Ford cuts 4000 jobs in Europe, Germany injured again

Another large enterprise in the automotive industry has announced a layoff plan.

On November 20th local time, Ford announced plans to lay off 4000 employees in Europe by the end of 2027, accounting for approximately 2.3% of its global workforce (174000) and 14% of its European workforce (28000).

The reasons include economic headwinds, weak demand for electric vehicles in the region, inadequate government support for the transformation of electric vehicles, and fierce competition from Chinese competitors. Ford revealed that the layoffs are mainly concentrated in Germany and the UK. In addition, two electric SUVs from Ford's German factory have been reduced in production to cope with the sluggish market.

In fact, in recent months, several automakers and suppliers, including Nissan, Bosch, Schaeffler, etc., have issued layoff notices, and Volkswagen Group is also fiercely confronting labor unions over layoffs and the closure of German factories. For Germany, Ford's announcement is undoubtedly another heavy blow.

Ford's European predicament highlights

Ford's layoffs will be completed by the end of 2027 and will be carried out after consultation with employee representatives. Among them, Ford will lay off 2900 employees in Germany, 800 employees in the UK, and 300 employees in other European countries. It is obvious that Ford's layoffs are mainly concentrated in Germany, specifically in Ford's Cologne factory in Germany.

Cologne is the location of Ford's European headquarters, and currently the Cologne factory has nearly 12000 employees. The layoff of 2900 people means that about 1/4 of the positions will be cut. Ford's move is also quite helpless, as the company had previously invested $2 billion to renovate its Cologne factory to produce electric vehicles.

However, not long ago, Ford announced that due to the weak European economy and lower than expected demand for electric vehicles, the Explorer and Capri electric models at its Cologne factory in Germany will reduce production and reduce working hours. These two models were just put into production in June and September this year, respectively.

Peter Goldsell, Vice President of Ford Europe, claimed that consumer demand for electric vehicles is weaker than previously expected, and the company continues to face challenges in operating costs, which means Ford needs to take decisive action to restructure our business. He also added that although the company hopes that layoffs can solve the problem, it does not rule out the possibility of taking further measures if the market situation deteriorates. Regarding this, Benjamin Gruschka, Chairman of Ford's German Labor Council, stated that he will strongly resist the factory layoff plan.

With the transition to electric vehicles, the global automotive industry is still in a period of significant disruption. This transition is particularly intense in Europe, where car manufacturers face huge competition and economic headwinds, while also dealing with the mismatch between carbon dioxide emission regulations and consumer demand for electric vehicles, "Ford said in a statement.

Of course, the layoffs are also related to Ford's poor performance in the European market, and not just in the electric vehicle market. In recent years, Ford's performance in Europe has been declining, with its market share constantly shrinking. Looking back at the 1990s, Ford's market share in Europe exceeded 10%, but by 2023 it had fallen to 4%.

On November 21st, data released by the European Automobile Manufacturers Association (ACEA) showed that from January to October this year, Ford's cumulative sales in the European passenger car market were about 363000 units, a year-on-year decline of 17.5%. During the same period, the overall passenger car sales in the European market were 10.82 million units, a slight increase of 0.9% year-on-year.

 Ford's market share has reached a low point of 3.35%. More notably, among the major car companies listed by ACEA, Ford experienced the largest decline, followed by Tesla (down 11.8% year-on-year). As for another American competitor, General Motors, it completely withdrew from the European market as early as 2017 after selling Opel.

Layoffs mostly focus on Germany

Ford's move is not an isolated case, especially as we enter 2024, with the accelerated internal competition in the Chinese car market and sluggish production and sales in major European and American car markets, the wave of layoffs seems to be particularly fierce, involving many large car manufacturers with decades or even hundreds of years of history and veteran component suppliers. Stellantis, Nissan, Continental, ZF, Bosch, Schaeffler and others have all announced layoff plans, with most of them focusing on Europe, especially the German region.

Specifically, Nissan plans to lay off 9000 employees globally, but the regions have not been disclosed. Stellantis has been taking continuous actions and has released multiple layoff plans, involving multiple regions such as Spain, Italy, and the United States.

Continental Group has launched a layoff plan for approximately 7150 employees in its automotive division, of which about 40% will occur in Germany and is scheduled to be completed by the end of 2025.

ZF plans to gradually reduce its German workforce from the current 54000 to 11000 to 14000 by the end of 2028, and will also integrate its German factories. Schaeffler and Weipai Technology have decided to lay off approximately 4700 employees in Europe after their merger, including approximately 2800 positions in Germany. Bosch also plans to lay off over 7000 employees, mainly in the automotive sector.

As for Volkswagen Group, its Audi brand's electric vehicle factory in Brussels, Belgium has been confirmed to close by the end of February 2025, and the company has stopped searching for buyers for the factory after a potential investor from the commercial vehicle sector withdrew its offer.

In addition, in Germany, Volkswagen Group intends to close at least three of its existing 10 factories, lay off tens of thousands of employees, and implement a 10% pay cut for all employees to reduce costs. If successful, this will be the first time in Volkswagen Group's history that a German factory has been closed. The union strongly opposes this and demands a 7% salary increase. Given the deadlock in negotiations, the union has warned that a warning strike will begin in December to put pressure on management.

One of the reasons why Germany has become a high-risk area for layoffs among major car manufacturers and component manufacturers is that, as Marcus Wassenberg, General Manager of Ford Germany, said, labor and energy costs in Germany are too high. If some of Volkswagen Group's German factories are ultimately closed, it will undoubtedly be a greater blow to Germany.

In October of this year, the German federal government released its autumn economic forecast report, lowering the forecast for Germany's GDP growth in 2024 from the previous 0.3% to -0.2%. This means that Germany may face two consecutive years of economic recession.