Ford to 'redesign' European business

Ford will import a range of iconic new models, boost production of its strongest European-made cars and SUVs and improve or ditch its slowest-selling local lines as part of a comprehensive plan to improve its competitive position and profitability in Europe.

The plan, part of a £14bn (Rs 125,929 crore) global cost-cutting programme, is described as “decisive action to transform the Ford business” by Ford president Steven Armstrong.

It will include a range of measures to cut costs in areas such as purchasing, manufacturing and engineering, as well as to reduce “surplus labour”, for which union negotiations are just beginning. It is understood that the numbers 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 include an electrified model, either mild, full or plug-in hybrid, or battery electric.

The company is also expected to announce further details of what it calls “a potential alliance” with the Volkswagen Group within days, perhaps at the Detroit auto show next week. Ford of Europe’s central aim, Armstrong says, is to deliver a pre-tax operating profit of 6 percent 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, says Armstrong, with a decision on its future likely 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 commercials — potentially with help from Volkswagen — but 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 Ecosport, Kuga and Edge, but is already advanced with plans to drop the slow-selling C-Max and Grand C-Max people carriers, currently made at Saarlouis in Germany. It has already announced that production of small automatic transmissions will cease this year at Bordeaux, France, and that its UK headquarters will move from its long-established Warley location to the Dunton technical centre.

Steven Armstrong believes importing more Ford-built vehicles provides “an important opportunity”. The American-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 Mustang-inspired Mach One SUV, due in 2020. Armstrong believes Ford will soon have “a significantly stronger and more focused product line-up” capable of delivering sustainable profits.

Also read: A long-term vision for the European automotive industry