In an effort to restore its European division to profitability, Ford announced substantial job cuts and overall downsizing initiatives through 2020 as it braces for a stagnant European market and an increasingly stringent regulatory environment. The latest developments arrive at an auspicious moment for Ford, as it continues to struggle in nearly every region outside North America.
Ford dominated the news last year when it announced its decision to stop producing sedans and passenger cars for the American market in order to concentrate on trucks and utilities. Consumer preferences in Europe are also shifting towards crossovers, which means Ford cannot rely on the Fiesta and Focus as much as they used to. Complicating matters is the European Union’s latest effort to combat CO2 emissions. The new regulations all but guarantee an electrified version of nearly every vehicle currently on sale in the region. That means Ford has to develop pricey new technology for low margin cars, and the larger, more trendy vehicles that consumers want. Other factors like a no-deal Brexit or the imposition of tariffs by the American government weren’t directly cited by Ford as justification for the latest round of cuts, but it’s likely they played an indirect role in the decision as well.
That is probably why Ford has opted to simply stop offering the Ka in Europe. But the latest round of cuts has also claimed the C-Max lineup as well. And Ford isn’t ruling out the discontinuation of other models like the Mondeo and S-Max either. The company finds itself in this precarious situation after letting nearly every model not named Fiesta or Focus continue without any substantial updates.
How does Ford plan on getting its European division to a six percent operating margin? By devoting resources towards commercial vehicles, in-demand passenger vehicles, and the importation of specialized models like the Mustang and Explorer. It will also cut 2,000 salaried positions and close six factories, which will eliminate about 10,000 jobs. Saarlous Body & Assembly and Valencia Body & Assembly will also face a reduction in output. Those plants are responsible for the C-Max, Focus, Mondeo, Galaxy, Kuga, Transit Connect, and S-Max models, most of which have experienced sales slowdowns.
In addition to pursuing strategic partnerships, Ford hopes an infusion of new crossovers will help turn things around. Case in point: the recently introduced Ford Puma. The Fiesta-based subcompact crossover is aimed towards the premium end of the market, and at Mini buyers specifically. Ford moved slightly over one million vehicles between 2015-2018, down from a high of 1.7 million in 2004. The company clearly wants to focus on higher margin vehicle segments not just in America, but globally too. A prudent course of action in shrinking markets.
Ford’s European troubles are nothing new. And a lot of their current issues were self-inflicted. Today’s announcement also reflects the reality that every automaker is facing in nearly every region: rapidly shifting consumer tastes and the increasing importance of alternative energy vehicles. The company isn’t out of the woods by any means, and it’s possible they’ll mimic General Motors and pull out of Europe completely if things don’t improve. In any event, look for Ford to replicate their approach to the Puma in more vehicles and in regions outside of Europe.
The EU emission regs mean that small IC cars may soon become essentially extinct there. It’s not worth the trouble (money) tot try to make them meet the regulations. Toyota is in good shape, as it already has the hybrid Yaris, which is exactly what’s needed there now to comply.
The only likely future for small cars there is full hybrids like the Yaris or EVs. A number of small IC car programs have already been cut, or will be soon. The end of an era.
Yes, the A-segment (like the Ford Ka mentioned in the article) is walking on its last legs. Replacements for the models available now simply would become way too expensive.
I’d say that something like the brand new B-segment Opel Corsa-e (EV, 330 km range WLTP) is just perfect for my country.
I wonder by how much are batteries going to raise the price of a small car?
To Prius levels, I think
The number of Ka, C-Max, and S-Max sold must be low. Still, as a fan of the Blue Oval, and its long line of European offerings, it is a shame to see so many folks being made redundant.
This is nothing new for Ford.
1977-1979 Thunderbird best selling ever… Iacocca fired
1989 Thunderbird gets rave reviews…entire team fired.
Ford of Europe designs an actual cool looking small CUV that doesn’t look like everything else on the road without looking strange either (Nissan Juke, Pontiac Aztec) but upstages the darling of Dearborn Eco-Sport… you’re fired!
The EcoSport was a rush job. I seriously doubt that Ford management has any illusions regarding its greatness.
Prelude to selling out to VW…….
