Ford to cut 12,000 jobs in Europe, shut down five plants on weak car demand

Ford Motor Company said that it would cut about a fifth of its European work force and shut down five plants as the company deals with weak demand for its cars. The automaker, which has struggled to turn a profit in Europe, said about 12,000 of its 65,000 workers across Europe would lose their jobs, with most being offered voluntary separation programs.

The job reductions were announced along with plans to build more electrical vehicles in the region, as part of "a new business model" to streamline the company's European operations. Ford started to shrink its European presence in 2013, but said at the start of 2019 that it would cut thousands of jobs. Like many global automakers, it has been buffeted by changes in the industry that have made it increasingly difficult to justify maintaining production facilities in the region.

Ford is closing three plants in Russia, one in France and another in Britain. It will also sell a plant in Slovakia, leaving it with 18 facilities in the area by 2020. It will also consolidate two headquarters in Britain and move them to one location.

Employees at its assembly plants in Saarlouis, Germany, and Valencia, Spain, will also have shifts reduced.

“Separating employees and closing plants are the hardest decisions we make, and in recognition of the effect on families and communities, we are providing support to ease the impact,” Stuart Rowley, president of Ford of Europe, said in a news release.

The job reductions were announced along with plans to introduce new vehicles, including ones with the option of running on electricity.

"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," Rowley said.

In recent months, companies including Nissan, Honda and Jaguar Land Rover have all announced plans to withdraw from parts of Europe, where tighter regulations over fossil fuels, sluggish sales and Brexit have made markets harder for carmakers.

In Britain, car production has fallen for 12 consecutive months, an industry group said this week, with output falling 15.5 percent over that period. The Society of Motor Manufacturers and Traders blamed Brexit for the continued slump.

"The ongoing political instability and uncertainty over our future overseas trade relationships, most notably with Europe, is not helping," Mike Hawes, the chief executive of the organisation, said in a statement.

At the same time, traditional auto companies are facing more competition from technology companies and have turned their focus to China, the world's largest maker and seller of electric cars.

Since announcing in January that it would be cutting employees and facilities, Ford has teamed up with Volkswagen in an alliance intended to spur the development of electric and self-driving cars, as well as to cut costs.

The company said on Thursday that all its new models would have options for electrification and that it would be building electric vehicles in Europe.

"Our future is rooted in electrification," Mr. Rowley said.

First FedEx, now Ford Motors' JV; China continues clampdown on US companies

China fined Ford Motor Co.’s main joint venture in the country for antitrust violations, marking the latest action toward a US company as tensions between the two nations escalate.

Changan Ford Automobile Co. will be fined 162.8 million yuan ($23.6 million) for restricting retailers’ sale prices in the southwestern city of Chongqing since 2013, according to a statement on the State Administration for Market Regulation’s website. The fine amount is equivalent to 4 per cent of Changan Ford’s annual sales in Chongqing.

The announcement comes just days after China said that it’s investigating FedEx Corp. for “wrongful” deliveries, a move framed by the state news agency as a warning by Beijing after the Trump administration declared a ban on business with telecommunications giant Huawei Technologies Co. China has also threatened to blacklist foreign firms that damage domestic companies’ interests and on Tuesday warned its citizens against travel to the US.

Though China didn’t spell out any links between the fine and the US tensions, "it’s hard to see it as not related," said Andrew Polk, co-founder of research firm Trivium China in Beijing. "At this stage I think our baseline assumption should be that there are no coincidences."

Ford said in a statement that it respects China’s decision and that the venture will regulate operations in the country. Representatives at Changan weren’t immediately available to comment.

With the spat over trade and technology escalating, more companies risk being caught up. China is drawing up a list of what it called “unreliable entities,” opening the door to target a broad swath of the global tech industry, from US giants like Alphabet Inc.’s Google, Qualcomm Inc. and Intel Corp. to non-American suppliers that have cut off Huawei, such as Toshiba Corp. and SoftBank Group’s ARM Holdings.

A Chinese official said on Sunday that the government is firmly against the US’ “long-arm” jurisdiction on Huawei, while downplaying concerns that the planned list of unreliable entities will be used to target foreign companies as a retaliation tool in the trade war.

It’s not the first time China has hit out at an American automaker amid geopolitical tensions. In 2016, China slapped a 201 million yuan fine on General Motors Co.'s venture with SAIC Motor Corp. for antitrust violations. At the time, China-US relations were strained after President-elect Donald Trump proposed tariffs on Chinese goods, questioned the One-China policy regarding Taiwan and accused the country of stealing an American naval drone in international waters in the South China Sea.

The fine adds to Ford’s woes in China as sales at its Changan venture dropped 54 per cent in 2018. But going after carmakers makes it potentially awkward for China as foreign auto-makers typically team up with a local partner.

After a months-long ceasefire, Trump reignited the trade war by accusing China of reneging on commitments. He’s since slapped tariffs on more Chinese products and intensified the crackdown on Huawei. The escalation risks provoking China to use other tools of pressure at its disposal, from boycotts to regulatory pushback for American companies active in the world’s biggest consumer market.

As to FedEx, which is based in Memphis, Tennessee, it had already felt the impact of China’s slowing economy due to trade tensions and apologized for what it described as errors involving Huawei packages. China’s biggest tech company said it’s reviewing its relationship with the US delivery service. Two packages containing documents being shipped to Huawei in China from Japan were diverted to the US without authorization, Reuters reported.

China opened a probe because FedEx violated Chinese laws and regulations and harmed customers by misdirecting packages, the officials Xinhua news agency reported. Vice Commerce Minister Wang Shouwen said Sunday that “there’s no grounds to blame China” for starting the investigation into FedEx. China Central Television said in a commentary the probe will be a warning to other foreign companies and individuals “that violate Chinese laws and regulations.”