Employees at Ford Motor Co. were advised this week that the second-largest U.S. automaker plans to cut 3,000 jobs.
Workers in the US, Canada and India will be affected by the move, which was first reported by trade publication Automotive News. About 2,000 jobs will come from payroll, with another 1,000 agency workers affected.
The automaker has already cut design and engineering jobs this year. But more cuts appear to be in the works, the automaker indicated in a Bloomberg News Service report in July. An internal target of 8,000 job cuts.
“Building this future will require changing and reshaping nearly every aspect of the way 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 competitive against traditional and new competitors.
Short term pain for long term gain
In an interview with TheDetroitBureau.com last month, Farley candidly discussed the financial challenges facing Ford. Since assuming the role of CEO two years ago, he has taken aim at several areas where the automaker is not cost competitive, including operating European, Latin American and Indian units.
International operations are in much better shape now, Farley said. But he emphasized that there are many other areas that need to be tended to.
Overall, Farley said, Ford spends $2,000 more than the competition to market, distribute and retail its products compared to newer competitors like Tesla. Some of that can be recovered by changing policies, such as reducing advertising spending and slimming dealer inventories.
Traditionally, automakers like Ford maintain a 60- to 70-day supply of unsold vehicles. An ongoing semiconductor shortage has forced sharp cuts in dealer inventory, but even after those problems are resolved, Farley said, Ford will maintain an average of only about 30 days of supply.
But the staff needs to be cut, though.
The latest round is expected to impact a variety of corporate silos, including procurement. Meanwhile, there will be changes to the company’s structure, Automotive News suggests.
Change is coming
In addition to reshaping its marketing and distribution functions, Ford split its engineering and manufacturing into two separate organizations. Ford Blue now focuses on traditional gas-powered products, with the Model E tasked with developing and producing electrified products that dominate the company’s line-up.
As the shift to battery-power continues, analysts predict Ford Blue will experience the sharpest reduction.
“We have skills that no longer work and we have jobs that need to change,” Farley said on an earnings call last month. “In the past, often indiscriminately, we would raise costs. That’s not happening at Ford now. This is a different kind of change, where we’re reshaping the company.
One challenge Ford faces is determining which employees can be retrained to match the changes the company is making—which can be especially difficult for engineers trained in the development of internal combustion engines and related components.
“None of this changes the fact that this is a difficult and emotional time,” said a letter sent to employees this week. “The people leaving the company this week are friends and colleagues and we want to thank them for all they have contributed to Ford. It is our duty to care and support those affected – and we will fulfill this duty – not only with benefits but also with vital help in finding new career opportunities. to do
Ford employed about 187,000 people worldwide earlier this year, according to its corporate website. This includes 88,000 in the United States. Of that group, there are 57,000 hourly employees.
While Ford is expected to continue shedding jobs to reflect its changing strategies, it is likely to hire thousands to handle new work lines. That covers everything from the development of new EV technology to in-car infotainment and autonomous driving systems, Farley indicated in an interview with TheDetroitBureau.com last month.