A German labor union warned Tuesday that Ford Motor Co.'s German subsidiary could face insolvency following an announcement of financial investment if economic conditions in Europe don't improve.

The move is a "dirty trick" by management to pave the way for job cuts, according to a news release issued by David Lüdtke and Frank Koch, IG Metall chair shop stewards, and Kerstin Klein, chairwoman of IG Metall Köln-Leverkusen. They wrote that the company is terminating a "letter of comfort" that has existed since 2006.

"Without it Ford Werke GmbH could face insolvency in the next few years if the economic situation does not improve and the parent company in the USA no longer covers the losses," they wrote. "This is supposed to put pressure on the works council in the most despicable way possible, in order to agree to the planned operational changes."

Ford declined Tuesday to respond to the IG Metall statement.

Since the end of November when Ford said it would cut 4,000 jobs in Europe by the end of 2027, it has planned to eliminate 2,900 positions in Cologne, according to IG Metall. Cologne is a city in the western part of the country where Ford has a body and assembly plant with 4,090 people, a transmission plant with 1,280 people, an engine plant with 810 people and a forging site with 410 people, according to Ford's website.

An agreement between the company and the union, however, protects workers from layoffs until the end of 2032, according to IG Metall, which said it wouldn't discuss further job reductions without a future concept for the site.

The Dearborn automaker on Monday said it's investing up to $4.8 billion (4.4 billion euro) in Ford Werke to address debt and fund a multi-year business plan to improve the automaker's competitiveness in Europe. The move, the company said, enables the retirement of a financial support letter, which has been in place since 2006, and aligns Ford’s support with its affiliates around the world.

A challenging economic environment, bumpy road to electric vehicle adoption and increasing competition are complicating automotive sales in Europe. Ford's share of the passenger car market there dropped to 3.3% in 2024 from 4% in 2023, according to the European Automobile Manufacturers’ Association

The automaker has focused its efforts on the commercial sector in Europe, where it has been the top-selling CV brand for 10 years with its Ford Pro division. Company leaders have promised to double down on that market.

The union leaders added that the financial changes is a signal that the Cologne plant "is in acute danger" and said the union has initiated preparations for collective bargaining before Christmas.

"Now there is no way around a collective dispute," they wrote. "We are determined and ready for battle!"

Ford in its announcement of the investment this week said it has made $2 billion in investments in its Cologne plant for EV passenger vehicle production, including the Ford Explorer and Capri.

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