Ford Motor Co. announced that its joint venture in Russia is about to dismiss about 950 employees at two factories due to decreasing demand in the country and the weak performance of the ruble. The spokesman of Ford in Germany – Mr. John Gardiner reported that about 700 jobs are to be cut in a car plant that is managed by a joint venture with OAO Sollers. Another 250 temporary positions in the Tatarstan region will be eliminated as well.
About 5,500 people are employed by the companys joint venture. Ford Sollers revealed that it intends to become more focused on single shift production in St. Petersburg. Ford is also going to adapt its production schedule at the companys second plant.
Ford Motor Co. made an official statement, part of which was cited by Bloomberg: “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.” The company explained that its decision has been made due to “the rapid and significant depreciation of the ruble, falling industry sales and a consumer shift away”.
In the last few years, Russia became a popular place for investments, especially among overseas auto makers. However, in 2013 there was a 5% decrease in overall sales posted, which is considered a result from the slowing Russian economic growth and the recent events in Ukraine, which led to further economic instability in the region.
Over the last few years Ford Motor Co. has been one of the fastest-growing companies in the region, especially when it comes to increasing its production and local manufacturing. However, according to the Association of European Businesses, the company posted an 18% decrease in its sales in Russia in 2013 due to the dropping demand for compact cars in the region.
Ford Motor Co fell by 0.80% to $16.19 per share in New York by 13:34 GMT, marking a one-year change of +24.44%. The company is valued at $64.50 billion. According to CNN Money, the 16 analysts offering 12-month price forecasts for Ford Motor Co. have a median target of $18.00, with a high estimate of $22.00 and a low estimate of $12.00. The median estimate represents a +10.29% increase from the previous close of of $16.32.
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