Ford Slashing 7,000 Jobs as Disruption Sweeps Auto Industry

A 2017 Ford Motor Co. Super Duty F-250 truck stands near an American flag at the Ford Kentucky Truck Plant in Louisville, Ky. (Luke Sharrett/Bloomberg News)

Ford Motor Co. plans to eliminate about 7,000 salaried jobs — about 10% of its global white-collar workforce — as pressures mount on automakers to keep pace with massive technological shifts amid signs global car demand has peaked.

Eliminating the positions will save Ford about $600 million a year, CEO Jim Hackett wrote in a memo to employees May 20. The majority of the cuts will be completed by May 24 in North America, and by the end of August in other markets including Europe, China and South America.

“To succeed in our competitive industry, and position Ford to win in a fast-changing future, we must reduce bureaucracy, empower managers, speed decision making, focus on the most valuable work, and cut costs,” Hackett wrote. “Ford is a family company and saying goodbye to colleagues is difficult and emotional.”

The dismissals are designed to shrink Ford’s management structure by 20% and streamline the number of organizational layers to nine or less, from 14, Hackett said. The job cuts are far less than the 25,000 predicted by a Morgan Stanley analyst last year.

In the United States, there will be 800 “involuntary separations,” including 500 this week, according to a Ford spokesman. As of April 25, Ford had 196,000 employees worldwide, down from 202,000 at the end of 2017.

The memo provides additional details of a companywide salaried job reduction that Ford notified employees of in October, and is part of a broader $11 billion restructuring. Other changes focus on product development, such as the creation of a new vehicle architecture and design team and greater investments in infotainment, software development and electrification.

The cuts come as many global automakers are struggling to cope with consumers’ preference for crossovers and SUVs over sedans, slumping sales and the cost of electrifying their lineups to meet stiffer emissions restrictions in markets including China and Europe.

General Motors Co., Volkswagen AG and Tata Motors Ltd.’s Jaguar Land Rover also are eliminating thousands of employees as the rise of electrification and self-driving vehicle technology reshapes the global auto industry.

“Ford is squeezing every cent they can out of the current business by cutting employees, cutting products and getting out of unprofitable businesses so they can put more money into future technology like electric vehicles, autonomous vehicles and mobility services,” said Michelle Krebs, an analyst with car-shopping researcher Autotrader. “The danger is cutting so much that you hurt today’s business and eat your seed corn.”