FRANKFURT -- Ford Motor Co. said it will have cut 12,000 jobs in Europe -- about 20 percent of its overall workforce there -- by the end of next year to try to return the business to profit, part of a wave of cost reductions in an auto industry facing stagnant demand and record-level investments to build low emission cars.
Ford said it has ceased production at three plants in Russia, is closing plants in France and Wales, and has cut shifts at factories in Valencia, Spain and Saarlouis, Germany. The cuts will reduce its manufacturing footprint in Europe from 24 plants down to 18.
Approximately 12,000 jobs will be impacted at Ford’s wholly owned facilities and consolidated joint ventures in Europe by the end of 2020, primarily through voluntary separation programs, the automaker said in a statement released on Thursday.
The challenge of investing in electric, hybrid and autonomous vehicles -- while having to overhaul combustion engines to meet new clean-air rules -- has forced Europe's carmakers to slash fixed costs and streamline their model portfolios.
"We have largely concluded consultations with social partners regarding restructuring actions," Stuart Rowley, president, Ford of Europe told Reuters.
Around 2,000 of the jobs to be cut are salaried positions, which are included among the 7,000 salaried positions Ford is reducing globally, the carmaker said. The rest are workers on hourly contracts or agency workers.
Ford Europe has 51,000 employees in Europe or 65,000 when joint ventures are included.
In January Ford announced a sweeping business review that included the prospect of plant closures and discontinuing loss-making vehicle lines to pursue a 6 percent operating margin in Europe.
Demand for cars in Europe is falling. The European automobile manufacturers' association ACEA on Thursday predicted that European passenger car registrations will shrink by 1 percent in 2019 to 15 million cars, revising its previous forecast of 1 percent growth.
Car sales will stagnate or decline in the next three years, AlixPartners said in a survey of the industry published this week. Manufacturers balancing sales of electric and combustion engined cars will see margins hit particularly hard, the survey said.
Ford said it intended to double the profitability of its commercial vehicle business in Europe in the next five years, supported by a restructured Ford Sollers joint venture in Russia and a strategic alliance with Volkswagen Group.
Earlier this year Ford said it would seek to exit the multivan segment and focus on developing electrified versions of more profitable "crossover" and SUVs.
European passenger vehicle development, including for battery electric vehicles, will be centered in Cologne, the carmaker said.
Ford also said it expected to triple passenger car imports into Europe by 2024 by selling Mustang and Explorer vehicles, including a Mustang-inspired electric car in late 2020.
Bloomberg contributed to this report.