April 2 (Bloomberg) -- Ford Motor Co.’s Russian joint venture is cutting about 950 jobs at two factories in response to the falling ruble and deteriorating demand in the country.
A car plant run in partnership with OAO Sollers near St. Petersburg will eliminate about 700 positions as it drops a work shift in June, John Gardiner, a spokesman for Ford in Cologne, Germany, said yesterday by phone. Another 250 temporary personnel will be let go at a Ford-Sollers site in the country’s Tatarstan region.
The Russian auto market was declining even before the country’s annexation of the Crimean peninsula and massing of troops on Ukraine’s borders drew international economic sanctions in the biggest crisis between Russia and NATO countries since the end of the Cold War. Car deliveries fell 4 percent in January and February, following a 5.5 percent drop in 2013 to 2.78 million vehicles.
“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 carmaker said in a statement. Workforce and production cuts were caused by “the rapid and significant depreciation of the ruble, falling industry sales and a consumer shift away” from compact models in favor of sport-utility vehicles.
The ruble has lost 13 percent of its value against the dollar in the last 12 months, and it was the second-worst performing major emerging-market currency in the quarter ended yesterday. The drop prompted Renault SA, the French carmaker that controls Russia’s market-leading Lada auto brand, to raise prices by about 3 percent in both January and March, Oxana Nazarova, a spokeswoman at the company, said last month.
Accenture Plc said last week that Russia’s dispute with Ukraine is causing “uncertainty in the marketplace,” joining companies from DuPont Co. to Commercial Metals Co. in bracing for potential financial fallout from the confrontation.
Not all companies are spooked. Daimler AG is examining whether to build Mercedes-Benz cars in Russia as part of a plan to widen the automaker’s global production capacity and assemble more vehicles near the markets where they’re purchased.
“We have been looking at the basic parameters and potential of local production of passenger cars in Russia, and have held various discussions,” Sebastian Wahle, a spokesman for the Stuttgart, Germany-based manufacturer, said yesterday in a statement. “These activities will be continued.”
The Ford-Sollers St. Petersburg plant, which makes the Focus compact and the midsize Mondeo sedan, will also halt manufacturing for more than four weeks until single-shift operation begins at the paint shop and final assembly hall on June 9, Gardiner said. Ford declined to comment on how much production will be reduced by the moves.
Ford’s sales in Russia this year through February fell 21 percent to 10,556 vehicles, according to the automaker. The Dearborn, Michigan-based company plans to add production of the EcoSport SUV at a third factory run by the Sollers venture later this year.