Marginal gains

10 January 2019 By Liam Proud Follow @liamwardproud

If boss Jim Hackett hits long-term profit targets, the carmaker’s market value could rise by $10 bln. Yet that requires implausible cost cuts. Partnering with or selling to a continental rival might be better. Peugeot’s purchase of GM’s European arm shows both sides can benefit.

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Ford Motor on Jan. 10 said it will cut thousands of jobs, exit unprofitable markets and discontinue loss-making vehicle lines in Europe as part of a turnaround effort aimed at achieving a 6 percent operating profit margin in the region.

Ford said it may stop making two C-MAX models – a type of compact multi-purpose vehicle – at an assembly plant in Germany. It will also halt production at an automatic-transmission plant in Bordeaux, France. The company is also undertaking a “strategic review” of its Russian joint venture and combining the headquarters of Ford U.K. and Ford Credit at a site in Dunton, Essex.

Ford Europe employs 53,000 people and reported a 245 million euro ($282 million) operating loss in the three months to September, equivalent to a negative 3.3 percent margin. It declined to quantify the scale of job cuts, pending negotiations with labour leaders, but said staff reductions would run into the "thousands".

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