Ford Cuts 7,000 White Collar Workers to Save $600 Million

The automaker is laying off about 10% of its global salaried workforce as part of its restructuring effort.
Ford Cuts 7,000 White Collar Workers to Save $600 Million

As part of massive restructuring efforts, Ford announced it is cutting 7,000 white collar jobs or about 10% of its salaried staff worldwide – among other recent reduction measures expected to save the company about $600 million a year.

On Monday morning, Ford workers opened an email from CEO Jim Hackett with an explanation of how many salaried workers would be leaving the auto company this week and why.

The company will cut 500 salaried workers in the U.S. this week, and 800 in the U.S. by June. By the end of August, Ford projects 7,000 voluntary and involuntary terminations globally. Some 2,400 of the job cuts are in North America, and 1,500 of the positions were eliminated through a voluntary buyout offer.

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The email from Hackett with the subject line, “Smart Redesign Update,” says that “clearly cost reduction is a key aspect of Smart Redesign.”

The move is an effort to reduce bureaucracy within the company and reduce the management structure in addition to its desire to cut costs, according to the email. The result, Hackett said, means “significant progress in eliminating bureaucracy, speeding up decision making, and driving empowerment as part of this redesign.”

The restructuring will continue in Europe, China, South America, and elsewhere with hopes of completing the reorganization by the end of August. “The time and effort,” Hackett wrote, “from so many of our team members (are) helping to make us a stronger company, well positioned for the future.”

He added that as a family company, “saying goodbye to colleagues is difficult and emotional…We also have a range of resources and services in place to support employees in managing this transition.”

Amid an auto industry facing tremendous pressures to prepare itself for the future, Ford committed last year to spending $11 billion to reshape its business, hoping to boost sales overseas and modernize its fleet of vehicles by focusing more on electric and self-driving technology.

Ford is also looking to make new alliances as it restructures its business. The company has teamed up with Volkswagen to develop new products and recently announced a $500 million investment in Rivian, which plans to debut an electric truck next year.

Ford’s layoffs are similar to the white-collar jobs that rival General Motors (GM) announced in November, but GM’s cuts were deeper. GM eliminated about 8,000 non-union jobs or 15% of its salaried and contract workers. GM also closed five North American factories as part of that announcement.