Ford To Lay Off 12,000: What Does The European Restructuring Mean For The Automaker?

Ford (F) announced on Thursday that it was launching a new business model and lineup of vehicles in Europe that will include a round of layoffs at several of its plants. The company will reduce its footprint in Europe by reducing factories and laying off 12,000 employees.

The company said that the layoffs will be completed in Europe by the end of 2020. Of the positions, 2,000 will be salaried employees. Beyond the layoffs at its plants, Ford said it will also reduce shifts at its Saarlouis, Germany, and Valencia, Spain, assembly plants.

The layoffs come as Ford looks to restructure its European business in an effort to deliver a long-term goal of profitability in the region. The changes to Ford’s European business unit will become effective on July 1, the company said.

“Ford will be a more targeted business in Europe, consistent with the company’s global redesign, generating higher returns through our focus on customer needs and a lean structure,” Stuart Rowley, president, Ford of Europe said.

“Implementing our new strategy quickly enables us to invest and grow our leading commercial vehicle business and provide customers with more electrified vehicles, SUVs, exciting performance derivatives and iconic imported models,” he added.

Included in the restructuring are three new business groups – Commercial Vehicles, Passenger Vehicles, and Imports. The move is designed to allow for “fast decision-making,” Ford said.

Each business unit will have a dedicated management organization that will be responsible for marketing, manufacturing, and product development. Hans Schep will lead the Commercial Vehicles group while Roelant de Waard will lead the Passenger Vehicles group. The Imports group leader was not named by the company.

Ford will also launch three new nameplates to its portfolio in Europe that will extend its Mustang, Kuga, Puma, and Explorer Plug-In Hybrid offering. The company also said it will offer an electrified version of all its new vehicle models for European customers.

“Our future is rooted in electrification,” Rowley said. “We are electrifying across our portfolio, providing all of our customers with more accessible vehicle options that are fun to drive, have improved fuel economy and are better for our environment.”

The European plant reductions will also include the closure or sale of six assembly and component plants by the end of the year. Included in the closures are the Bridgend Engine Plant in South Wales, Ford Aquitaine Industries Transmission Plant in France, and Naberezhnye Chelny Assembly, St. Petersburg Assembly and Elabuga Engine Plant in Russia. The Kechnec Transmission Plant in Slovakia will be sold to Magna.

The company said it intends to improve efficiencies at the plants and will now operate only 18 facilities by the end of 2020. Ford will also close the Ford of Britain and Ford Credit Europe headquarters in Warley, U.K., later this year while consolidating operations in Dunton, U.K.

Shares of Ford stock were up 3.13 percent as of 3:05 p.m. ET on Thursday.