That would be ironic. From Wikipedia:
In March 1948, the British offered the Volkswagen company to Ford, free of charge. Henry Ford II, the son of Edsel Ford, traveled to West Germany for discussions. Heinz Nordhoff was also present, and Ernest Breech, chairman of the board for Ford Motor Company. Henry Ford II looked to Ernest Breech for his opinion, and Breech said, “Mr. Ford, I don’t think what we’re being offered here is worth a dime!” Ford passed on the offer…
I betcha they edited the last word in that quote! 🙂
VW in 1948 wasn’t much. It went on to become huge against all odds. Had Ford taken control of VW in 1948, the VW that we all know wouldn’t exist. It would have followed a Ford vision for the future and likely would have been marketed as a division of Ford, just like Mercury, or Lincoln. VW succeeded because Ford didn’t take that offer.
Consumer tastes here seem to be the Ford Ranger its the best selling new vehicle period. Of course there are other Fords on offer but maybe not for much longer.
More precarious than auspicious I’d say.
It’s astounding how dramatic the short-term ramifications of ever-stringent CO2 emissions standards can be. Decades ago, tougher emissions standards and CAFE almost exclusively ended the lives of large, big-engined cars… now we’re seeing it on the complete opposite end of the spectrum as compact and smaller cars simply don’t have enough profit in them to justify investing into technologies that would lower their emissions or even make them zero-emission vehicles. Very interesting read!
Ford did it to themselves and no one likes their line up of cars with the tiny size and troublesome and expensive to fix turbo engines. The truth is they depended on Volvo and Mazda for platforms which was short sighted and now they don’t have them to depend on and they still can’t make a decent front wheel drive unit body so they are stuck. They should think outside the box and lower an f150 chasis and build a proper crown Vic, town car and Thunderbird.
I was watching Jeopardy! last night. It was a junior Jeopardy! with school kids playing. They were all brilliant. They answered worthy questions that pertained to worthy things that took place way before their time. One thing completely stumped them. They couldn’t identify a picture of a young Keith Richards and Mick Jagger. I don’t think that they’d do any better identifying a proper Crown Victoria, Town Car and Thunderbird. There is a new reality and we are not so relevant in it.
Bingo.
I watched that one. I recognized Mick and Keith right away. But I didn’t know the acts that the teens knew at all.
Now get off my lawn! (scowl) Dammit, doesn’t anyone remember The Knack or Psuedoecho ?? Grrr
A new T-Bird would sell just about as well as the 2002 ones did. But those are on my used car bucket list, along with the Panther based Mercury Marauder
The Crown Vic, Thunderbird and Town Car outlived their usefulness. Just look at their sales figures, or the Panthers’ resale values.
New ones would be DOA, especially with a truck chassis.
Selling Volvo was a mistake. The Volvo engineers are remarkably good. The Volvo P2 platform pretty much formed the basis for most of the Ford large car/crossover line-up: Edge/500/Taurus/TaurusX/Flex, etc…
The Edge was never on the Volvo-derived D3 platform. It was on the mid-size CD3 platform shared with Mazda.
I think Ford’s problem is that it tried to be everywhere on the market and ended up nowhere, due to most models not getting the necessary attention.
In what business were they? Budget cars? (for a while, the Ford Ka was the cheapest new car in my country) Sporty ordinary cars? Performance cars? Minivans? Crossovers? US imports? Simply put, having a 1.2 Ka and a Mustang GT in the same showroom makes for a lack of image, and there is a lot of segments to spread the profits between.
Volkswagen has the same problems, which is why they have to do range trimmings once in a while, but at least they have the initial quality that drives their buyers to the dealers. Ford sells more on the basis of price, which gives less money to spend on their vast range.
Ford, GM and Toyota have traditionally covered all segments in many markets. VW, not so much. Going forward, I agree that this might not be sustainable.
Nah, Ford did not have that much of a lineup. All they traditionally had was some ordinary car around the middle of the market and a van, later expanded to a small hatchback and a midsize coupe, which left a lot of room for specialty cars.
Only in the 90s and 21st century has the lineup ballooned to its current size.
Just a random year for Ford passenger cars from the 1970s. Does this typify “the ordinary car around the middle of the market and a van” you mentioned?
