Ford Motor Co. plans to cut 3,800 jobs in Europe, a move the Dearborn automaker announced Tuesday as part of a broader effort to revitalize its Europe business amid "rapidly changing market conditions" and an increasingly competitive electric-vehicle market.
The company plans to downsize its European engineering footprint by cutting 2,800 positions by 2025. Some 1,700 of those cuts would be in Germany, with another 1,000 in the United Kingdom and 100 in other European countries.
Ford said those planned cuts are driven by the transition to all-electric vehicles, which are less complex than internal combustion engine vehicles. The automaker will maintain about 3,400 jobs in its European engineering organization. That group will focus on vehicle design and development, as well as on connected vehicle services, according to a news release.
The rest of the job cuts, about 1,000, will come from Ford of Europe's administrative, marketing, sales and distribution functions. Of that total, 600 will be in Germany, 300 in the UK and 100 in the rest of Europe.
"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 vehicles. This will impact the organizational structure, talent, and skills we will need in the future," Martin Sander, general manager of Ford Model e in Europe, said in a statement.
Sander said the company would "engage in consultations with our social partners" on the plan, "with the intent to achieve the reductions through voluntary separation programs." A German union last month flagged the possibility of job cuts.
Ford executives said during the company's fourth-quarter earnings call earlier this month that changes would be necessary in Europe, pointing to quarterly results there that were slightly above break-even but missed expectations. Overall for 2022, Ford executives said the company "fell short" of its potential after posting a loss and missing its earnings guidance. At the time, executives also said further cost reductions would be needed and that "everything" was on the table.
"Given the changing macroeconomic environment and demand environment in Europe, we will make the changes necessary to deliver a sustainable business that consistently generates returns above our cost of capital," Chief Financial Officer John Lawler said on a call with analysts. "Our core strength in the region continues to be our leading commercial vehicle business."
Lawler said Ford is forecasting a moderate recession in Europe this year.
CEO Jim Farley also pointed to the company's commercial vehicle business in Europe as an area of strength in the accelerating shift to electric vehicles.
"We have a really strong business. And the decision really is how much do we need, how many engineers, how many people do we need in Europe and how big of a profile do we need in passenger cars?" said Farley. "That's the decision. We've already electrified Cologne and that's really the decision. It's not the right time to talk about where we're going to go, but we know exactly our strength in Europe, and we know what we need to do."
Ford said the moves announced Tuesday would help it compete profitably with a planned new lineup of passenger vehicles, and bolster its position in the commercial vehicle sector.
Sander said the company is "completely reinventing the Ford brand in Europe."
"Unapologetically American, outstanding design and connected services that will differentiate Ford and delight our customers in Europe," he said. "We are ready to compete and win in Europe."
Ford is investing $50 billion in electrification through 2026. In Europe, it has announced EV-related investments and moves in the UK, Romania, Spain, Turkey and Cologne, Germany, where a new all-electric passenger vehicle will be produced starting this spring. Ford plans to have a fully electric vehicle fleet in Europe by 2035.
