US automaker Ford said it would cut a total of 3,000 full-time and contract workers, mostly in North America and India, as it restructures its electric vehicle sector to catch up with Tesla.
Ford Chief Executive Jim Farley has been saying for months that he believes the Dearborn, Michigan-based automaker has too many workers. They are considered not to have sufficient skills to switch to the electric vehicle sector and digital services.
“We’re eliminating jobs, and reorganizing and simplifying business-wide functions. You’ll hear more specifics from your business area leaders later this week,” wrote Farley and Ford Chairman Bill Ford in a joint email. 2022.
Ford shares fell 4.8 percent in midday trade amid broader losses on Wall Street.
Like other established automakers, Ford has a workforce that is largely employed to support its internal combustion engine technology product line. Going forward, Farley has mapped out Ford’s strategy to develop a broad line of electric vehicles. Like Tesla, Ford wants to generate more revenue through services that rely on software and digital connectivity.
Tesla’s pre-tax profit margins have surpassed Ford’s this year, and Farley has spoken of the need to cut costs.
In Monday’s email to staff, Farley and Ford said the company’s cost structure was “uncompetitive with traditional and new competitors.”
Rising prices for batteries, raw materials and shipping put additional pressure on Ford and other automakers. However, Ford is sticking to its full-year profit forecast, despite the $3 billion higher cost due to inflation.
Ford has begun to separate its operations into electric vehicle, internal combustion engine, and commercial vehicle operations. Farley said in July “cost reductions will occur” in internal combustion engine operations. But Ford said Monday that the staff cuts would affect all parts of the company.
General Motors Co’s arch-rival Ford in late 2018 moved to cut 14,000 jobs as it accelerated its electric vehicle strategy.
Ford, GM, and Stellantis’ North American operations will face new workforce challenges next year as they begin contract negotiations with the United Auto Workers union, which represents employees of the US automaker’s Detroit factory.
UAW leaders have expressed concern that the shift to electric vehicles will result in fewer manufacturing jobs, and more jobs being spread to non-union battery and electric vehicle hardware manufacturers.
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