Ford’s joint venture with Russian automaker OAO Sollers plans to cut output and reduce staff at its two local plants because of the country’s deteriorating economy and a weakening ruble, in the wake of Russia’s annexation of Crimea and economic sanctions from the West.
A company spokesman for Ford’s European operations told Bloomberg on Tuesday that approximately 700 jobs will be eliminated from the brand’s plant near St Petersburg, which will also move to a single shift production, while another 250 temporary personnel will be let off at its second factory in the Tatarstan region. Ford employs around 5,500 people at the two sites.
“The rapid and significant depreciation of the ruble, falling industry sales, and a consumer shift away from C-cars, where the Ford brand is a leader in Russia, are the main factors driving the actions,” the automaker said in a statement, according to WSJ.
Vehicle deliveries in Russia fell around 4 percent in January and February, following a 5.5 percent drop in 2013 to about 2.8 million units. Ford’s Focus compact that is built at the joint-venture site in St. Petersburg saw its sales tumble 27 percent in 2013, and 41 percent during the first two months of 2014 compared to the same time last year.
Nevertheless, Ford stated that it believes that the fallout is temporary and expects the market to rebound.
“Ford Sollers remains absolutely committed to the Russian market and is confident it has the right product plan, people and assets to deliver long-term profitable growth,” said the company. “Ford Sollers still expects Russia to become Europe’s largest auto market in the longer term and is moving quickly to expand its lineup.”
By John Halas
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