Dance the night away The automotive aftermarket does rely to a significant extent on the manufacturing capability in the region. Even if many products are made outside the EU and UK, the aftermarket parts supply generally flows in a better way, especially if the required parts are used in a vehicle built in the region, or were fitted to previous models also built in the region. It is the bench mark.
For importers without this benefit, it is the standard by which they are judged. If the manufacturing ceases in the region (UK and EU27), parts supply will be more difficult and the pressure to deliver/cost control will be undermined.
Europe, excess capacity and rising costs
How is it being undermined though, and by whom? Not that I want to point fingers, but let’s start with former Prime Minister Theresa May who enshrined in law ‘Net Zero by 2050’ with no cost/benefit analysis or plan. Then there is the EU Commission, the political elite whose decisions ran our legal system. So much for politics – what has this got to do with vehicles?
Well, we find ourselves sharing with the EU27:
• Vehicle Whole Type Approval, which the UK so far is not leaving. This allows vehicle manufacturers and importers to minimise costs by standardising performance criteria, setting aside that UK and Eire drive on ‘the other’ side of the road.
• The aim to eliminate all internal combustion powered new cars and commercial vehicles from 2035 regardless of MHEV, HEV or PHEV assistance. The UK seek to eliminate pure internal combustion powertrain new vehicle from 2030 onwards in addition.
As soon as all routes to keep internal combustion production alive in the EU27 and the UK became blocked, component manufacturers either moved their operations out of the region or simply closed factories. This has been underway since 2019. The component supplier activity has expanded in electric powertrain technologies, but there is a net loss of employment. The inevitable next stage has arrived, and Europe is going to have mass closures of automotive plants. Let’s look at one vehicle manufacturer who is convulsing in much the same way as the rest.
Ford – A long history in Europe
Ford first started European manufacturing in what is now Eire, before migrating to the UK and Germany. The plant at Dagenham opened in 1919, and the Cologne plant opened in 1931, which historically – much like GM’s Russelsheim plant – was one of the most expensive to operate but also had the best quality. By the early 1990s Ford were forced to boost the plant capacity with its cheapest vehicle line, Fiesta, because Scorpio in spite of many facelifts had finally died. Quite simply fashion had moved on and the type of large cars built across Europe by non-premium brands were no longer viable. Why do this? Ford Werke was faced with paying a huge amount of cash to lay off the Cologne plant workers, or get them to build vehicles. The Fiesta was in demand, extra capacity was needed, and the maths kind-of worked. However, as with much of Germany, labour rates were high and did not fall. The writing was on the wall.
Ford steps out in 2023
In a familiar pattern for Ford, it made a barrage of announcements. First up, the planned in-depth marriage with Volkswagen Group would be instead a fling, with just two products to appear on the MEB platform. Next up, having announced years ago the that Mondeo would cease and not be replaced, came this:
• Fiesta: Stopped in June 2023, no replacement
• Focus: Stopped in 2025, no replacement, Saarloius plant to be closed
• S-Max and Galaxy: Stopped in April 2023, no replacements
• Transit Courier: (a van version of the now ceased B-Max) – No replacement, and the Romania plant sold to Ford partner Otosan to build yet more Transits
The main product development centre for Fiesta and Focus is Merkenich, next door to the Cologne plant. This will lose 1,700 product engineering jobs and 600 admin jobs. Meanwhile the UK engineering centre at Dunton will lose 1,000 product engineering jobs and 300 admin roles. A further 200 product engineering and admin jobs will be lost across the Ford of Europe operation beyond Germany and the UK. A total of 3,800 job losses, which will impact the associated supplier business too. This is a massive error.
The Saarlouis plant, which has 15 bidders including BYD, may yet lose all 4,600 jobs. Anyone working at the Cologne plant not on the BEV programme which uses the Volkswagen Group MEB electric powertrain, will also lose their jobs. More cuts will follow.
Struggling with overhead, costs and a new vision
Amid this chaos, the view from Dearborn is clear; Ford of Europe will disappear and they plan to import/ build more ‘upscale’ vehicles. Ford NAO think they can come to Europe with the Bronco, and clean up. After all, they did used to own Land Rover so think they know many things. Possibly they do, but not about this market. The word used by Dearborn is ‘Americanise’. Hell-yeah. Ford, the Captain Sensible of the Big Three U.S automakers, is now also taking the pills that led to GM leaving the European market.
Concentrating on BEVs is politically expedient, but unless costs fall significantly sales will remain stubbornly small. Sure, the tax penalties for making vehicles with any sort of internal combustion engine hurts, but the profitability per unit is way, way ahead of BEVs which are mainly break-even. Then we come to vehicles engineered primarily for the North American market, which have always had a small but dedicated following in Europe: Again, just how is this supposed to go from niche to volume sales with zero support?
Finally, the fashion bit. Ford in Europe were for many decades very, very good at reading trends, but annoyingly had limited success except in the UK. For some decades they have been fumbling about, producing great vehicles in a sea of outstanding vehicles. The idea they want to go ‘SUV only’ is very, very late - Nissan did that more than 10 years ago. Where will Ford be as the fashion swings around to lower riding vehicles? Yessiree, nowhere.
Ford North America builds a smaller pick up called Maverick which had huge market take-up, based on Escape and which also lends its platform to the Bronco Sport, which is nothing like a full USA scale Bronco. In effect Bronco Sport is related to Bronco in the same way Land Rover Discovery Sport owes nothing to Discovery No5. Maverick may not ‘be dancing with ladies that sway’, but it is dancing out of the USA showrooms. Is Ford promoting this here? Hell, no.
The 2022 results were sobering. Reasonable turn over, a US$ 2 billion loss and ‘disappointment’. The above plans will add to the one-off costs for 2023, and if any of the plan does not work, including a return to F1 by 2026, Ford will effectively vacate the European market. Ford is not alone. The EU Commission and European Parliament have only just realized what they have done, when it is already too late. Of course, there is no admission of fault, nor change in policy.
