Ford keeps Fiesta in Germany image

As the US automaker is in search of the fabled European profit, it has ceded to keep the manufacturing of the Fiesta subcompact in Germany, where wage costs are high.

The deals comes part of a plan, negotiated with the employees of the Cologne plant that makes the brand’s top-selling European car, that would see assembly costs going down – a move of the broader strategy to end years of losses for the regional division.

The No.2 US automaker announced the company officials and the employees at the plant decided together to stop the night shifts – which are too costly – augment the flexibility of the working hours and bring additional work from suppliers to the plant – for total savings estimated at $400 million for the 2017 – 2021 period.

“The agreement will make the plant more cost efficient, ensuring that next-generation Fiesta production will be globally competitive,” Ford said in a statement.

Ford is also looking to hire additional staff for the development center in Cologne, one of its two German factories, which already has around 4,100 employees. Labor costs in Germany are among the highest in the world, as the Cologne-based IW economic institute research shows that in 2012 a worker received for each work hour around 36.98 euros, which compares to Japan’s 29.56 euros, the United States 25.87 euros or the 3.78 euros that Romanian workers get – as Ford has a factory there, too.

Via Reuters