Like GM, Ford Plans Major European Restructuring
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Almost two years after GM closed a deal to sell its unprofitable Opel and Vauxhall divisions in Europe, Ford plans to undertake its own massive restructuring.
Reuters reported this month that Ford has major job cuts in the pipeline. The number of jobs at risk is unknown, but the word “thousands” was included in the report. The cuts could lead to plant closures and the discontinuation of some models in the region. One Morgan Stanley analyst said Ford may need to slash 20 to 30 percent of its capacity and headcount to come out ahead.
Last year, Ford Europe posted a $282 million loss in the third quarter and analysts declared the region the biggest risk to the automaker’s long-term viability. Ford has been under pressure to restructure its European operations after GM offloaded its own European ventures to PSA Group.
GM profits rose after closing the deal, though ironically, the French automaker has since turned a profit with Opel.
The cuts come after Ford announced a major partnership deal with German automaker VW. The two will work together to develop and manufacture commercial vehicles and pickup trucks. Specifically, Ford will take the lead on the next-generation Ranger and Volkswagen Amarok. VW, meanwhile, will handle the Ford Transit Connect replacement. Ford will also develop large commercial vans.
The two also signed a memorandum of understanding to work together on future electric and self-driving cars. Details about the additional cooperation aren’t available yet, however. VW plans a massive assault on the market with numerous electric vehicles coming in the next couple of years.
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It is so difficult to build and sell cars there anymore that it is just not worth it.
Ford is losing a ton of money there. This is evidence that GM was far from alone in losing money there and that selling Opel will be seen as a smart move in the future.
It is obvious that the combo of premium brands on top and budget cars below has squeezed middle brands like Ford. Also, reputation means everything and both Ford and Opel (especially after the near 2009 crisis sale) lack in this regard especially outside UK and Ireland.
I take issue with the proposition that Europe is just too labor friendly/high tax for anyone to earn a profit. PSA, after near death, as well as Renault, Nissan and the Korean brands prove this.
GM could and should have made similar reforms to those made by PSA’s Traveres–business schools will one day profile his methods of factory utilization. GM should have been paying Opel for its autos, platforms and technology instead of sending the money to a Delaware account.
For has signed onto a poor deal in which VW gets Ford’s most valuable products while v in exchange Ford didn’t seem to be getting access to VW modular kits.
If PSA and cFCA can survive Europe Ford can, too, albeit with the proper vision, plant utilizion and quality vehicle.
Europe takes a business plan counter to most markets in the world.
GM failed with Chevy that most blamed was because they were seen as America. Well now Ford is failing and they are seen as Euro since they have been there so long.
PSA survival is yet to be assured. They are ok in Europe for now and the third world but struggle everywhere else. Let’s face it France is not the stellar country of choice for durable great looking cars.
Yes VW is getting the better part of the deal but Ford is not in a place they can go it alone any longer.
The Ford family just wants to hold onto what they have and will do what it takes to survive.
At this point and time the entire auto market is in a great fluid transition. Many companies will face great changes yet including mergers and sadly failures.