Ford to cut 3,800 jobs in Europe in EV revamp
US automaker Ford has announced its decision to cut 3,800 jobs in Europe in the next three years. The company expects the layoffs to accelerate its switch from petrol and diesel engines to electric vehicles. Ford currently employs 34,000 people in Europe. The company aims to fully electrify its fleet in Europe by 2035. It is spending $50 billion on electrifying its product range.
Why does this story matter?
The EV race is heating up in Europe. The continent aims to take on the US and China in a race for clean technology leadership. The European auto industry is scrambling to meet the EU target of selling no more vehicles with internal combustion engines by 2035. The shift in direction has forced automakers to restructure. More layoffs can be expected.
Most job cuts are at Cologne and Aachen
Ford's layoffs will target engineering and administration divisions. The company will cut around 2,300 jobs at its Cologne and Aachen sites in Germany, 1,300 in the UK, and 200 in the rest of Europe. The company aims to concentrate its engineering know-how in the US but will retain 3,400 engineering roles in Europe to focus on vehicle development and design.
EV operations require less labor
Ford's decision to cut jobs is also aimed at making its organizational structure "leaner." Jim Farley, the company's CEO, has repeatedly warned about how EV production would require less labor and significant cost-cutting to remain competitive. Martin Sanders, Ford's general manager for European EV operations, said, "There is significantly less work to be done on drivetrains moving out of combustion engines."
Company will offer affected workers its full support: Sanders
"These are difficult decisions, not taken lightly. We recognize the uncertainty it creates for our team, and I assure them we will be offering them our full support in the months ahead," said Sanders. "Paving the way to a sustainably profitable future for Ford in Europe requires broad-based actions and changes in the way we develop, build, and sell Ford vehicles," he added.
Ford had a brutal fourth quarter in 2022
Ford's restructuring comes in the backdrop of a brutal fourth quarter. It recorded a net income of $1.3 billion, $11 billion lower than the same period a year before. The company attributed the disappointing results to execution and supply chain management issues. "Our cost structure is not competitive," said CFO John Lawler. He added the company will tackle its issues aggressively in 2023.
