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Ford will cut 7,000 white-collar jobs

Ford is cutting about 10% of its salaried staff worldwide, in an effort to reduce costs and cut company bureaucracy, according to a letter CEO Jim Hackett.

Posted: May 20, 2019 9:20 AM
Updated: May 20, 2019 12:15 PM


Ford is cutting 7,000 white-collar jobs, or about 10% of its salaried staff worldwide, as part of a cost-cutting effort it says will save the company about $600 million a year.

Ford says workers will begin to be notified of cuts starting Tuesday, and the terminations will be completed by the end of August. About 2,400 of the jobs cuts are in North America, and 1,500 of the positions will be eliminated through a voluntary buyout offer.

The move is an effort to cut bureaucracy within the company and flatten the management structure in addition to its desire to cut costs, according to a letter CEO Jim Hackett sent to employees Monday morning.

Ford's layoffs are similar to white-collar job cuts rival General Motors 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. It also closed five North American factories as part of that announcement.

Ford has been making cuts over the past several months as part of a massive restructuring that is expected to cost thousands of jobs across the globe. The company 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 autonomous driving tech.

But Ford has been slow to give details of how it will spend the $11 billion and what jobs might be cut as part of the restructuring of the business. It has said it will close three plants in Russia, one factory in Europe and another in Brazil. But it has said the moves announced so far represent only about $1 billion of the $11 billion restructuring it plans to do.

Ford also faces global challenges. The domestic unit is the strongest part of the company, and Ford reported last quarter that sales and profits increased in North America. But it has struggled overseas, prompting significant restructuring there. Last year it reported losses in South America, Asia and Europe even as it made money in North America and from its finance arm.

In March, the company said it was cutting roughly 5,000 jobs in Germany through a 'voluntary separation' program. It also said it would cut a number of jobs in the United Kingdom, but did not provide more information about those positions at that time.

Ford's struggles

Ford faces pressure to improve its profitability. Its profit margin has lagged those of some competitors. It has announced the costs of commodities it buys, such as steel and aluminum, have increased about $1 billion annually after tariffs were imposed on those products, even though it sources most of those raw materials from domestic mills. But its executives have said the effort to reshape the business is part of a longer term strategy and not a response to those increased costs.

Because of its restructuring efforts Ford's stock is up by about a third so far this year, though its was slightly lower in morning trading on the news. Still, that's more a reflection of how low Ford shares were coming into the year.

Ford's market value of $41 billion is only slightly higher than that of Tesla, an automaker a fraction of its size that has rarely posted a profit. And it's worth about 40% less than Uber, which only recently went public and has yet to report a profit.

But Ford and the rest of the auto industry is facing a lot of pressure to prepare itself for the future. The major automakers all have to buy into new technology and plan for a world full of self-driving cars and customers who would rather buy rides than autos themselves. They also face competition from tech companies that are also interested in the market, like Tesla and Alphabet's Waymo.

'It's Ford today. It was GM. All the automakers are looking to do this,' said Michelle Krebs, senior analyst with Cox Automotive. 'Everyone cut to the bone during the great recession, then they beefed up since then. They have to figure out how do you wring more money out of today's business to free up money for future business. The problem is we don't know when that future business will pay off.'

Krebs said automakers are also preparing for a possible slowdown in auto sales and a possible slowing US economy. Ford sold 237,000 fewer cars and trucks globally in the first quarter, a drop of 14%. It has essentially dropped the traditional sedan from its US product lineup.

Ford is playing catch-up with other automakers, which are further along in their ambitions for electric and self-driving vehicles. It does not currently offer any battery-only electric vehicles, because it halted production of the electric Focus when it discontinued production of the gas version of that vehicle. It lags some other automakers in the race to bring self-driving vehicles to the market, though like other automakers it does have test versions of those vehicles on the road.

So Ford is looking to make new alliances as it restructures its business. It's teamed with Volkwagen to develop new products, and recently announced a $500 million investment in Rivian, which plans to debut an electric truck next year.

Other big auto companies are also looking toward the future. GM, for example, has brought in millions in investment by setting up a separate unit known as Cruise to focus on self-driving cars. GM has also sold stakes to Softbank and Honda. Ford has said it's looking at possible outside investors in its electric and self-driving car unit as well.

-- CNN's Vanessa Yurkevich contributed to this report

Mississippi Coronavirus Cases

Data is updated nightly.

Confirmed Cases: 94021

Reported Deaths: 2846
CountyConfirmedDeaths
Hinds6979155
DeSoto542555
Harrison374372
Jackson339967
Madison321286
Rankin319375
Lee261067
Jones242778
Forrest239570
Washington218171
Lafayette209239
Lauderdale2007124
Bolivar179565
Oktibbeha175450
Lamar163534
Neshoba1540103
Panola144527
Sunflower142144
Lowndes140357
Warren138150
Leflore137080
Pontotoc123616
Pike121348
Monroe118965
Scott116425
Copiah116333
Coahoma112827
Holmes109258
Marshall107615
Lincoln106853
Grenada106235
Yazoo103929
Simpson101443
Union97824
Tate95537
Leake94037
Adams92136
Wayne87721
Pearl River86750
Marion84133
Prentiss81517
Covington80922
Alcorn77511
Itawamba77021
Newton75923
Tallahatchie75718
George75113
Winston72519
Tishomingo66137
Chickasaw65624
Tippah64516
Attala64125
Walthall59425
Clay58117
Hancock56421
Jasper55515
Noxubee54315
Clarke53739
Smith52414
Calhoun50612
Tunica48113
Montgomery45520
Claiborne45216
Lawrence42512
Yalobusha41814
Perry40918
Quitman3755
Humphreys37315
Stone35711
Greene34617
Webster33113
Jefferson Davis32811
Carroll31212
Amite31110
Wilkinson30217
Kemper28615
Sharkey26312
Jefferson2439
Benton2201
Franklin1893
Choctaw1795
Issaquena1033
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Alabama Coronavirus Cases

Confirmed Cases: 131988

Reported Deaths: 2304
CountyConfirmedDeaths
Jefferson19123337
Mobile13122290
Montgomery8688173
Madison763075
Tuscaloosa7323114
Lee575159
Shelby571950
Baldwin508749
Marshall387943
Calhoun337439
Etowah336547
Morgan321426
Houston272722
Elmore255847
DeKalb237119
St. Clair224335
Walker224380
Talladega207726
Limestone200119
Cullman186218
Dallas174926
Franklin174528
Russell17312
Autauga169124
Lauderdale165333
Colbert160926
Escambia156425
Blount156014
Jackson151611
Chilton150227
Dale133343
Covington131127
Coffee12838
Pike11619
Tallapoosa113683
Chambers113242
Clarke105517
Marion94828
Butler91138
Barbour8387
Winston71612
Marengo70119
Lowndes64927
Pickens63814
Bibb63610
Randolph62212
Hale61528
Lawrence59220
Bullock59114
Geneva5814
Monroe5768
Cherokee56916
Clay5527
Washington54913
Perry5386
Wilcox53111
Conecuh52411
Crenshaw52331
Macon47820
Henry4754
Fayette4269
Sumter41819
Lamar3532
Choctaw34512
Cleburne3326
Greene30015
Coosa1653
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