Ford now cuts jobs in Europe
US auto giant Ford plans to cut hundreds of jobs in Europe in a bid to strengthen profitability. A plan for voluntary layoffs was presented to the workforce, a company spokesman said, but declined to provide numbers or a timetable for the cuts. Officials said the numbers could be in the hundreds, out of the total workforce of 10,000 in the region.
Ford Motors: a brief
Ford Motor Company, based out of Dearborn, Michigan, USA, was founded in 1903 by Henry Ford. It is the second largest American auto company, after General Motors, and in 2014 had a revenue of $144 billion and 1,87,000 employees all over the world. Ford, ranked 8th in the fortune 500 company list, has products such as Mustang, Fiesta, Escape, Expedition, Fusion Hybrid cars, etc.
Ford cutting unprofitable business
Ford is pruning unprofitable businesses across the world including in Russia, Thailand and Australia, besides Indonesia and Japan. In Indonesia, its sales declined by almost 50% from 11,614 vehicles (2014) to 6,103 (2015), primarily due to stiff competition from Japanese car makers. In Japan, the contracting population coupled with import regulations lowers future prospects for Ford in Japanese markets.
Is TPP a reason?
The Trans Pacific Partnership (TPP), a mega trade deal among pacific rim nations to promote trade by lowering trade barriers, does not have enforceable provisions against exchange rate manipulations.
Ford opposes TPP in present form
Ford advocated for stricter provisions against currency manipulation in the TPP, as the weak Japanese Yen had rendered imported Ford cars uncompetitive in Japanese market. Ford had therefore urged the US congress to reject the TPP. The weaker Yen affected American auto companies as they account for just 0.3% share in Japanese markets as against the 32% Japanese car makers have in US markets.
Import driven sales makes easier exit
Ford does not have local production in Indonesia and Japan and the market is fed mainly from imports making it easier for Ford to exit.
Ford to exit Japan and Indonesia
Ford Motors is planning to wrap up its operations in Japan and Indonesia over difficult market conditions leading to unprofitable operations. American auto companies have complained of adverse regulations in Japan which put importers at a disadvantage. Ford sold 5000 and 6100 vehicles in Japan and Indonesia respectively and has a paltry market share of 0.1% and 0.6% in the two nations.