Ford is set to lay off at least 1,000 employees and contract workers in its latest attempt to alleviate some of the heavy costs of investing in electric vehicles.
The planned job cuts will be focused on the engineering ranks of the business, a company spokesperson confirmed to the Wall Street Journal.
The redundancies will be the latest move in Ford’s cost-cutting spree, after several rounds of global layoffs this year, including a 3,000-person reduction in the U.S last summer.
Ford, alongside other car manufacturers, have invested heavily in electric vehicles (EVs) in recent years, aiming to invest more than $50 billion by 2026.
The company plans to be able to manufacture EVs at a rate of 600,000 per year by the end of this year and 2 million a year by 2026.
Ford CEO, Jim Farley, suggested the cuts were due to the company’s workforce not possessing the right skills for the more towards clean energy (pictured: Farley at the Amerex Technology summit in February)
Ford, alongside other car manufacturers, have invested heavily in electric vehicles (EVs) in recent years (pictured: Ford all-electric Mustang Mach-E)
The company says it is expected to lose $3 billion in operating profit on its EV business this year.
‘Teams that were affected were pulled together yesterday to let them know that there would be actions taken this week’ Ford spokesman T.R. Reid said.
‘Then individual people will be notified today and tomorrow,’ they added.
The company’s stock appeared to be performing well, closing 2.37 percent higher on Tuesday, and up more than 14 percent in the last month.
Ford CEO, Jim Farley, also suggested the cuts were due to the company’s workforce not possessing the right skills for the move towards clean energy, and that the company is adapting.
‘It’s more real time and not kind of big titanic events,’ he said, adding that the company is hiring in some areas, such as software development.
As well as cost-cutting internally Ford has sought government financing to expand its battery-manufacturing operations.
The US energy department last week confirmed it would loan a Ford joint venture $9.2 billion to expand its production across its factories in Kentucky and Tennessee.
News of the job cuts come just weeks before Ford is set to start negotiations with the United Auto Workers (UAW) union
Ford’s planned job cuts will be focused on the engineering ranks of the business
Ford’s stock appeared to be performing well, up more than 14 percent in the last month
News of the job cuts come just weeks before the company is set to start negotiations with the United Auto Workers (UAW) union over a new our-year labor contract for its hourly factory workers.
There is a higher than usual risk of strikes, analysts have suggested, after the election of a tough new leadership team.
UAW President Shawn Fain, who was elected in March, has criticized the federal loan, suggesting it is not actually benefitting the company’s workforce.
‘These companies are extremely profitable and will continue to make money hand-over-fist whether they’re selling combustion engines or EVs. Yet the workers get a smaller and smaller piece of the pie,’ he said.
Company officials said the electric vehicle unit, called Ford Model e, will be profitable before taxes by late 2026 with an 8% pretax profit margin.
Other businesses have also announced brutal job cuts this week, including KPMG who say they are to cut 5 percent of its US workforce.
A spokesperson for the accounting firm said on Monday the decision was in reaction to ‘economic headwinds, coupled with historically low attrition.’
It comes after the Big Four firm already cut about 2 percent of its US employee count in February.
‘We do not take this decision lightly. However, we believe it is in the best long-term interest of our firm and will position us for continued success into the future,’ KPMG said in an emailed statement.