The steep white-collar job cuts that simmered on Ford’s back burner for a year have come into clear focus. In a letter to employees on Monday, CEO Jim Hackett announced the elimination of 7,000 salaried positions — some 10 percent of the automaker’s global workforce.
The move, part of Ford’s $11 billion restructuring plan, also calls for a 20-percent reduction in the company’s upper tier management. In the U.S., much of the pain will start being felt this week.
Hackett’s effort to reduce overhead and firm up its struggling overseas business is already well underway. Amid a cooling Western auto market and trouble in China, the company has taken steps to stem the flow of red ink, cutting plants, models, and jobs in Russia and Brazil. Workers in Germany and the UK, both salaried and otherwise, are on notice for looming cuts above and beyond those already announced.
Of the 7,000 white-collar jobs slated for elimination, Ford says 2,300 reside in the United States. Buyouts and layoffs are in order, with the company claiming 500 of the 900 jobs expected to be cut this week will be U.S.-based positions. The rest will come to an end by August.
According a Ford spokesman that spoke to CNBC, 1,500 of the 2,300 U.S. cuts came in the form of voluntary buyouts in 2018.
In his letter, Hackett said, “We are now entering the final phase of Smart Redesign,” adding that impacted employees would be notified beginning Tuesday. By May 24th, the “majority” of these employees will learn of their termination. Overseas, layoffs will take longer to complete, ending by the end of August.
Hackett has made streamlining his company’s workforce Job One, claiming the employee reduction should save the automaker $600 million a year and make for speedier decision making. Product-wise, Ford is betting that consumer thirst for trucks and SUVs will never wane, while gambling on an electrification push. That electric product wave starts with a sporty crossover due in 2020, with an EV F-150 following it at a later date. The automaker recently teamed up with Michigan-based electric vehicle startup Rivian, with Ford investing half a billion dollars to support a jointly developed vehicle — most likely a midsize SUV.
While Ford’s cost-cutting mission aims to make the company nimble, lean, and recession-proof (Hackett has dared one to happen), it also aims to bolster investor confidence and earn the automaker a big thumbs-up from Wall Street. The company’s share price, which is up since the start of the year, received a boost from a better than expected first-quarter earnings report.