Ford is cutting 5,700 jobs in the U.K. and Belgium as it tries to return to profitability in Europe.
The company is expecting annual losses of over $1.5 billion in Europe.
Alisa Priddle of the Detroit Free Press has more:
The actions will cut capacity by 18% or 355,000 vehicles a year which should result in annual savings of $450 million to $500 million, the company said today.
With the 500 salaried and agency workers in Europe also expected to leave by the end of the year as part of a voluntary reduction program already underway, Ford said the 6,200-person reduction represents about 13% of its European workforce that was 47,000 in 2011.
“We expect to achieve profitability by mid-decade,” said Ford CEO Alan Mulally.
The AP says Ford is struggling in Europe for the same reasons as other carmakers: overcapacity, high labor costs, and sluggish demand due to the global economic crisis.
Despite the European losses, Ford officials remain optimistic, reports Michigan Radio’s Tracy Samilton.
Chief Financial Officer Bob Shanks pointed to the company’s North American profitability.
“So we’re still gonna have a very, very good year this year,” he said.
Expected third-quarter pre-tax profits are higher than last quarter’s, as are earnings per share, the Free Press Reports.
Though downsizing, Ford is still introducing new models to Europe. In doing so, Ford is following the same game plan it used to turn around in North America, says Samilton.
Ford will publish its latest earnings report on Tuesday.
- Jordan Wyant, Michigan Radio Newsroom