Jaguar Land Rover Ltd and Ford of Europe A.G. will eliminate thousands of jobs across Europe as they strive to surmount problems caused by weaker sales compounded by clear signs of a global economic slowdown.
Based in Coventry, England, Jaguar Land Rover said it will slash 4,500 out of 42,500 jobs at its facilities in the United Kingdom. Cologne-based Ford of Europe said it will cut "thousands" of jobs as part of an overhaul that will later see the removal of weak selling Ford models from its line-up.
Ford will most likely close some plants in Europe as part of its retrenchment. It employs 53,000 people in its facilities throughout the continent.
Ford will also eliminate the family van or MPV segment. It said it will reassess its operations in Russia and merge the headquarters of Ford U.K. and Ford Credit. The aim of these moves will be to attain a six percent operating margin in Europe.
The large job cuts for both Ford and Jaguar Land Rover were triggered by a sharp fall in demand for diesel-engine cars. Another reason is that European policymakers in December agreed to implement stricter pollution limits. Instead of devoting money to making less polluting diesel engines, carmakers opted to speed-up investments in developing all-electric cars.
Analysts noted that profits of Jaguar Land Rover and Ford's have lagged behind those of competitors BMW, Volkswagen and Peugeot. The weaker operating results have seen investor pile on the pressure on managers to limit mounting losses.
Ford of Europe reported a $282 million loss before interest and taxes in the third quarter of 2018. For its part, Jaguar Land Rover reported a 4.6 percent drop in full-year sales to just under 600,000 vehicles. It lost $450 million between April and September 2018.
"We are taking decisive action to transform the Ford business in Europe," said Steven Armstrong, group vice president, Europe, Middle East, and Africa.
Ford of has been losing money for years. Pressure to restructure its operations has risen since arch-rival General Motors boosted profits by selling its European Opel and Vauxhall brands to Peugeot of France.
On the other hand, Jaguar Land Rover is being best by much weaker sales in China, its biggest overseas market. It said demand in China plunged 21.6 percent in 2018, the biggest drop in any of its markets.
The economic slowdown in China and Trump's trade war "is continuing to influence consumer confidence," said Jaguar Land Rover Chief Commercial Officer Felix Brautigam.
