Ford Motor Co. recently announced that it is cutting 3,000 jobs across the U.S., Canada, and India in an effort to cut costs and accelerate its transition to electric vehicles. Those affected include 2,000 salaried and 1,000 contract positions, mostly in Michigan and Metro Detroit.
According to the Detroit News, the announcement followed Bloomberg’s report that the automaker plans to eliminate up to 8,000 positions in order to increase profits and fund its plans for electric vehicles.
Implementing the decision of the layoffs, Ford Executive Chairman Bill Ford and CEO Jim Farley wrote a companywide email stating, “We are eliminating work, as well as reorganizing and simplifying functions throughout the business.”
T.R. Reid, Ford spokesman, stated on Monday that “the actions touch every one of our business units and all of the functions that However, the breakdown of jobs in which business units are affected was not disclosed.
By 2026, Ford aims to achieve a company-adjusted EBIT margin of 10%, which would be fueled by higher volumes, EV costs improvement, and a $3 billion reduction in structural costs associated with internal combustion engine vehicles. This plan will help the company achieve the $3 billion target.
“This is a massive transformation for Ford as Farley & Co. aggressively bet on EVs over the next decade,” said Dan Ives, managing director of equity research for Wedbush Securities, in a statement. “Some cost cutting will come with this transition across the auto industry and Ford is not alone with the cuts. This is a smart move to evolve its cost structure with the Street laser focused on this tightrope for the Detroit stalwart.”
To finance Ford’s plans for electric vehicles, this cost-cutting through the elimination of 3,000 jobs is a significant strategy to save funds. Although it is unfortunate for the affected employees as they suddenly lose their jobs, Ford will provide them with severance pay and help them find new jobs.