Ford announced 3,000 job cuts worldwide to lower costs and fund the automaker's shift to electric vehicle manufacturing. File photo by John Angelillo/UPI | License Photo
Aug. 22 (UPI) -- Ford Motor Co. will cut 3,000 jobs worldwide as part of a restructuring to lower costs and fund electric vehicle manufacturing.
"We are eliminating work, as well as reorganizing and simplifying functions throughout the business," Ford executive chairman Bill Ford and chief executive officer Jim Farley said in a letter to employees Monday.
Ford plans to eliminate 2,000 salaried positions and 1,000 contract jobs in the United States, Canada and India. A company spokesman said most of the cuts are in Michigan, where the automaker is headquartered.
"Building this future requires changing and reshaping virtually all aspects of the way we have operated for more than a century. It requires focus, clarity and speed. And, as we have discussed in recent months, it means redeploying resources and addressing our cost structure, which is uncompetitive versus traditional and new competitors," the letter reads.
When Farley took over as Ford's CEO in October 2020, he promised to "move with urgency" to reduce costs saying the automaker had too many workers.
"It's not a surprise given Farley being very open about Ford having too many people," David Whiston, U.S. autos equity analyst for Morningstar Inc. "They also need to cut costs to get profits moving again so this is one of those steps. They seem to really want to focus on EV now."
Monday's job cuts are divided across Ford's businesses, which split earlier this year into internal combustion engine manufacturing, called "Ford Blue," and electric, referred to as "Ford Model e."
"We are going all in, creating separate but complementary businesses that give us start-up speed and unbridled innovation in Ford Model e together with Ford Blue's industrial know-how, volume and iconic brands like Bronco, that start-ups can only dream about," Farley said in a statement in March.
Ford plans to build 2 million electric vehicles a year with a $50 billion investment by 2026. Last year, Ford produced fewer than 64,000 EVs. The company increased its EV spending this year to $5 billion, double what it spent in 2021.
Ford's restructuring, called Ford+, aims to save up to $3 billion in costs tied to internal combustion engine vehicles by 2026. Monday's job cuts are expected to help get the automaker closer to its goal.