Ford to cut £14bn, axe slow sellers and boost SUV range
FORD WILL IMPORT a range of ‘iconic’ new models, boost production of its strongestselling European-made cars and SUVS and ditch its slowestselling local lines as part of a comprehensive plan to improve its profitability and make it more competitive in Europe.
The move is part of a wider, £14 billion global cost-cutting programme and is described by Ford president Steven Armstrong as “decisive action to transform the Ford business”.
It includes a range of measures to reduce costs in areas such as purchasing, manufacturing and engineering, as well as cutting “surplus labour”, about which union negotiations are just beginning. It is understood that the number of jobs affected will be in the thousands.
The plan’s two-pronged aim is to improve near-term profitability with the efficiency measures while working at top speed to offer a “more targeted” model range to match fast-improving competition. Every Ford model will have an electrified version, either mild-, plug-in or fullhybrid, or battery electric.
The company is also expected to announce further details of what it calls “a potential alliance” within days, perhaps at the Detroit show this week. Ford of Europe’s central aim, Armstrong says, is to deliver a pre-tax operating profit of 6% for the longer term as a way of building a sustainable business that currently employs 53,000 people across its 50 markets.
Its unprofitable Russian joint venture, Ford Sollers, is under strategic review, said Armstrong, with a decision about its future likely to be made in the second quarter.
Ford is establishing three business groups in Europe: for commercial vehicles (based in Dunton, Essex), for passenger cars (based in Cologne, Germany) and for an expanded range of imported models. The company wants to protect and enhance its leadership in commercial vehicles – potentially with help from Volkswagen – but it insists that suggestions it will leave the passenger car market are wide of the mark.
It aims to build on 2018’s SUV sales record of 250,000 units set by the Ecosport, Kuga and Edge but plans to drop the slow-selling C-max and Grand C-max people-carriers, made in Saarlouis in Germany, are already advanced.
It has also announced that production of small automatic transmissions will cease in Bordeaux, France this year, and that its UK headquarters will move from its long-established Warley base to the Dunton technical centre.
Armstrong believes importing more Ford-built vehicles into Europe provides “an important opportunity”. The Us-made Mustang and Edge are likely to be joined by the newly announced Explorer and Europe will also be a target market for the new Mustanginspired Mach 1 SUV, due in 2020. Armstrong believes Ford will soon have “a significantly stronger and more focused product line-up” capable of delivering sustainable profits.