Ford, Jaguar slash thousands of jobs across Europe

The cockpit and steering wheel of a Streetscooter WORK XL
electric van based on a Ford Transit is pictured at Ford’s
new production line in Cologne, Germany, October 9, 2018.
Wolfgang Rattay, Reuters

FRANKFURT, Germany – Ford and Jaguar Land Rover unveiled
sweeping job cuts across Europe on Thursday as carmakers
struggle with a slump in demand for diesel vehicles, tougher
emissions rules, and a global economic slowdown led by China.

Tata-owned JLR, based in central England, said it will cut
4,500 out of 42,500 jobs, while Ford said it will slash
“thousands” of jobs as part of an overhaul that could result in
plant closures and the discontinuation of some models.

A trade war between China and the United States combined with
Britain’s pending exit from the European Union has fragmented
once global markets, forcing carmakers to reassess the
profitability of individual models and locations.

In recent quarters, JLR and Ford’s profits have lagged behind
those of peers BMW, Volkswagen, and Peugeot, ramping up
investor pressure on managers to stem losses.

“We are taking decisive action to transform the Ford business
in Europe,” Steven Armstrong, group vice president, Europe,
Middle East and Africa, said in a statement on Thursday.

Ford Europe, which employs 53,000 people, has been losing money
for years and pressure to restructure its operations has
increased since arch-rival General Motors raised profits by
selling its European Opel and Vauxhall brands to France’s
Peugeot SAC.

JLR said demand in China, once one of its strongest countries,
fell by 21.6 percent in 2018, the biggest drop of any of its
markets.

“The economic slowdown in China along with ongoing trade
tensions is continuing to influence consumer confidence,” said
Jaguar Land Rover Chief Commercial Officer Felix Brautigam.

The job cuts come as Ford and JLR have been hit by a fall in
demand for diesel-engined cars and after European policymakers
last month agreed stricter pollution limits, forcing carmakers
to accelerate investments to make electric cars.

“We believe Ford Europe could require as much as a 20 to 30
percent reduction of capacity and headcount,” Morgan Stanley
analyst Adam Jonas said in a note on Thursday.

Ford said it will seek to exit the family vans or MPV segment,
review its operations in Russia, and combine the headquarters
of Ford U.K. and Ford Credit to a site in Dunton, Essex to
achieve a 6 percent operating margin in Europe.

“We want to be a net contributor of capital and not a net
detractor,” Armstrong told journalists on a later call,
referring to Europe’s financial contribution to U.S. parent
Ford Motor.

Ford Europe reported a 245 million euro ($282 million) loss
before interest and taxes in the third quarter, equivalent to a
negative 3.3 percent EBIT margin.

JAGUAR CUTS

Jaguar Land Rover, which is owned by Tata Motors and employs
around 40,000 people in Britain, on Thursday reported a 4.6
percent drop in full-year sales to just under 600,000 vehicles.
It lost 354 million pounds between April and September 2018.

Automakers have been hit by a regulatory clampdown on diesel
emissions ever since Volkswagen admitted to systematic cheating
in 2015, leading regulators to discover massive discrepancies
between real-world and theoretical pollution levels.

Diesel accounts for 90 percent of Jaguar Land Rover’s British
sales and 45 percent of global demand, the company said last
year, as demand tumbles following new levies in the wake of the
Volkswagen scandal.

Ford’s Armstrong said pressure to build electric and hybrid
cars had forced the carmaker to make choices about where to
allocate its capital.

“In smaller vehicles the diesel decline is accelerating. It is
unlikely that we will further develop small diesel engines for
smaller passenger cars,” Armstrong said.

BREXIT

Armstrong said any Ford layoffs and plant closures would be
subject to negotiations with labor representatives, and such
plans did not account for the possibility of a ‘hard’ exit by
Britain from the European Union. 

“If Brexit went in the wrong direction we would have to have
another look, to mitigate that,” Armstrong said. 

A Ford spokesman said the carmaker currently assumes that any
Brexit deal would keep tariff-free trade between Britain and
Europe.

Jaguar Land Rover Chief Executive Ralf Speth said he had
serious concerns about the impact of a hard Brexit but it was
not possible to predict what steps might be required if that
happens.

“I don’t want to make at the moment any statement about Brexit
and/or the closure of the plant or further implications out of
it not knowing the results from politics. We have to know first
what is going on.”

Fellow carmakers Mini, Rolls-Royce and Honda have said they
would temporarily close plants in April after Brexit to avoid
any disruption.

($1.00 = 0.8678 euros)

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