Ford’s European business will be the subject of an $11-billion restructuring effort as the Blue Oval continues to try and reach a place of reliable profitability in the market, and significant casualties are anticipated. According to a report from The Times (subscription required), Ford Europe is preparing to axe the mid-size Mondeo car, as well as its MPV stablemates, the S-MAX and the Galaxy, at the same time that it reduces the size of its hourly European workforce.
Morgan Stanley analysts expect that Ford might lay off up to 12 percent of its more-than-200k workers worldwide, with European workers receiving the worst of the layoffs.
The Times even reports that Ford Europe could end up forming a joint venture with a rival automaker in the region to reduce development and production costs. The paper didn’t speculate as to which rival automaker Ford might partner with.
Back To Red
Ford Europe lost $73 million in the second quarter of 2018 (from April through June), after several years of promising profits. Europe was a losing market for the Blue Oval from 2011 through 2014, but through a concerted restructuring effort, Ford Europe returned to modest profits the following year, and in 2016, posted a record $1.2 billion in pre-tax profits. Profitability was lessened again in 2017 in the wake of the UK’s “Brexit” vote, and things are looking more dismal still in 2018.
While Ford Europe’s anticipated response sounds an awful lot like how the automaker reacted to slowing car sales in North America, there’s little to indicate that the company’s European-market product cull might look anything like its American one. Crossovers are increasingly popular in Europe, as they are in many markets around the world, but the Old Continent’s more tightly-packed cities and relatively high fuel prices mean that there will always be a place for small, inexpensive, efficient cars like the Ford Fiesta and Ford Focus.
Comments
Ford has finally decided to become Isuzu. If it is too hot in the kitchen, and you cannot keep up, bail. More is less, less is more.
Okay.
Mondero could have easily been imported from one global line in China for Europe. Brexit would have had m no effect, also a RHD could have been made for OZ. This car is pure fleet profit, especially in Vignale trim.
PSA demonstrates how to handle under-utilized factories: Operate the line three days a week at full speed as opposed to 5 in slo mo; close off or lease out not needed space.
Clearly Ford wants to be a highly capitalized CUV in every segment Jeep. Ford overheard Sergio saying Jeep could do Toyota-sized volume and Hacket stole the idea.
One Ford presented FoMoCo an opportunity to develop a true global business plan appropriate for changing markets like Europe and developing markets like Brazil and Russia where One Ford needed a second more economical Skoda-like option.
Ford is doomed unless it can partner with VW (GM will take a large stake in PSA by 2020 so that’s off Ford’s menu). Ford’s only other option is to sell off EU operations and transform Latam into a J/V and then use the cash savings for China and India. Otherwise it will be Junk bond status.