April 1, 2014 / 5:47 PM / 4 years ago

Ford's Russian venture cuts 700 jobs as economy falters

MOSCOW, April 1 (Reuters) - Ford Sollers, a joint venture between U.S. automaker Ford Motor Co and Russian carmaker Sollers is cutting 700 staff in its plant near St Petersburg due to Russia’s deteriorating economy and weaker rouble, the company said on Tuesday.

Ford Sollers employs around 5,500 people around St Petersburg and in Tatarstan. The company said the move was also due to lower Russian auto sales and lower demand for “C-segment” cars, referring to compact cars such as its Ford Focus, which are made at its Vsevolozhsk plant near St Petersburg.

Car sales have faltered in Russia as economic growth has slowed, causing people to put off large purchases. Car sales fell 5 percent in 2013, according to lobby group AEB, which is forecasting another weak year because of the fragile economy.

The rouble has dropped 7 percent this year as investors price in the risk of Russia’s annexation of Crimea and economic retaliation from the West. The falling rouble reduces consumers’ purchasing power and makes it more expensive for automakers to buy parts from abroad.

Formed in late 2011, the Ford Sollers venture produces the Ford Kuga, Ford Explorer, Ford S-MAX, Ford Galaxy, Ford Transit and Tourneo Custom, as well as the Focus and Mondeo models in Russia. It has announced plans to add the Edge and EcoSport SUV models from 2014. (Reporting by Gleb Stolyarov, writing by Megan Davies. Editing by Jane Merriman)

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