Ford is moving to cut as many as 8,000 jobs to reduce costs as it expands its push into the electric vehicle arena.
The automaker, according to a report in Bloomberg News, will make the announcement at a press conference early Thursday morning. Reportedly, the company will eliminate jobs within its salaried workforce as well as its Ford Blue unit, which focuses on vehicles powered by internal combustion engines.
The company’s been making changes since current CEO Jim Farley took the reins in October 2020. He’s moved some of the company’s top executives into new roles while recruiting others with expertise outside of the company’s strengths.
Change is coming
The cuts haven’t been finalized and could change, but are likely to begin this summer, according to Bloomberg. Ford doesn’t typically comment on speculative stories, but it does have a call scheduled at 8 a.m. Thursday.
According to the company, “Ford executives will provide details on how the company is building out its industrial system to reach a global production run rate of 600,000 EVs, growing to more than 2 million EV annual global run rate by 2026.”
“To deliver our Ford+ transformation and lead this exciting and disruptive new era of electric and connected vehicles, we remain focused on reshaping our work and modernizing our organization across all automotive business units and across the company,” Ford spokesman T.R. Reid told Reuters in a statement.
“As part of this, we have laid out clear targets to lower our cost structure to ensure we are lean and fully competitive with the best in the industry,” he added.
Change is constant
As mentioned, Farley’s been an agent for change since his ascension to the top spot. That started with job cuts and executive changes early in his tenure as CEO as the company looked to accelerate the plans implemented by his predecessor, Jim Hackett.
He’s also reconfiguring the company’s business structure to meet current and long-term needs and goals. In March, the company divided its conventional gas and diesel vehicle operations from a new unit focusing on electric vehicles and digital technologies such as connected cars and digital marketing.
Farley said the new approach will adapt to changing industry realities but also allow the two operations to leverage each others’ strengths. And in the process, he predicted, Ford will be able to “beat the new players” in the auto industry, such as Tesla.
“Our legacy organization was holding us back,” Farley said at the time. “We had to change,” he added, calling the move “one of the biggest changes in our history” at Ford.
The payoff, said Farley, will be significant. He predicted a big increase in sales, especially EVs, while Ford, as a whole, will see its adjusted EBIT margins climb from a strong 7.3% in 2021 to an estimated 10% by 2026.
The two organizations, Ford Blue and Ford Model e, are among five new, semi-independent operating units within the company, a group that includes Ford Finance, the automaker’s captive lending business, tech unit Ford Drive, and recently created Ford Pro which focuses on fleet and commercial products.
Ford Model e will handle EV development while Ford Blue will take over development, production and marketing of conventional models using internal combustion engines, such as the “iconic” F-Series pickup, Ford’s best-selling and most profitable model.