F Ford Motor Company

By William Boston and Nathan Allen 

BERLIN -- Ford Motor Co. detailed plans to close factories in Europe and cut 12,000 jobs, or more than 20% of the company's workforce there, an effort to return to a profit in the region and focus on technologies that are reshaping the auto industry.

The moves are part of a revamp of Ford's unprofitable European operations announced in January and a broader cost-cutting effort as the company pivots toward electric vehicles and autonomous driving. Ford said it would cut its European manufacturing footprint to 18 plants from 24 by the end of 2020.

As part of the overhaul in Europe, where auto makers are struggling with sluggish consumer demand after years of growth, the company aims to focus more on imported passenger cars and locally built higher-margin commercial vehicles.

The move is the latest example of a big U.S. car maker retreating from Europe, which has high labor costs and is in the process of adopting some of the strictest emissions regimes in the world.

The announcement adds the key missing details to several statements that Ford has made since unveiling plans for a global restructuring last October. In January, Ford said the job cuts would hit a "significant number of the 50,000 we employ" in Europe, as it aimed to turn European losses into a 6% profit margin in the next few years. Ford has since unveiled plans for deep cuts in Germany, France, the U.K. and Russia.

"The cuts are very broad-based," Stuart Rowley, president of Ford's European business, told reporters on a conference call. "Ford will be a more targeted business in Europe, consistent with the company's global redesign, generating higher returns through our focus on customer needs and a lean structure."

The overhaul comes as the industry is under pressure from demands by European regulators to meet tougher greenhouse-gas emissions limits next year, waning demand as European car sales are expected to fall for the first time in six years, and uncertainty amid global trade tensions and a slowing economy.

The company said stepped-up imports would consist of "a niche portfolio of iconic passenger vehicles" that would include the Mustang, the Explorer, and a new fully electric sport-utility vehicle.

The reduction in European manufacturing will result in the loss of around 5,000 jobs in Germany, and 3,000 in the U.K., more than 2,000 in Russia and nearly 1,000 through the closure of a plant in the Bordeaux region of France.

Ford has about 51,000 employees in Europe, and almost 200,000 world-wide, as of last year.

Ford has struggled to generate consistent profits in Europe for years. In addition to the streamlining of its European business, Ford and Volkswagen AG recently said they would create an alliance to produce light commercial vehicles. Mr. Rowley said the talks, which are expected to conclude soon, were on track. He declined to elaborate.

In addition, Ford has been negotiating with local trade unions, which have more say over such restructuring measures than labor representatives in the U.S., about a number of plant closures.

Ford has also agreed to sell its Kechnec transmission plant in Slovakia to Magna International Inc., an automotive supplier.

Those talks have now been concluded and Mr. Rowley said the bulk of the job cuts would be completed by the end of next year.

Write to William Boston at william.boston@wsj.com

(END) Dow Jones Newswires

June 27, 2019 10:29 ET (14:29 GMT)

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