Ford of Europe’s UK unit plans to axe up to 850 jobs on a “voluntary separation” basis “in response to the serious economic situation affecting the automotive industry”, it said today, adding that it also wanted renegotiate a 5.25% pay rise agreed last November, a move which has angered unions which are threatening strike action.
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The job cuts include 350 salaried posts across the automaker’s UK sites plus 400-500 production staff at the Southampton Transit van plant, all to depart by the end of next May, Ford said in a statement on Thursday.
The layoffs represent nearly 7% of Ford’s UK workforce of 12,900 – with almost half of the Southampton factory’s staff of 1,100 affected.
“Ford of Europe is implementing a number of cost reduction initiatives designed to protect its business and ensure it is well positioned to take full advantage of an eventual economic recovery,” the statement said. Affected employees and their unions were told about the cuts yesterday afternoon.
“Declining customer demand for commercial vehicles has had a significant impact on Southampton Plant, which currently operates on less than four shifts a week to produce the required number of Ford Transits,” the automaker said.
“Continued non-production days with employees on basic pay are not affordable in the absence of a significant improvement in customer demand. To address this, the company will open a voluntary separation programme for salaried and hourly Southampton employees to bring manned capacity into line with customer demand, with between 400 and 500 employees leaving by May 2009.”
Ford last October took 17 days out of the factory’s production schedule to the end of 2008.
A spokesman told just-auto at the time the plant built about 74,000 vehicles in 2007 and would complete about 65,000 in 2008.
Ford had said in September it would halve output of Transit vans at Southampton. It would continue making the Transit panel van at the plant until 2011 and then use the site only to make chassis cab versions after that. Production would steadily be reduced to 35,000 units a year. Ford axed 124 temporary jobs at the plant last August.
“The current Transit is a class-leading vehicle that will continue to compete successfully in the commercial vehicle market,” the automaker said today.
“Ford has revised the timing of the launch of the new Transit to deploy more effectively the engineering resource at its UK research and development centre. Southampton Plant will continue to produce the current model Transit until the new model is introduced.”
Ford had agreed a 5.25% first-year pay increase last November, reflecting high inflation here in the UK.
“The business situation has worsened significantly since then and inflation has fallen,” it said on Thursday. “Conserving cash is the single most important task confronting the company. In this difficult situation, the company has discussed with union representatives the need to re-evaluate the pay offer in the light of the present and continuing business conditions.
“Such a serious step would not normally be contemplated but in the unprecedented circumstances the priority is to ensure a sustainable Ford Motor Company.
“In response, union representatives said that they expected the November 2008 pay increase to be paid and asked the company to confirm [its] position on this increase. [Ford] undertook to reflect on the increase, but it reiterated that further discussions were required given the seriousness of the situation.”
The GMB union has accused Ford of “going back on its agreement” over the 5.25% increase agreed late last year, the BBC reported.
Gary Alexander, a worker at the factory for 20 years, told the broadcaster: “It’s doom and gloom here at the moment and I think this factory’s days are numbered.
“They [Ford] went back on their word about the pay offer and they said there would be no more job losses. They said the redundancies will be voluntary but they will not get that many.” He ruled out a possible strike saying “nobody wants that”.
GMB union officer Justin Bowden told the BBC: “Ford of Europe made a profit in excess of GBP1bn in 2008. The pay offer reflects last year’s rate of inflation and the massive contribution to that profit by the UK Ford workers. Yet again Ford is going back on its agreement with its workforce and this time it is on pay.”
“As demand across the industry continues to fall, we are facing some immediate and major challenges which require us to take decisive action to reduce all our costs – and to do so in ways which will best protect our business for the long term and ensure that we are well positioned to be among the winners when recovery does come,” said Ford of Europe chairman and CEO John Fleming in the statement.
“Those companies which act quickly in taking the right decisions will be those who not only survive but who emerge strongest from this deep recession. We aim to be one of those who emerge stronger than before.”
The announcement came as the Society of Motor Manufacturers and Traders said UK new car registrations fell 31% in January.
