Ford Motor Company is preparing to cut as many as 8,000 jobs in the coming weeks as the automaker tries to boost profits to finance its foray into the electric vehicle market, according to people familiar with the plan.
The cuts will come from the newly created Ford Blue unit, responsible for producing internal combustion engine vehicles, as well as other salaried operations across the company, said the people connected to the matter, who asked not to be identified because they are internal discussions. The plan is not yet finalized and the details could still change.
The move would mark a significant step in Chief Executive Officer Jim Farley’s plan to cut $3 billion in costs by 2026. He has said he wants to transform Ford Blue into “a company-wide cash and profit engine.” In March, Farley radically restructured Ford, splitting its car manufacturing in two by creating the “Model e” unit to expand electric car offerings and “Ford” to focus on traditional gasoline-burning cars as its sport utility vehicle: Rough.
The job cuts are expected to take place among Ford’s salaried ranks in a variety of operating roles, according to the people familiar with the matter. These could come in phases, but are likely to start this summer, the people said. Ford employs about 31,000 salaried workers in the United States, where most of the cuts are expected to occur.
Ford declined to comment on possible cuts, saying it is focused on reshaping the organization to capitalize on growth from its electric vehicle plan. “As part of this, we have set clear goals to reduce our cost structure to ensure we are efficient and fully competitive with the best in the industry,” the company said in a statement.
Farley has previously said cutting staff is key to boosting profits, which have evaporated as manufacturing of its and other plug-in models amid rising commodity costs and warranties.
“We have too many people,” Farley said at a Wolfe Research auto conference in February. “This management team strongly believes that our ICE and BEV portfolios are generating insufficient income.”
Ford shares have fallen 39% this year through Tuesday, amid fears of inflation and supply chain entanglements rattling the auto industry.
In March, Farley increased spending on electric vehicles to $50 billion and laid out a plan to build two million battery electric vehicles annually by 2026, after selling just 27,140 units in the United States last year. Last month, Ford electric vehicle sales were up 76.6% from a year earlier.
To fund Ford’s electric ambitions, Farley has said he needs the company’s traditional gasoline models to make more money.
