Ford announces major global layoffs

Ford Motor Company is cutting about 7,000 jobs or roughly 10 percent of its global white-collar workforce.

The company said on Monday that a major restructuring will trim thousands of jobs by August.

The plan will save about $600m per year by eliminating bureaucracy and increasing the number of workers reporting to each manager.

In the United States, about 2,300 jobs are being cut through buyouts and layoffs. About 1,500 have already happened voluntarily, and about 500 more workers will be let go this week.

Most of Ford’s white-collar employees work in and around the company’s Dearborn, Michigan headquarters. The company has yet to determine the specifics of potential job cuts in other regions.

In a memo to employees, Ford CEO Jim Hackett said the fourth wave of the reorganisation will start on Tuesday, with the majority of cuts being finished by May 24.

“To succeed in our competitive industry, and position Ford to win in a fast-charging future, we must reduce bureaucracy, empower managers, speed decision making and focus on the most valuable work, and cut costs,” Hackett wrote.

Ford has been phasing out most sedan models in the United States as more consumers have opted for pick-up trucks and sport utility vehicles.

At the same time, the company is ramping up investment in electric cars and autonomous driving technology, while the industry also struggles with new business models that de-emphasise car ownership.

Detroit automotive woes

This is the second set of layoffs for Detroit-area automakers, even though they are generating healthy profits. Sales in the US, where these automakers get most of their revenue, have fallen slightly but are still strong.

General Motors (GM) has undertaken job cuts over the last year for similar reasons that Ford did. In November, the company announced it would shed up to 14,000 workers as it cut expenses to prepare for technology shifts.

GM’s layoffs included the closure of five factories in the US and Canada and cuts of another 8,000 white-collar workers worldwide. About 5,000 blue-collar positions were cut, but most laid-off factory workers in the US will be placed at other plants that mainly build trucks and SUVs.

Both companies have said the cuts are needed to prepare for the future, as they face huge capital expenditures to update their current vehicles and develop them for the future.

GM’s cuts were the target of withering criticism from US President Donald Trump and Congress, especially the closure of a small-car factory in Lordstown, Ohio. Trump had campaigned on bringing factory jobs back to the industrial Midwest in the US.

GM has since announced a possible deal to sell the Lordstown plant to a startup electric vehicle maker, but the transaction has not been finalised.