In an effort to turn its slumping growth around, Ford Motor Co. (F, Financial) said on Thursday it plans to cut jobs, exit loss-making markets and discontinue unprofitable vehicle lines in Europe.
"We are taking decisive action to transform the Ford business in Europe," Steven Armstrong, group vice president and president, Europe, Middle East and Africa, said. "We will invest in the vehicles, services, segments and markets that best support a long-term sustainably profitable business, creating value for all our stakeholders and delivering emotive vehicles to our customers."
For the third quarter, the company posted loss of 245 million euros ($282 million) before interest and taxes, which reflected a -3.3% EBIT margin.Ă‚
Bird’s-eye view
As a resutl of the European market passing tougher emission standards, Ford said it would offer electric editions of its new passenger cars, stepping up its game in the space.Ă‚ The company is also working toward identifying and focusing on its most lucrative product lines. .
The Dearborn, Michigan-based company is also trimming its workforce in Europe as part of its restructuring plan. The automaker currently employs 68,000 people in Europe, so it will meet with labor unions to discuss the cuts. It hopes it can reduce labor costs through voluntary employee separations.Â
Ford also plans to close a transmission factory in August, assess its operations in Russia and consolidate the headquarters of Ford U.K. and Ford Credit Europe.
Parting thoughts
The automaker has been struggling in Europe since 2013, continuing to suffer losses under a glut of cars. Offsetting those losses has been expensive owing to severance payments.
While Ford did see mammoth sales growth in pickup trucks and SUVs in the U.S., it underperformed in foreign markets. To step up its game on the global front, the company has met with Volkswagen (XTER:VOW, Financial) to discuss a potential partnership to support commercial vehicle growth.
Disclosure: I do not hold any positions in the stocks mentioned.
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