Ford Motor has announced plans to carry out layoffs this week, primarily affecting engineering jobs in the United States and Canada. The job cuts are part of Ford’s cost-cutting measures as the company undergoes a restructuring of its business operations.
The layoffs as per CNBC are expected to impact all three of Ford’s business units: Ford Blue, which focuses on internal combustion engine operations; Model e, the electric vehicle unit; and Ford Pro, the fleet service operations.
How many people will be affected by the layoffs?
The exact number of employees affected by the layoffs has not been disclosed by the company. In its most recent quarterly filing, Ford stated that it expected to incur charges in 2023 between $1.5 billion and $2 billion “primarily attributable to employee separations and supplier settlements”.
This is comparable to similar actions in 2021 and 2022, which resulted in charges of $2 billion and $608 million, respectively.
In an emailed statement, Ford, as per CNBC, said: “Delivering our Ford+ plan for growth and value creation includes increasing quality, lowering costs, investing in our priorities, and adjusting staffing to match the capabilities we need.”
“People affected by the changes will be offered severance pay, benefits,” added the company as reported by Reuters.
“This is related to the Ford+ growth plan we introduced in 2021,” it added.
Ford+ Plan
Ford has been implementing restructuring efforts for several years as part of its Ford+ plan, led by CEO Jim Farley.
Last year in August, the company cut 3,000 workers in North America and recently conducted 3,800 layoffs in Europe.
Ford stated in its first-quarter filing that it would continue to review its global businesses and may take additional restructuring actions in cases where sustained profitability is not feasible.
“We continue to review our global businesses and may take additional restructuring actions where a path to sustained profitability is not feasible when considering the capital allocation required for those businesses.”
According to Ford’s Farley, the company faces a cost disadvantage of approximately $7 billion compared to some of its competitors. The company aims to address this through efficiency gains and job reductions.
Ford and job cuts
In 2022, Ford’s employee headcount decreased by approximately 10,000 people to 173,000 globally.
The employees affected by the most recent job cut will be offered severance pay, benefits, and assistance in finding new career opportunities. Reportedly, the layoffs have been communicated to contractors and team leaders, with employees expected to be notified throughout the week. The company has instructed affected units to work remotely during this period.
Ford’s restructuring efforts align with the broader trend in the automotive industry, with other automakers such as General Motors and Stellantis also implementing layoffs and cost-cutting measures to focus more on the electric vehicles markets.
(With inputs from agencies)
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