On February 13, 2023, Ford CEO Jim Farley made an announcement at a battery lab in suburban Detroit. He revealed plans for a new $3.5 billion electric vehicle battery plant in Michigan. This plant will produce lithium iron phosphate batteries.
This investment by Ford is a clear indication of their commitment to electric vehicles and sustainable transportation. The company aims to strengthen its position in the EV market and meet the growing demand for electric vehicles.
However, not all news from Ford is positive. The automaker confirmed on Monday that it will be implementing layoffs this week. These job cuts primarily target engineering positions in the United States and Canada. Ford is taking these cost-cutting measures as part of its efforts to restructure its business operations.
The layoffs are expected to affect employees across all three of Ford’s business units: Ford Blue, Model e, and Ford Pro. While the exact number of affected employees is unknown, Ford’s recent quarterly filing suggested charges between $1.5 billion and $2 billion are expected in 2023 for employee separations and supplier settlements.
Under the leadership of CEO Jim Farley, Ford has been undergoing a significant restructuring process for a few years now. The company has already laid off 3,000 workers in North America and recently conducted 3,800 layoffs in Europe.
In a statement, Ford acknowledged that the company is continuously evaluating its global businesses and may take additional restructuring actions if sustaining profitability becomes unfeasible. With a $7 billion cost disadvantage compared to its competitors, Ford is focusing on boosting efficiency and reducing its workforce to address this gap.
Last year, Ford’s employee headcount decreased by approximately 10,000 people globally, reaching a total of 173,000 employees. However, Ford reaffirmed its commitment to its employees affected by the layoffs, stating that they will be offered severance pay, benefits, and assistance in finding new career opportunities.
The recent layoffs at Ford were first reported late last week when some contractors received notifications that their services would no longer be required. Today, team leaders whose departments are affected by the layoffs were informed, and employees are expected to receive notifications throughout the week.
Ford is not alone in reducing its workforce as it reorients its business towards electric vehicles. Competitor General Motors has also implemented layoffs and a buyout program, costing them $875 million in the first quarter. Similarly, Stellantis, the maker of Jeep, offered voluntary buyouts to around 33,500 U.S. employees as part of its cost-cutting efforts.
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