Ford announces €4.4 billion investment in Europe, unions still worried

American car manufacturer Ford is supporting the transformation of its European business with fresh capital for its German subsidiary. The US manufacturer announced a capital injection of up to 4.4 billion euros, which is intended to ensure the “financial stability of Ford-Werke GmbH.” At the same time, it cancels an important guarantee, which worries the unions.

The US company directly emphasises that it has already made ‘significant investments’ in Europe in recent years, including the two billion dollars used to convert the Ford plant in Cologne into the ‘Cologne Electrification Center,’ a purely EV production site.

However, as this step has not yet paid off and Ford’s European business is weakening overall, the Americans are injecting more money and providing a “comprehensive business plan for the German subsidiary, Ford-Werke GmbH.”

4.4 billion

According to Ford, the new financing of up to 4.4 billion euros includes a capital injection to reduce Ford-Werke’s debts. In addition, funds will be made available for a multi-year business plan aimed at “supporting the ongoing restructuring efforts and increasing competitiveness.”

Ford announced in November 2024 that it would cut 4,000 jobs in Europe, 2,900 of them at the Cologne site, also using competitiveness to justify the move. In addition, short-term work was introduced in the Cologne production at the end of 2024.

Last year, Ford switched production in Cologne to electric cars and now only builds the Explorer and Capri at the plant. The electric SUV and coupe are based on Volkswagen’s MEB platform. They adopted the complete drive system with electric motors, VW batteries, and some interior components.

As the Ford models are naturally very similar to the corresponding model series of the VW brands and the market has not developed as expected a few years ago anyway, the Explorer and Capri sales have so far remained well below plan.

‘Letter of comfort’ dropped

However, the current financial injection comes with a big catch: “This step replaces the letter of comfort issued by Ford Motor Company in 2006 and brings the support of the Ford plants in line with that of other Ford subsidiaries worldwide,” the company announced.

In other words, with the cancellation of this letter of comfort, Ford will no longer automatically guarantee the financial obligations of its German subsidiary. On the one hand, the European business will be supported financially, but at the same time, an essential guarantee will be cancelled, which could cause further unrest at Ford Europe.

This means that the German subsidiary, which previously had a particular status within Ford, will now be placed on an equal footing with other Ford locations worldwide. To that end, Ford-Werke GmbH will also have to support itself financially in the future.

“With the new capital for our German subsidiary, we are supporting the transformation of our business in Europe and strengthening our competitiveness with a new product range,” said John Lawler, Vice Chairman of Ford Motor Company. “To be successful in Europe in the long term, we must continue to simplify our structures, reduce costs, and increase efficiency.”

Lawler emphasizes that the investment is a “clear commitment to our European business.” But he also warns that ‘all stakeholders’, explicitly mentioned are industry, political decision-makers, trade unions and social partners, must work together to secure the future of the European automotive industry.

“In particular, we need a clear political agenda in Europe that promotes the acceptance of electric cars and harmonizes consumer demand with European emissions targets,” says Lawler. Ford does not comment on the EU action plan for the future of the automotive industry in the communication.

Unions worried

IG Metall, the biggest union in Germany and very well represented in the automotive industry, sees the disappearance of the letter of comfort as a ‘dirty trick’ intended to put a lot of pressure on the works council. Production capacity has already been halved in Cologne, and the future of the Saarlouis plant near the French border is uncertain.

Ford wants to build new EVs on a new platform by 2027, but some analysts have growing doubts about the future of Ford cars in Europe. LCVs and even trucks are still selling well on the old Continent, and according to those same analysts, this is the only reason that Ford is still giving some financial breathing space to the cars division.