Union leaders fear Ford-Werke bankruptcy

FORD Motor Company announced this week that it is investing €4.4 billion ($A7.6b) over the next four years to help transform its European operations.

The manufacturer says it wants to minimise costs and improve competitiveness in the European market, the cash injection going in part to reduce debt at Ford-Werke (Ford’s European passenger car business and manufacturing operations in Germany and Spain), while at the same time restructuring its workforce over the coming years.

“In order to be successful in Europe in the long term, we must continue to simplify our structures, reduce costs, and increase efficiency,” said Ford Motor Company chief financial officer John Lawler.

But according to German union leaders, the subsidiary could become bankrupt in “just a few years” if its financial situation does not improve, fearing its restructuring plans could result in as many as 2900 further job cuts at its Cologne plant alone.

Ford said last year that it would eliminate 4000 positions in Europe, on top of 3800 jobs cut in 2023. The automaker carried out most of those reductions in Germany, where Ford is phasing out its factory in Saarlouis.

This week’s funding commitment replaces a 2006 agreement that any losses at Ford’s German subsidiary would be covered by its US-based parent – a move union official Benjamin Gruschka says withdraws the subsidiary’s insolvency protection and increases its risk of bankruptcy.

“The subsidiary could go bankrupt in a few years if the situation does not improve,” he said.

“The mother (Ford Motor Company) has always been there for her daughter (Ford-Werke) in the background, but that is over now.”

Indeed, the end of the credit lines from the parent company could lead to a concentration of Ford’s money-losing activities in Europe, protecting Ford Motor Company from the insolvency risk of its subsidiary.

Ford-Werke is reportedly €9.0 billion ($A15.6b) in debt, a deficit likely to increase if its passenger car sales slide is not addressed.

According to Mr Gruschka, Ford-Werke has been losing money because of high costs and weak demand for vehicles that are out of touch with European tastes (a preference for sedans and hatchbacks over SUVs).

Ford of Europe no longer offers passenger models – like the now-defunct Ka, Fiesta, Focus (remaining stock available in selected markets), or Mondeo – instead offering only SUV and light commercial models like the Puma, Kuga, Explorer, Capri, Mustang Mach-E, Ranger, Tourneo.

Ford’s share of Europe’s passenger car market dropped to 3.3 percent last year from 4.0 percent in 2023, according to industry association ACEA.

Ford-Werke managing director Marcus Wassenberg says this week’s cash injection “aims to reduce the over-indebtedness of the Ford-Werke plants” while supporting the “transformation of the business in Europe” – a transformation that includes a shift to an almost total electric line-up by 2030.

With Automotive News Europe