Ford Motor Co. employees. have been advised that America’s second-largest automaker plans to cut 3,000 jobs this week.
Workers in the US, Canada and India will be affected by the move, which was first reported by the trade publication Automotive News. About 2,000 of the jobs will come from salaried positions, with another 1,000 agency workers affected.
The automaker has already cut jobs this year in design and engineering. But more cuts appear to be in the works, with a report from the Bloomberg news service in July indicating that the automaker had an internal target of 8,000 job cuts.
“Building that future requires changing and reshaping virtually every aspect of how we’ve operated for more than a century,” CEO Jim Farley and Chairman Bill Ford Jr. wrote in a letter to company employees. “It requires focus, clarity and speed. And, as we’ve discussed in recent months, that means redeploying resources and addressing our cost structure, which is uncompetitive against traditional and new competitors.”
Short term pain for long term gain
In an interview with TheDetroitBureau.com last month, Farley openly discussed the financial challenges facing Ford. Since taking the CEO role two years ago, he has targeted a number of areas where the automaker is not cost-competitive, including the operations of its European, Latin American and Indian units.
International operations are in much better shape now, Farley said. But he stressed that there are a number of other areas that need to be addressed.
Overall, Farley said, Ford spends about $2,000 more than the competition to market, distribute and retail its products than newer competitors like Tesla. Some of this can be recovered by changing policies, such as reducing advertising spending and reducing dealer inventories.
Traditionally, automakers like Ford maintain about 60-70 days supply of unsold vehicles. Continued semiconductor shortages have forced sharp cuts in dealers’ inventory, but even after those issues are resolved, Farley said, Ford is likely to maintain only an average of about 30 days of supply.
But still there will have to be cuts in staff.
The latest round is expected to impact a variety of different corporate silos, including acquisitions. While there will be changes in the company’s structure, Automotive News reported.
Change is coming
Beyond reshaping its marketing and distribution operations, Ford has split its engineering and manufacturing into two separate entities. Ford Blue now focuses on traditional gas-powered products, with the Model E tasked with the development and production of electrified products that will grow to dominate the company’s lineup.
As the shift to battery power escalates, analysts predict Ford Blue will experience the sharpest reductions.
“We have skills that don’t work anymore and we have jobs that need to change,” Farley said during an earnings call last month. “In the past, often indiscriminately, we would remove the cost. That’s not what’s happening at Ford right now. This is a different kind of change, where we are reshaping the company.”
One of the challenges Ford faces is determining which employees can be retrained to adapt to the changes the company is making — something that can be especially difficult for engineers trained to develop internal combustion engines and components. connected.
“None of this changes the fact that this is a difficult and emotional time,” the letter sent to employees this week said. “The people leaving the company this week are friends and colleagues, and we want to thank them for everything they have contributed to Ford. We have a duty to care and support those affected – and we will fulfill this duty – by providing not only benefits, but significant help to find new career opportunities.”
Ford employed about 187,000 people worldwide earlier this year, according to its corporate website. This included 88,000 in the United States. Of that group, 57,000 are hourly workers.
While Ford is expected to continue to eliminate jobs to reflect its changing strategies, it is also likely to hire thousands to handle new lines of work. That will cover everything from the development of new EV technology to in-car infotainment and autonomous driving systems, Farley said during an interview last month with TheDetroitBureau.com.