Sure their lineup was smaller prior to about the mid-60s but anything occurring in the nearly half century since the early 1970s would constitute tradition, wouldn’t it?
I’m talking about Ford of Europe here.
Though I mistakenly wrote “car” instead of “cars”.
They had more than one: first one small and one big in Germany (Taunus) and some variations of the small and big British car (Anglia and company/Consul, Z-Cars), then three around the middle of the market (Escort, Cortina/Corsair/small Taunus, big Taunus/Consul/Granada). Even the Capri and Transit did not make that a huge lineup.
The flight of fancy started in the 80s and 90s – Explorer, Ka, Galaxy, Maverick, Puma, Fusion, Sportka…
There I was, enjoying your article and looking at the pictures when it hit me like a brick.
I like the look of that Kuga.
I pinched myself in case I was dreaming, so that my dream didn’t suddenly change into a ravenous, aggressive Kia/Hyundai coming up from hell to devour me and my family.
Or maybe just pee in my Corn Flakes.
But no, the pinch stimulated a pain response, so I was in fact awake.
I then checked the picture over closely in case it would reveal itself to be photoshopped, hiding the alien insect anal-bead-wielding LED-emblazoned homage to hippety-hop tackiness beneath.
But no, it was an actual MODERN vehicle which did not make me want to cover my eyes in horror. It is nice looking. How can this be?
Pleasant roofline. Minimal unpainted gray plastic.
Only one front end, not two or three stacked on top of one another like a Juke.
A minimal amount of black mesh grille/barbed wire or whatever that stuff is.
Nicely-shaped headlights that don’t make me sad for all the crying children who have seen them haunting their dreams. Just a vehicle. For driving, presumably.
Not concerned with screaming out how scary/badass/gangsta it is.
Vin Diesel wouldn’t want to mumble some inane crap about “muscle/look-how-sweaty-dirty I am so I must be really tough and did you notice I am bald?” about this SUV.
Sorry, that was a long sentence. I quit using the hyphens halfway through because it takes too long. But I think I made my point.
I like it! More, please. I would buy it if I had the means. I have much more opinion than money these days. But I hope people will buy these things so that I can once again be happy to see cars like I enjoy the ones from 1889 until 2008.
Benz Patent Wagon, yo!
Please sober up and stop buying the “glitter-ball Gene Simmons in full makeup with wheels” things or it will never end. I take this Kuga as a good sign that things may yet turn around, and sanity/taste/class/dare I say “normal” styling will once again fill the highways of our country and world.
Make them electric, hybrid, candle-powered or powered by our own sense of self-importance, I don’t care.
Just make them pretty again like that Ford.
Please?
The Kuga would look better without the sextagonal grill.
The current gene simmons styled cars all look like Stormtroopers or Cylons to me and I refuse to even consider them. Toyota is especially obnoxious with the black plastic patches (which will quickly turn brownish and fade) on the front fascia. Hell, some of the patches even look like the gang teardrop tattoo that means you’ve killed someone.
I never noticed that before, but now I can’t unsee it.
MY JOB HERE IS DONE (mounts horse, spins lever gun before putting it in saddle holster and rides off into the sunset while music plays)
I missed just exactly when Alan Mulally’s “One Ford” idea sunk beneath the waves, but it definitely did. The world auto business has always been subject to the whims of local markets’ tax and regulatory environments.
As an American I lack a strong knowledge of European conditions, so is this just a uniquely Ford story or is this this problem with future viability affecting European companies too? Or is Ford hobbled as an outsider that does not benefit from direct or indirect subsidies that European governments have tended to give to their local manufacturers?
“One Ford” was BS from the get-go. Had GM made the same pledge, it would have been just as untrue. However, GM did more of a “One GM” than Ford ever tried to do. GM brought Opel/Vauxhall/Holden models over as Saturns, then Buicks, with a Pontiac/Chevrolet model for fun, and relied on GM Korea to design and build small efficient models sold in the US.
Name one model that Ford ever brought over from overseas that sold well. One can argue the Capri, maybe the Merkurs, and if being generous, the Pantera. However, none of them sold as mainstream Fords. Ford used Mazda for small, Volvo for luxury, then ruined and sold off the PAG marques to Tata and Geely, who have done well with them.
