Ford Motor Co. employees have been advised the second-largest U.S. automaker plans to eliminate 3,000 jobs this week.
Workers in the U.S., Canada and India will be impacted by the move which was first reported by trade publication Automotive News. About 2,000 of the jobs will come from salaried positions, with another 1,000 agency employees affected.
The automaker has already cut jobs this year in design and engineering. But more reductions appear to be in the works, a report by the Bloomberg news service in July indicating the automaker had an internal target of eliminating 8,000 jobs.
“Building this future requires changing and reshaping virtually all aspects of the way we have 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 have discussed in recent months, it means redeploying resources and addressing our cost structure, which is uncompetitive versus 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 Ford faces. Since taking on the CEO role two years ago, he has taken aim at a number of areas where the automaker isn’t cost competitive, including its European, Latin American and Indian units operations.
International operations are in much better shape now, said Farley. But he stressed that there are a number of other areas that need to be leaned out.
Overall, said Farley, Ford spends about $2,000 more than competition to market, distribute and retail its products than new competitors such as Tesla. Some of that can be recouped by changing policies, such as reducing ad spending and slimming back dealer inventories.
Traditionally, automakers like Ford maintain about a 60- to 70-day supply of unsold vehicles. The ongoing semiconductor shortage has forced sharp cuts in dealer inventory but even after those issues are resolved, said Farley, Ford will likely only maintain an average of around 30 days’ supply.
But there will need to be cuts in staffing, nonetheless.
The latest round is expected to impact a variety of different corporate silos, including purchasing. Meanwhile, there will be changes in the structure of the company, Automotive News suggested.
Change is coming
Beyond reshaping its marketing and distribution operations, Ford has split its engineering and manufacturing into two distinct entities. Ford Blue now focuses on traditional gas-powered products, with Model E charged with developing and producing the electrified products that will grow to dominate the company’s line-up.
As the shift to battery-power escalates, analysts anticipate Ford Blue will experience the sharpest cutbacks.
“We have skills that don’t work any more and we have jobs that need to change,” Farley said during an earnings call last month. “In the past, often indiscriminately, we’d take the cost out. That’s not what’s happening at Ford now. This is a different kind of change, where we’re reshaping the company.”
One of the challenges Ford faces is determining which employees can be retrained to fit in with the changes the company is making — something that can be particularly difficult for engineers trained on the development of internal combustion engines and related components.
“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 coworkers and we want to thank them for all they have contributed to Ford. We have a duty to care for and support those affected — and we will live up to this duty — providing not only benefits but significant help to find new career opportunities.”
Ford employed about 187,000 people worldwide at the beginning of this year, according to its corporate website. That included 88,000 in the United States. Of that group, 57,000 are hourly employees.
While Ford is expected to continue to eliminate jobs to reflect its changing strategies, it also is likely to hire thousands to handle new lines of work. That will cover everything from developing new EV technology to in-car infotainment and autonomous driving systems, Farley indicated during an interview last month with TheDetroitBureau.com.