Ford would cut a quarter of its workforce to fuel the expansion of electric vehicles

Ford is considering major workforce reductions amid a shift to electric vehicles. According to a recent report by Bloombergthe Blue Oval is preparing to lay off 8,000 workers – about a quarter of its US workforce – as it aims to cut $3 billion in operational costs by 2026.

The cuts will come from Ford Blue, the company’s former internal combustion engine business. Earlier this year, Ford split into two entities, Ford Blue covering ICE vehicles and Ford Model E focusing on electric vehicles and software projects. At the time, Ford said Ford Blue would generate the revenue that would help the Ford Model E develop new and innovative products.

But now it looks like Ford Blue will have to generate that revenue with far fewer employees. The cuts, which Bloomberg reports have not been finalized and may still change, are likely to come in phases, starting this summer. Ford employs about 31,000 workers in the United States, where the bulk of the cuts are expected to fall.

According to Detroit Free Press, Ford CEO Jim Farley sent a video message to employees Thursday morning, in which he didn’t deny that layoffs were coming and reiterated the goal of cutting the company’s operational costs.

TR Reid, director of corporate communications and public policy at Ford, declined to discuss what he called “other people’s speculation about our business.”

“We are reshaping our work and modernizing our organization to implement the transformation plan we call Ford+, which includes leadership in the disruptive and exciting new era of connected electric vehicles,” Reid said in an email to The edge. “We are reshaping what happens in all of our automotive business units and across the company. And we’ve set clear goals to improve our cost structure along the way, so we’re lean and fully competitive with the best in the business.

Photo by Andrew Hawkins/The Edge

Ford has announced plans to spend $50 billion on its shift to electric vehicles. When he announced the restructuring, Farley said Ford Blue was to be a “profit and cash engine for the entire company.”

But profits have been hard to come by amid vast change in the auto industry. Ford lost $3.1 billion in the first quarter of 2022, largely due to a sharp decline in the value of its stake in electric vehicle company Rivian. The company’s operating profit was $2.3 billion, compared to $3.9 billion in the first quarter of 2021.

Ford said cutting staff was key to boosting profits. And thanks to rising material costs, its best-selling vehicles, like the Ford Mustang Mach-E, are struggling to meet their own margins. The company said it was revamping its vehicles on the fly to improve profits, including introducing battery chemicals that are cheaper to manufacture.

The company said that by the end of 2023, it plans to have enough batteries to support production of 270,000 Mustang Mach-Es, 150,000 Transit EVs, 150,000 F-150 Lightnings and 30,000 units of a mysterious all-new intermediary. SUV intended for release in Europe.

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