Chrysler, for good or bad, used their European partners effectively. I would say Chrysler got more out of Europe than Europe out of Chrysler.
It may not be rocket science, but why aren’t the OEMs just banding together and asking all the major regulatory groups (China/EU/USA) to standardize regulations? Build global product to one global standard. It can be the most stringent one, but if products all meet the requirements, or have the same goals, it would seem to be easier to meet them.
Name one model that Ford ever brought over from overseas that sold well. One can argue the Capri,
I would argue the Capri was a success. I remember a Capri TV advert claiming the Capri was the second best selling European car in the US.
Agreed, but it was sold as a Mercury, not a Ford. God forbid it ate into any Mustang sales in the USA. Same with the Merkurs, perfectly fine Sierras and Scorpios, but not sold as Fords over here. If a car is good, why not sell it in multiple markets, especially when it compliments other product in the line? Ford refused to sell it as a mainstream Ford.
Opels sold at Buick dealers were sold (originally) as Opels. It was after Saturn ran out of product that Opels got rebadged, first as Saturns and then Buicks. When the current Opel line dies, PSA is not going to sell to GM, so what will Buick have to sell other than their SUVs and the big sedan?
“but why aren’t the OEMs just banding together and asking all the major regulatory groups (China/EU/USA) to standardize regulations?”
Your proposal makes a lot of sense to me, but I suspect there are a lot of companies that are jealous of their “home turf” that are afraid of straight-up competition. There will always be localized tastes/conditions that make some vehicles more popular one place than another, but I wonder if the Americans/Europeans are afraid of Asian companies? There seems to be something about the culture of Asian companies that encourages the building of better long-term vehicles, something that the American and European companies have not been able or willing to duplicate despite decades of opportunities.
“It may not be rocket science, but why aren’t the OEMs just banding together and asking all the major regulatory groups (China/EU/USA) to standardize regulations?”
Automakers don’t have nearly enough political clout to bring that about. Those three political entities can’t even agree on such basic things as human rights much less automobile regulation.
As I noted above, most of the European division line-up was in the platforms of a good part of the Ford USA lineup. Focus was entirely a Euro car with tweaks to the interior and powertrain for the USA in the early incarnations. Contour was the Euro Mondeo and the second generation of Fusion was a rename of the Mondeo.
Edge/Flex/Taurus/500/TaurusX/Freestyle are all based on a modified Volvo P2 platform (S60/S80/V70/XC90).
Fiesta has always been European, but small small cars are always a limited market in the US.
My hunch is this is only one of several shoes to drop.
With the C-Max gone, Saarlous is running well below capacity. Ford has announced that the next gen Transit Connect for the US will be built in Hermosillo while EU market Transit Connects will be rebadged VW Caddys. The Mondeo/S-Max/Galaxy are being allowed to run down. Take the Transit and Mondeo group away and the Kuga would be the only thing still built at Valencia. The Kuga is Focus based. They will probably move the Focus to Valencia and close Saarlous.
iirc, I have read that the Puma will be built in Romania, at the same plant that builds the Ecosport. That leaves the Fiesta as the only Ford passenger vehicle still built in Germany.
It’s just too expensive to cover the entire world with each region having its own regulations, taste, and flavors.
SCENARIO A: Ford of Europe gets punted like GM of Europe. Not sure who would be interested in catching FoE. The Ford brand still has an American mother ship, and changing Euro’s mindset about the Blue Oval would be difficult. Maybe an Asian brand would pick up the capacity, but not the brand.
SCENARIO B: Ford of America develops generic EV platforms that avail themself to various bodies (SUV, CUV, sedan, city van, etc.) for different parts of the globe. Therefore, Ford finally achieves a “World Car”. This is very difficult and very expensive, but all the traditional car manufacturers are in the same situation. IIRC, Ford and VW are working in this direction. I foresee many more “hookups” to conquer the emission regulations
SCENARIO C: Ford of Europe is eliminated in stages. Use badge engineering to meet emissions regulations while holding on to a few key profitable Euro vehicles (vans, Kuga, Puma, etc.). Eventually, lock the gate and turn off the lights.
