Ford is offering severance packages to a few hundred of its workers in Europe, as it trying to reduce costs in a shrinking market that is also affected by overcapacity.
The employees that will receive severance packages are from Germany, the United Kingdom and other countries in Europe, Ford Germany spokeswoman Beate Falk told Reuters. The official confirmed a report from daily newspaper Frankfurter Allgemeine Zeitung released in advance of publication on Wednesday. The automaker is also cutting expenses on outside contractors as well as purchased services. Ford declined to give further details about its severance program.
Ford Europe is expected to lose more than $1 billion this year and is restructuring its operations on the continent as austerity measures are affecting the economy. Ford sales in Europe fell a whopping 29 percent in August, while overall industry sales decreased by 8.5 percent.
Ford is considering closing one of its five Western Europe assembly plants, but once such a decision is made, it would likely face strong resistance from unions and governments. Ford vowed to act in order to cut costs and production capacity in Europe. The company said a downsizing in Europe could have positive results over time, similar to those seen by Ford in North America, where the restructured company is now producing impressive profits.