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May 22, 2019

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Ford laying off 10% of its white-collar workforce

Ford revealed details of its long-awaited restructuring plan yesterday as it prepared for a future of electric and autonomous vehicles by parting ways with 7,000 white-collar workers worldwide, about 10 percent of its global salaried workforce.

The major revamp, which had been underway since last year, will save about US$600 million per year by eliminating bureaucracy and increasing the number of workers reporting to each manager.

In the US about 2,300 jobs will be cut through buyouts and layoffs, Ford said. About 1,500 have left voluntarily or with buyouts, while another 300 have already been laid off. About 500 workers will be let go starting this week, largely in and around the company’s headquarters in Dearborn, Michigan, just outside Detroit. All will get severance packages.

The layoffs are coming across a broad swath of the company including engineering, product development, marketing, information technology, logistics, finance and other areas. But the company also said it is hiring in some critical areas including those developing software and dealing with self-driving and electric vehicles.

In a memo to employees yesterday, CEO Jim Hackett said the fourth and final wave of the restructuring was to start yesterday, with the majority of US cuts being finished by May 24.

“To succeed in our competitive industry and position Ford to win in a fast-charging future, we must reduce bureaucracy, empower managers, speed decision making and focus on the most valuable work, and cost cuts,” Hackett wrote.

A shift to electric

It’s the second set of layoffs recently for Detroit-area automakers, even though the companies are making healthy profits. Sales in the US, where the automakers get most of their revenue, have fallen slightly but still are strong.

In November, General Motors announced it would shed up to 14,000 workers as it cut expenses to prepare for a shift to electric and autonomous vehicles. The layoffs included the closure of five factories in the US and Canada and cuts of another 8,000 white-collar workers worldwide.

About 6,000 blue-collar positions were cut, but most of the laid-off factory workers in the US will be placed at other plants mainly that build trucks and SUVs.

Both companies have said the cuts are needed because they face huge capital expenditures to update current vehicles and develop them for the future.

At GM, the cuts brought withering criticism from US President Donald Trump and Congress, especially the closing of a small-car factory in Lordstown, Ohio. Trump campaigned on bringing factory jobs back to the industrial Midwest.

GM has since announced a possible deal to sell the Lordstown plant to a startup electric vehicle maker but it hasn’t been finalized.

Ford’s white-collar employees had been fearful since last July when the company said the restructuring would cost US$7 billion in cash and hit pretax earnings by US$11 billion over the next three to five years.




 

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