Ford Motor Co is preparing to cut as many as 8 000 jobs in the coming weeks as the motor manufacturer tries to boost profits to fund its push into the electric vehicle market, according to people familiar with the plan.
The eliminations will come in the newly created Ford Blue unit responsible for producing internal combustion engine vehicles, as well as other salaried operations throughout the company, said the people, who asked not to be identified revealing internal discussions. The plan has not yet been finalised and details could still change.
Ford said it doesn’t comment on speculation.
The move would mark a significant step in CEO Jim Farley’s plan to cut US$3-billion of costs by 2026. He has said he wants to transform Ford Blue into “the profit and cash engine for the entire enterprise”. In March, Farley radically restructured Ford, cleaving its car making in two by creating the “Model e” unit to scale up EV offerings and “Ford Blue” to focus on traditional petrol burners.
The job cuts are expected to come among Ford’s salaried ranks in a variety of operational functions, according to the people familiar. They may come in phases, but are likely to begin this summer, the people said. Ford employs about 31 000 salaried workers in the US, where the bulk of the cuts are expected.
Farley has said cutting staff is a key to boosting profits, which have evaporated on its electric Mustang Mach-E and other plug-in models amid rising commodity and warranty costs.
“We have too many people,” Farley said at a Wolfe Research motoring conference in February. “This management team firmly believes that our ICE and BEV portfolios are under-earning.”
Ford’s shares tumbled 39% this year to Tuesday, worse than the broader market, amid inflation fears and supply-chain snarls roiling the motoring industry.
In March, Farley boosted spending on EVs to $50-billion and set a plan to build two million battery-electric vehicles annually by 2026, after selling just 27 140 in the US last year. Last month, Ford’s EV sales rose 76.6% from a year earlier as it rolled out the hot new electric F-150 Lightning bakkie.
To finance Ford’s electric ambitions, Farley has said he needs the company’s traditional petrol-fuelled models to make more money.
“The funding for that $50-billion, it’s all based on our core automotive operations,” Farley said in a March interview with Bloomberg Television. “That’s why we created a separate group called Ford Blue, because we need them to be more profitable to fund this.” — Keith Naughton and Ed Ludlow, (c) 2022 Bloomberg LP