Ford Motor Co.
) has struck a deal with its German workforce, whereby it will
manufacture the next generation Fiesta compact car in Cologne
during 2017 to 2021. The automaker also agreed to avoid any layoffs
due to restructuring. Ford will also refrain from reducing the
hourly wages of its German workforce.
In return for these concessions, Ford's entire German workforce
of over 24,000 people agreed to increased flexibility in their
working hours and days. This means that from 2017, Ford can
increase or reduce their working hours by up to 30 minutes per day
to suit its requirement.
Moreover, vehicle assembly will be done in only two shifts and
there will be no night shift, which will save expenses
significantly as these are very costly in Germany. However, engine
production will be done in three shifts. Labor costs are
significantly higher in Germany, compared with other countries like
the U.S., Romania and even Japan.
According to Ford, the agreement will lead to savings worth $400
million during 2017-2021. Meanwhile, the automaker will add 500
engineers to its 4,100 strong workforce at the Cologne plant.
Earlier it had been reported that Ford might produce the next
generation Fiesta in Romania to attain cost benefits. In fact, the
CEO of Ford's European operations divulged that other plants had
been considered for production of the car before settling on
Ford is struggling to attain profitability at its European
operations. The company had to shut down two manufacturing
operations in Britain last year. It also plans to close its
assembly plant in Genk, Belgiumby the end of 2014.
Ford currently carries a Zacks Rank #3 (Hold). Some
better-ranked automobile stocks worth considering are
Fox Factory Holding Corp
Tower International, Inc.
). All these stocks carry a Zacks Rank #1 (Strong Buy).
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