How about Scenario D who could be a mix of parts of B and C?
Then if Ford of Europe is sold to someone else, VW might be under the eyes of European anti-trust organizations since they have already a big market share. Will Renault (who got their own problems with the Renault-Nissan alliance in precarious situation after the arrest of Carlos Ghosn) or Peugeot (who just got Opel-Vauxhall) step on the occasion?
Just like Europe’s push for Diesels in the 1970’s was a disaster- their push now for “electrification” will end up an even bigger disaster.
The road to hell is paved with good intentions
Governments should not interfere based on blind emotion
Tell this to the unelected eurocrats in Brussels. They try to micro-manage everything, up to the maximum curvature of bananas…
Fact is, the road to hotter-than-hell is paved with petroleum. Temperatures reached 113 degrees F (45 C) in France today, setting an all-time record.
I would give all of what is is my pockets if Daniel Stern would do his French accent reacting to that extremely hot day.
Let’s see, it adds up to $3.12 legal tender.
I shall wait here patiently…
Oh, la la la la, zee maircuray eez so ‘igh in zee sairmometair, she eez brokann. Eet eez too ‘ote, non? Pair’ops monsieur le clima-denieur woood lack to explain to oss ‘ow zee tempairatyeur can be so ‘igh? Eet does note railly mattair; we weel die, zen owair ‘air and owair nails weel conteenue to grow for a wahl. Bof!
(signed copies will be available after the performance 😉 )
Everyone knows that thermometers and data are myths!
Tee-hee, I am being provocative again…
ford is doing the only sensible thing by downsizing in europe. europe has way too many suppliers for a shrinking market. it’s hard to justify the cost of the eu’s electrification mandate, too. this is the same regulatory regime that was all about diesel less than a decade ago. it’s hard to know what they will do next.
ford’s best bet is to concentrate on the uk where they can gain market share post-brexit.
At the root of all this downsizing:
An apocryphal tale is told about Henry Ford II showing Walter Reuther, the veteran leader of the United Automobile Workers, around a newly automated car plant (in the early 1950s). “Walter, how are you going to get those robots to pay your union dues,” gibed the boss of Ford Motor Company. Without skipping a beat, Reuther replied, “Henry, how are you going to get them to buy your cars?”
(From The Economist, Nov. 4, 2011.)
BMW is the new Ford, Mercedes is the new Opel.
Interest rates are kept dangerously low in Europe to try to keep the sick southern European economies afloat people can lease or finance German prestige cars for next to nothing.
If you’d calculate our dispiccable Euro, you’d see an ‘Italian Euro’ would be approx 40 Euro cents while a Gernan Euro would be about 3 Euro based on the Gross National Product of these countries. The southern economies are still in crisis, before the Euro, Italians and French would devaluate their national coin (Italian Lire & French Franc) and people would be tempted to purchase products from these countries.
The domination of Germany and the German economy is sucking life out of the whole EU.
We cannot continue in this way, the so called bank crisis of 2008 has not been solved, even worse instead of writing off those debts we have increased them, printing Euro’ like hell while we’re all smug driving cars we really can’t afford.
We buy houses for silly money thanks to an artificial low interest rate. And the money borrowed to save the Greek economy, went not into the Greek econony but straight back to the banks who borrowed that money to Greece.
All the EU does is pushing problems forward
So Ford sees no future as their products are snowed under by tempting lease tariffs for Mercedes A class, even here in Holland where cars are crazy expensive to buy you can lease an A class Bens for € 400 a month.
Ford are making themselves small to be prepared for the next crisis which will be the real big one where the Chinese will take over our European economy. They are already buying sea ports all over Europe, they bought the Greek port of Piraeus and are now buying ports in Italy.
And we here in Europe are so happy to drive our premium cars that we have no idea of what the hell is going on !
Exactly, the euro and the detrimental “leadership” of the vastly unpopular EU (basically an unwanted, superimposed government without a country) are the death knell for Europe.
Rammstein it sounds like you are describing the US with debt and postponing things.
sadly rammstein, you are 100% correct. as the sage once sang, “you don’t need a weatherman to know which way the wind blows.” the chinese are stocking up on tangible assets around the world because they know what’s coming.