Ford eliminating 3,000 jobs to cut costs, boost competitiveness

Ford Motor Co. on Monday confirmed it's eliminating 2,000 salaried positions and 1,000 contract positions — mostly in Michigan and Metro Detroit — as a way to cut costs and be more competitive. 

Ford Executive Chairman Bill Ford and CEO Jim Farley sent a letter to employees detailing the decision, stating: "We are eliminating work, as well as reorganizing and simplifying functions throughout the business." 

The news comes after Bloomberg reported last month Ford was planning to cut as many as 8,000 jobs to boost profits and fund its electric-vehicle plans. 

Ford spokesman T.R. Reid said Monday that "the actions touch every one of our business units and all of the functions that support them." Ford is not providing a breakdown on how many jobs in which business units are affected. 

When asked how many of the affected jobs are based in Michigan, Reid replied, "The majority of both the salaried and contract positions."

David Whiston, U.S. autos equity analyst for investment services firm Morningstar Inc., said the job cuts had been expected.

"It’s not a surprise given Farley being very open about Ford having too many people ... they also need to cut costs to get profits moving again so this is one of those steps," Whiston said in an email. "They seem to really want to focus on EV now and need EV people not more ICE people. That along with a need to cut costs does not make the move seem rash but sad to see people lose their jobs."

The moves align with the Dearborn automaker's Ford+ transformation and growth plan presented in May last year. The plan includes focusing on electrification, commercial vehicles and connected services. In March, the Blue Oval announced it would separate its legacy auto business and EV business into separate units. 

Ford is targeting a company adjusted EBIT margin of 10% by 2026, which would be driven by higher volumes, improvement in the cost of EVs and a reduction of up to $3 billion in structural costs tied to internal combustion engine vehicles.

Monday's job cuts would help Ford reach that $3 billion goal, but the automaker is not specifying how much they will save. 

"This is a massive transformation for Ford as Farley & Co. aggressively bet on EVs over the next decade," said Dan Ives, managing director of equity research for Wedbush Securities, in a statement. "Some cost cutting will come with this transition across the auto industry and Ford is not alone with the cuts. This is a smart move to evolve its cost structure with the Street laser focused on this tightrope for the Detroit stalwart."

Crosstown rival General Motors Co. already went through a transformational cost-reduction program that it launched in 2018. As part of this, GM eliminated more than 4,000 salary jobs to cut $4.5 billion in costs by the end of 2020. 

GM spokesman David Barnas said Monday the automaker is not planning any layoffs.

"We have been proactively managing our cost structure all along including by taking out significant cost in our transformation completed in 2020 to enable our pivot to growth and EV acceleration," Barnas said in a statement. "However, we are being prudent in limiting our hiring to critical skill sets."

khall@detroitnews.com

Twitter: @bykaleahall