U.S. car manufacturer Ford will pay around $200 million in cash to workers and suppliers who lose their jobs when the company closes three of its plants in Russia in June, the company said in a statement.
The U.S. automaker officially announced this week it is closing two assembly plants and one engine factory because it says the passenger vehicle market in Russia is no longer profitable.
Ford does business in Russia via a joint venture with Russian automaker Sollers. The joint venture, called Ford Sollers, offers Ford’s Fiesta, Focus, and Mondeo (Fusion) sedans; its EcoSport, Kuga (Escape) and Explorer SUVs; and several variants of Ford’s Transit commercial van. Ford’s Russian operations employ 3,700 people.
The company said one assembly plant will remain open and will focus on the production of the Ford Transit light commercial vehicles.
“Significant employee separations are required and will be delivered through voluntary programs to the fullest extent possible,” Ford said in a statement on Wednesday.
Ford Sollers CEO Adil Shirinov called the decision to close the plants “difficult” and added that they were “critical to ensure the long-term viability of the Ford Sollers business.”
Mikhail Sergeyev, the chairman of the union representing employees at the Vsevolozhsk plant near St. Petersburg, told RBC that the union would seek redundancy payments of two annual salaries for each of its members.
“This is our main requirement if the administration offers us nothing more interesting. On April 2, negotiations will begin,” Sergeyev said.
The news website cited the Association of European Businesses as saying sales of passenger cars in Russia halved to 1.4 million between 2013 and 2016, and recovered to only 1.8 million in 2017.