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Ford, Jaguar slash thousands of jobs across Europe

Reuters  |  FRANKFURT 

By and Pitas

(Reuters) - Ford and unveiled sweeping job cuts across on Thursday as carmakers struggle with a slump in demand for diesel vehicles, tougher emissions rules and a global economic slowdown led by

Tata-owned JLR , based in central England, said it will cut 4,500 out of 42,500 jobs, while Ford said it will slash "thousands" of jobs as part of an overhaul that could result in plant closures and the discontinuation of some models.

A trade war between and the combined with Britain's pending exit from the has fragmented once global markets, forcing carmakers to reassess the profitability of individual models and locations.

In recent quarters, JLR and Ford's profits have lagged behind those of peers BMW, and Peugeot, ramping up investor pressure on managers to stem losses.

"We are taking decisive action to transform the Ford business in Europe," Steven Armstrong, group vice president, Europe, and Africa, said in a statement on Thursday.

Ford Europe, which employs 53,000 people, has been losing money for years and pressure to restructure its operations has increased since arch-rival raised profits by selling its European and Vauxhall brands to France's SAC .

JLR said demand in China, once one of its strongest countries, fell by 21.6 percent in 2018, the biggest drop of any of its markets.

"The economic slowdown in along with ongoing trade tensions is continuing to influence consumer confidence," said

The job cuts come as Ford and JLR have been hit by a fall in demand for diesel-engined cars and after European policymakers last month agreed stricter pollution limits, forcing carmakers to accelerate investments to make electric cars.

"We believe could require as much as a 20 to 30 percent reduction of capacity and headcount," said in a note on Thursday.

Ford said it will seek to exit the family vans or MPV segment, review its operations in Russia, and combine the headquarters of and to a site in Dunton, to achieve a 6 percent operating margin in

"We want to be a net contributor of capital and not a net detractor," Armstrong told journalists on a later call, referring to Europe's financial contribution to U.S. parent .

reported a 245 million euro ($282 million) loss before interest and taxes in the third quarter, equivalent to a negative 3.3 percent EBIT margin.

JAGUAR CUTS

Jaguar Land Rover, which is owned by and employs around 40,000 people in Britain, on Thursday reported a 4.6 percent drop in full-year sales to just under 600,000 vehicles. It lost 354 million pounds between April and September 2018.

Automakers have been hit by a regulatory clampdown on diesel emissions ever since admitted to systematic cheating in 2015, leading regulators to discover massive discrepancies between real-world and theoretical pollution levels.

Diesel accounts for 90 percent of Jaguar Land Rover's British sales and 45 percent of global demand, the company said last year, as demand tumbles following new levies in the wake of the scandal.

Ford's Armstrong said pressure to build electric and hybrid cars had forced the carmaker to make choices about where to allocate its capital.

"In smaller vehicles the diesel decline is accelerating. It is unlikely that we will further develop small diesel engines for smaller passenger cars," Armstrong said.

BREXIT

Armstrong said any Ford layoffs and plant closures would be subject to negotiations with labour representatives, and such plans did not account for the possibility of a 'hard' exit by Britain from the

"If Brexit went in the wrong direction we would have to have another look, to mitigate that," Armstrong said. A Ford said the carmaker currently assumes that any Brexit deal would keep tariff-free trade between Britain and Europe.

said he had serious concerns about the impact of a hard Brexit but it was not possible to predict what steps might be required if that happens.

"I don't want to make at the moment any statement about Brexit and/or the closure of the plant or further implications out of it not knowing the results from politics. We have to know first what is going on."

Fellow carmakers Mini, and have said they would temporarily close plants in April after Brexit to avoid any disruption.

($1.00 = 0.8678 euros)

(Reporting by and Pitas; Editing by Elaine Hardcastle)

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

First Published: Fri, January 11 2019. 06:37 IST
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