Ford cuts 3,000 jobs as it pivots to EVs, competes with Elon Musk's Tesla
Ford Motors
FordMotorCo said it will cut a total of 3,000 salaried and contract jobs, mostly in North America and India, as it restructures to catch up with Tesla Inc in the race to develop software-driven electric vehicles.
FordChief Executive Jim Farley has been saying for months that he believed the Dearborn, Mich. automaker had too many people, and that not enough of its workforce had the skills required as the auto industry shifts to electric vehicles and digital services.
"We are eliminating work, as well as reorganizing and simplifying functions throughout the business. You will hear more specifics from the leaders of your area of the business later this week," Farley andFordChairman BillFordwrote in a joint email.
Fordshares were down 4.8% in midday trading amid broader declines on Wall Street.
Like other established automakers,Fordhas a workforce largely hired to support a traditional combustion technology product lineup. Going forward, Farley has mapped out a strategy forFordto develop a broad lineup of electric vehicles. Like Tesla,Fordwants to generate more revenue through services that depend on digital software and connectivity.
Tesla's pre-tax profit margins have exceededFord's this year, and Farley has been blunt about the need to cut costs.
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In Monday's email to staff, Farley andFordsaid the company's cost structure "is uncompetitive versus traditional and new competitors."
Rising prices for batteries, raw materials and shipping are putting additional pressure onFordand other automakers. Still,Fordhas stuck to its full-year profit forecast, despite $3 billion in higher costs due to inflation.
Fordhas begun separating its operations into electric, the combustion engine and commercial vehicle operations. Farley said in July "cost reduction will happen" in the combustion operations. ButFordsaid on Monday the staff cuts will affect all parts of the company.
Rival GeneralMotors Co in late 2018 moved to cut 14,000 jobs as it prepared to accelerate its electric vehicle strategy.
Ford, GM and Stellantis' North American operations will confront a new workforce challenge next year as they begin contract negotiations with the United Auto Workers union, which represents the Detroit automakers' U.S. factory employees.
UAW leaders have expressed concern that electric vehicles will mean fewer manufacturing jobs, and more jobs dispersed to non-union battery and EV hardware factories.
