Ford Officially Announces Closure of Three Assembly Plants in Russia

Salon de l'auto de Genève 2014 - 20140305 - Ford

Russian joint venture Ford Sollers, a branch of U.S. car manufacturer Ford Motor Co, will close two assembly plants and an engine factory in Russia, exiting the country’s passenger vehicle market, Reuters reported on Wednesday.

Two assembly plants in Naberezhnye Chelny and Vsevolozhsk and the engine plant in the Alabuga Special Economic Zone will be closed, the companies said in a statement on Wednesday. The move is part of a restructuring that will see Russia’s Sollers assume control of the venture, which is currently led by the U.S. automaker.

This month, Reuters reported citing industry sources that Ford was considering closing Russian plants as it was reviewing operations in unprofitable regions. The U.S. carmaker said the closures would lead to “significant” job losses, without giving details.

A restructured Ford Sollers will focus on commercial vehicles, while passenger vehicle production will cease by the end of June, the companies said.

“The new Ford Sollers structure supports Ford’s global redesign strategy to expand our leadership in commercial vehicles and to grow the business in Europe in those market segments that offer better returns on invested capital,” Steven Armstrong, president of Ford Europe, said in the statement.

“The Russian passenger vehicle market has been under significant pressure in recent years, with recovery slower than expected and a shift to lower-priced passenger vehicle segments,” Ford said.

Ford was the first international carmaker to launch vehicle assembly in Russia, opening a plant in St Petersburg in 2002. In 2011, it set up a joint venture with Sollers in which Ford and Sollers each hold a 50 percent stake, but Ford has controlled the business since buying up preferred shares.