According to people with knowledge, Ford Motor Co. plans to cut around 8000 jobs in the coming weeks. The automaker is pushing to boost its profits by investing in the electric vehicle market.
The layoffs could happen in the newly formed Ford Blue unit that manufactures internal combustion engine vehicles. Eliminations can also occur in the company’s salaried operations, according to people requesting not to be identified disclosing internal matters. The plan is still not final, and details may change.
Restructuring and Cost-Cutting Exercise
This could be a significant step in CEO Jim Farley’s plan to cut $3 billion expenditure by 2026. Farley says he wants to make the entire Ford business profitable by transforming Ford Blue into a cash engine. In March, Farley restructures Ford into two by making Ford Blue and Model e units. The Ford blue focus on traditional gas vehicles like Bronco sport-utility while model-e unit scale the EV division.
The staff reduction is expected in the salaried ranks across various functions according to people. They will be executed in phases starting from summer. Ford has about 31,000 salaried workers in the US, where the bulk of layoffs is expected.
Ford declined to comment on the possible reduction and said it focused on restructuring for EV growth. Mark Truby, Ford’s Chief Communications Officer, said the company has clear targets. It wants to lower the cost structure and make ford lean and Competitive with the best in the industry.
Farley said Ford had lost profits on its Mustang Mach – E and other EV models due to rising warranty and commodity costs. It wants to boost profit by cutting staff expenses.
Farley said Ford has too many people at the Wolf Research Auto Conference in February. The management felt that BEV and ICE portfolios were underperforming.
Supply Chain and Inflation Effect
Ford shares sank 39% in 2022 through Tuesday, more than the broader bear market. The stocks fell on fears of inflation and supply chain snarl in the automotive industry.
Farley boosted spending to $50 billion on EVs and planned to make 2 million EVs annually by 2026. Last year Ford sold just 27,140 EVs in the US. In June, EV sales rose 76.6% compared to the previous year after it rolled out the F-150 Lightning pickup.
Farley said to fund the ambitious electric ambitions of Ford. He wanted the traditional combustion vehicle unit to make more profit. He said the core operations generated the $50 billion investment in EVs. This was why a separate Ford blue division was created.
