Ford will cut about 10% of its salaried staff worldwide.
CEO Jim Hackett sent out an e-mail to employees Monday morning stating the company would cut jobs to “cut bureaucracy within the company and flatten the management structure”, according to a CNN Business report. As of right now, Ford is in the midst of an $11 billion effort to restructure its business, of which this move will supposedly save Ford $600 million a year.
The company it will notify workers of their fate Tuesday morning, with terminations set to wrap up in August. Of the 7,000 salaried positions, around 2,400 are in North America. Ford will eliminate 1,500 of those positions through a voluntary buyout, as GM did with their recent layoffs.
This round of layoffs is hardly where the restructuring ends for Ford. The company said it will close three of its manufacturing plants in Russia, as well as one in Europe and one in Brazil. Collectively, the company estimates that will save another $1 billion in the long run. However, it remains to be seen where the rest of Ford’s cost-cutting efforts will land. While the business turned a profit in North America, it struggled in global markets last quarter.
As with the rest of the auto industry, Ford faces pressure to prepare for the future. That means investing in new technology, including electric and autonomous cars. In that respect, Ford lags behind some of its competition, and its stock prices as well as its market value bear that out.
Ford said repeatedly that higher commodity costs, like steel and aluminum, have also impacted the bottom line. After new tariffs were imposed on those products, Ford saw its costs increase by about $1 billion annually, the company claims. Despite that, executives stress the restructuring effort has more than a long-term focus. That is, these job cuts are not directly related to increased material costs.