Ford Motor Co. has announced a significant workforce reduction in Europe and the UK by the end of 2027. The company cites various challenges including economic headwinds, increased competition, and weaker-than-expected electric car sales. This move comes as the global auto industry undergoes a period of significant disruption in the shift to electrified mobility.

Ford's European Workforce Cut: A Response to Industry Turmoil

Job Cuts by Region

Ford stated that the majority of the 4,000 job cuts would occur in Germany, with 2,900 jobs being lost. In addition, 800 jobs would be cut in Britain and 300 in other EU countries. The company has a substantial workforce in Europe, with 28,000 employees, and a global presence of 174,000.This decision was made after careful consultation with employee representatives. It reflects the intense transformation taking place in the European auto industry, where automakers face significant competitive and economic challenges while also dealing with the misalignment between CO2 regulations and consumer demand for electric vehicles.

Impact on European Auto Industry

In Europe, automakers are under pressure to sell enough electric vehicles to meet new, lower limits for fleet average carbon dioxide emissions in 2025. The long-term goal of reducing emissions to zero by 2035 means the elimination of most vehicles with internal combustion engines. However, EV sales have lagged due to factors such as consumer hesitation due to inflation and the withdrawal of government purchase incentives in major car markets like Germany.Electric vehicle sales fell by 5.8% in the first nine months of the year in an overall shrinking car market. Carmakers are also facing increased competition from Chinese-made electric vehicles. These challenges have forced Ford to take decisive action to manage its costs and remain competitive.

Plant Operations and Sales

Ford has also announced a reduction in working time for workers at its Cologne, Germany plant, where it manufactures the Capri and Explorer electric vehicles. This indicates the company's efforts to optimize production and adapt to the changing market conditions.In terms of sales, Ford's performance in the first nine months of the year was not satisfactory. Sales fell by 15.3% compared to the same period last year, and the company's market share shrank from 3.5% to 3%. The third-quarter net profit also declined by 26% to $892 million due to accounting charges related to the cancellation of a three-row electric SUV and higher warranty and other costs.

Commitment to Climate Goals

Ford is an established brand in Europe and will celebrate its 100th anniversary of doing business in Germany next year. Its main plant in Cologne started production in 1931, with Henry Ford and then-Mayor Konrad Adenauer in attendance.Despite the workforce reduction, the company vice chairman and CFO John Lawler has written a letter to the German government, reiterating Ford's commitment to climate goals. He has urged the government to take action to improve market conditions and ensure the industry's future success.Lawler emphasized the need for an unmistakable, clear policy agenda to advance e-mobility, such as public investments in charging infrastructure, meaningful incentives for consumers to switch to electric vehicles, improving cost competitiveness for manufacturers, and greater flexibility in meeting CO2 compliance targets.Ford is not alone in facing these challenges. Volkswagen has also indicated its plans to consider closing some of its German plants. The European Automobile Manufacturers' Association has called for a faster review of lower CO2 limits scheduled for 2026.In conclusion, Ford's workforce reduction in Europe and the UK is a response to the complex challenges faced by the auto industry. The company is taking steps to adapt to the changing market and remain committed to its climate goals. However, it remains to be seen how these measures will impact the company's long-term performance and the future of the European auto industry.