It is now officially confirmed that Ford Motor Company is again planning to cut thousands of jobs. Some 3 800 across Europe before 2025, but the biggest part of it will be in Germany (2 300) and the UK (1 300). The proving grounds in Belgian Lommel also seem to be threatened.
The American number two car manufacturer plans to move most of the product development work to the US (-1 700 in Germany, -1 000 in the UK). The planned workforce reduction is part of the company’s efforts to cut costs to face ongoing macroeconomic conditions amid recession fears. Rising EV battery material costs are said to be a significant issue for Ford, which has set a target of attaining half of its global sales from EVs by 2030.
Ford is in discussions with the German works councils about its decision. Meanwhile, the union said it plans to take action if Ford goes ahead with the proposed cuts. IG Metall: “If negotiations between the works council and management in the coming weeks do not ensure the future of workers, we will join the process. We will not hold back from measures that could seriously impact the company, not just in Germany but Europe-wide.”
IG Metall also added: “The Ford example shows that digitizing and globalizing doesn’t come at the cost of the assembly plants alone anymore but is also hurting highly qualified personnel.” ‘
“It’s a tough reminder of what electrification also means,” adds Des Quinn from the British workers union Unite. Quin also criticized the British government for the “total absence of an industrial plan for electrification”.
Switch to EV costs jobs
Of some 183 000 employees worldwide, ±34 000 are currently employed by Ford of Europe. In June last year, Ford warned of significant job cuts in the near term at specific European factories as the shift to EV production would require fewer labor hours. In August last year, Ford cut 3 000 employees and contract workers while calling its cost structure uncompetitive compared to other car makers.
Meanwhile, Ford CEO Jim Farley warned last November that EV production would result in significant job losses. Producing more parts in-house would help to mitigate this impact. While talking at an auto conference for the Rainbow Push Coalition in Detroit, Farley said EVs require 40% fewer workers than needed for producing ICE cars and trucks.
Proving grounds Lommel
Switching to producing EVs makes a lot of development investments redundant, especially in Europe, where no EV vehicles will be developed in the near future. For some EVs sold in Europe, Ford will use VW’s MEB platform, other EVs will be developed in other parts of the world, mainly the U.S.
As the Lommel proving grounds in the north of Belgium are part of the German Ford division, the restructuring could affect the 370 employees there too. Some 100 test pilots and many engineers/technicians are working there in the final stages of product development. In more recent years, the site opened its doors to other car manufacturers and, lately, also to the public for different events. In the past ten years, Ford invested € 50 million in its test site, one of the largest and best-equipped in Europe.
Ford of Europe
For years now, the European division of Ford Motor Company has been wrestling. Profits have dwindled, and many ‘European’ Fords are disappearing from the portfolio. First, there were the larger models like Mondeo, S-Max, and Galaxy; now, the end of the popular Fiesta has been announced (mid-2023), and the Focus will be stopped in 2025.
Ford hopes to revive its European sales by going electric as soon as possible and by selling mainly crossover and SUV models. By 2025, Ford wants to offer 7 different EV models, and by 2030 all sales must be electric on the old continent. The development of those cars, unfortunately, is far less planned in Europe.
In a decade, Ford has lost a lot of sales in Europe, falling back to some 4,6% of total sales in 2022. It seems that the European market, where Ford has been present since 1903, isn’t so important anymore for the American company. The big plant in Saarlouis (French-German border region) is for sale when the Focus and C-Max have ended. It employs 4 600 people.
According to the Wall Street Journal, the Chinese car manufacturer BYD was interested, but the latest news is that it would prefer to build a totally new, so-called greenfield plant somewhere else in Europe. BYD, one of the biggest EV manufacturers in the world, has shown a significantly increased interest in the European market lately.
New battery plant in the U.S.
Meanwhile, Ford is investing $ 3,5 billion in a new plant for lithium iron phosphate (LFP) batteries in the US state of Michigan. It is working with Chinese battery maker CATL, who will license the technology to Ford and provide technical assistance. The factory is Ford-owned, making it eligible for subsidies under the Inflation Reduction Act installed by the Biden administration. This ‘BlueOval Battery Park will have an annual capacity of 35 GWh, and production will start in 2026.
LFP batteries will give Ford customers a second technology to choose from. So far, the carmaker has used nickel cobalt manganese (NCM) in its vehicles. Last year, Ford announced that it would begin using LFP batteries made in China by CATL in certain Mustang Mach-E electric SUVs and the Ford F-150 Lightning pickups offered in North America and Europe.
Ford’s plan to build this battery plant near Marshall, Michigan, is also influenced by the fact that lower cost and faster recharging will attract many customers, including commercial fleet buyers, to accept the limitations of lithium-iron-phosphate, or LFP batteries.