Ford To Shut 3 Factories In Russia—Report
Ford is shutting down three plants out of four in Russia. Ford on Wednesday said that they will in a joint venture focus on manufacturing commercial vehicles like the Transit commercial van in Russia. The company had earlier undertaken the venture with Sollers PJSC, a Russian company. The joint venture will be taken from Ford by Sollers and they will assume a stake of 51%.
The closings will include the assembly lines in St. Petersburg and Naberezhnye Chelny along with Elabuga engine plant. The rest of the Elabuga plant will now manufacture commercial vehicles.
The company did not give an estimate as to how many employees would be losing their jobs because of the closure. Ford has around 3,700 employees in four plants and in offices. Last year the company has announced that it would be rearranging its operations globally and will be exiting out of businesses that are not profitable anymore or are not growing. Ford said that this will release the resources for new products like self-driving and electric vehicles. The company is estimating that the rearranging will cost them $11 billion for the next five years. The announcement that was made in Russia on Wednesday will cost them $450–500 million where $200 million will go for compensation and termination fees to suppliers.
Earlier Ford had announced to close a plant in France and said that it had begun discussions with unions regarding stopping the production in their Germany factory. The company said that it is expecting the shutdown of most plants to happen outside North America. The North American sales had taken up all the profit of the company last year. Earlier this month it said that it is planning to invest in Michigan around $900 million and is also planning to add around 900 jobs in the state to manufacture self-driving and electric vehicles.