Ford Announces Job Cuts In North America As Part Of Restructuring Strategy
Auto giant Ford (F) has revealed plans to slash hundreds of jobs in North America.
While the exact number of positions to be eliminated remains undisclosed, Ford has stated that the job cuts will affect all three divisions: Ford Blue, Ford Model e, and Ford Pro.
The majority of the cuts are anticipated to impact engineering roles across the company’s automotive business units and supporting functions. However, Ford assures affected individuals that they will receive severance pay, benefits, and significant assistance in finding new career opportunities.
These job cuts align with Ford’s overarching strategy to transform the company into a mammoth startup. Under its Ford+ plan, initially introduced in 2021 and subsequently updated, Ford has divided its operations into three units: Ford Model e, focused on electric vehicle development and related software; Ford Blue, consolidating activities related to gasoline-powered vehicles; and Ford Pro, dedicated to serving fleet customers.
The company aims to produce two million electric vehicle units annually by 2026, more than triple the projected figure of 600,000 by the end of 2023. To achieve this goal, Ford plans to invest $50 billion in electric vehicles between 2022 and 2026, compared to the previous plan of $30 billion by 2025.
T.R. Reid, a Ford spokesperson, emphasized that these job cuts are part of Ford’s strategy to align staffing with its focused priorities and ambitions while enhancing quality and reducing costs. This marks the first round of job cuts for 2023 and follows a previous round of layoffs in August, which saw the elimination of 3,000 salaried and contract jobs primarily in North America and India, aiming to reduce costs by $3 billion or more by 2026.
Earlier this year, Ford initiated a reorganization of its European factories, resulting in the elimination of 3,800 jobs in Europe, equivalent to nearly 11% of Ford’s workforce on the Continent. This restructuring effort seeks to establish a leaner and more competitive cost structure. Furthermore, by 2025, Ford plans to resize its European engineering footprint, leading to 2,800 fewer jobs.
Ford’s decision to implement cost-cutting measures is driven by the shift towards fully electric powertrains and less complex vehicles. As the company transitioned to producing electric vehicles, it faced substantial cost increases due to surging raw material prices and disrupted supply chains. Manufacturing an electric vehicle incurs significantly higher expenses compared to gasoline-powered vehicles. For instance, Ford’s Mustang Mach-E electric SUV costs approximately $25,000 more than a comparable Ford Edge gasoline SUV, with the battery alone amounting to $18,000 and an additional $3,000 for the charger.
While Ford’s investments in electric vehicles have not yet yielded profitability, the company remains steadfast in its commitment to these initiatives. Ford Model e reported a loss of $700 million before interest and taxes in the first quarter, surpassing the $100 million loss recorded in the previous quarter of 2022. Ford expects a substantial operating loss of $3 billion for Ford Model e in 2023, exceeding the $2.1 billion loss recorded in 2022.
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