.45, while Tesla stock rose 7.6% to $143.60.

Christopher J. Mitchell

Markets | Companies | M&A | Innovation | People | Management | Lifestyle | World | Misc