November 20th 2024.
Ford Motor Company has announced plans to downsize its workforce in Europe and the UK by 4000 employees by the end of 2027. The decision was made due to various challenges faced by the company, including economic downturns, increased competition, and lower than expected sales of electric cars. In a statement released on Wednesday, the US-based company stated that a majority of the job cuts will take place in Germany and will be done in consultation with employee representatives.
The job cuts are expected to affect 2900 employees in Germany, 800 in Britain, and 300 in other European Union countries. This reduction will impact a total of 28,000 employees in Europe and 174,000 worldwide. The company explained that the global auto industry is currently going through significant changes as it shifts towards electrified mobility. This transformation is particularly challenging in Europe, where automakers are facing tough competition and economic obstacles while also trying to align with CO2 regulations and meet consumer demand for electric vehicles.
In order to comply with new regulations, vehicle manufacturers in Europe must sell a certain number of electric cars starting next year. They also face a longer-term goal of achieving zero emissions by 2035, which would mean phasing out most vehicles with internal combustion engines. However, despite these goals, sales of electric cars have not met expectations. This can be attributed to consumer hesitation due to rising inflation and the recent discontinuation of government purchase incentives for electric cars in Germany. As a result, the overall market for cars has shrunk, with a 5.8% decrease in electric vehicle sales in the first nine months of this year. Additionally, carmakers are facing tough competition from Chinese-made electric cars.
In response to these challenges, Ford has also announced plans to reduce working time for employees at its plant in Cologne, Germany, where the Capri and Explorer electric vehicles are manufactured. The company's sales have already decreased by 15.3% in the first nine months of this year compared to the same period last year, and its market share has also decreased from 3.5% to 3%. In the third quarter, Ford's net profit fell by 26%, with a $1 billion write-down for a cancelled electric SUV contributing to the decline. The company also cited higher warranty and other costs as factors in the decrease.
Overall, Ford's decision to reduce its workforce in Europe and the UK is a result of the challenges faced by the global auto industry as it transitions towards electric mobility. The company remains committed to meeting the changing demands of the market and ensuring its long-term success.
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