Ford has announced plans to axe 3,800 jobs across Europe, citing difficult economic conditions and its major push toward electric vehicles.
The US carmaker said Tuesday that it would cut about 2,300 jobs in Germany, 1,300 in the United Kingdom and 200 across the rest of Europe over the next three years. The layoffs will be made in the company’s product development and administrative departments.
The cuts amount to about 11% of Ford’s staff in the region.
The plan is part of the company’s efforts to create “a leaner, more competitive cost structure for Ford in Europe,” it said in a press statement, adding that it intended to achieve the job cuts through voluntary redundancies.
The veteran automaker said the layoffs were primarily triggered by its transition to electric vehicles, and a reduction in “vehicle complexity.” Ford (F) plans to start production of its first European-made EV passenger car later this year, a key step toward turning its whole European fleet electric by 2035.
“These are difficult decisions, not taken lightly. We recognize the uncertainty it creates for our team, and I assure them we will be offering them our full support in the months ahead,” Martin Sander, general manager of Ford Model e in Europe, said in the statement.
The job cuts also come on the back of “unprecedented economic and geopolitical headwinds” in the region, a Ford spokesperson told CNN.
The past year has been difficult for European manufacturers. The cost of energy skyrocketed following Russia’s invasion of Ukraine last February, hitting an all-time high of €338 ($363) per megawatt hour in August. The prices of raw materials also shot up.
The eye-watering costs weighed on producers, causing some to slash production, relocate parts of their operations outside Europe, and lay off staff.
But inflation in energy prices has slowed in recent months. Wholesale gas prices — a key input for much of Europe’s heavy industry — are now back to their pre-war levels.
Still, the European Central Bank has vowed to “stay the course” on hiking interest rates to bring down high inflation in consumer prices, a move that could, in the near term, crimp economic growth in the 19 countries that use the euro, according to Berenberg bank.