Ford is embarking on a restructuring process that will cut about 3,000 employees from its workforce, in an effort to reduce costs ahead of a potential recession and 40-year high inflation.
According to a letter to employees obtained by CNBC, Ford began notifying its staff that about 2,000 salaried positions and 1,000 agency jobs across the US, Canada, India would be slashed as the automaker looks to make a series of transformation measures under CEO Jim Farley. The latest job cuts do not come as a surprise to markets, since Farley last month alluded that “we absolutely have too many people in certain places, no doubt about it.” The company recently divided itself into separate electric and internal combustion engine units.
“We worked differently than in the past, examining each team’s shifting work statement connected to our Ford+ plan. We are eliminating work, as well as reorganizing and simplifying functions throughout the business,” the message to employees read. Ford currently has about 31,000 salaried positions across North America, and just over 186,700 employees globally. After Farley became CEO in 2020, the automaker began allocating billions of dollars towards developing its EV lineup in competition with Tesla, as well as plans to cut annual costs by $3 billion by 2026 to reach a 10% pretax profit margin.
Ford’s latest move comes as other US companies look to deploy cost-cutting measures and cut back on employee headcount over fears of an economic slowdown and a potential recession. Inflation currently sits at 8.5%— a 40-year high, while GDP levels slumped for a second consecutive quarter, technically meeting the definition of a recession. Following the news, Ford shares were down about 5% on Monday to around $15.10 at the time of writing.
Information for this briefing was found via CNBC. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.