The less friendly parts of Ford’s ambitious mid-term transformation plan are beginning to materialize. They are going to lay off 3,000 workers, the details will be known soon, although it aims to recycle skills and competencies, leave the least necessary and make room for new talent.
Once again, and several times throughout its history, Ford Motor Company has to make painful adjustments to adjust to the conditions of an ever-changing world. What was once the world’s largest automaker is in the midst of a profound transformation.
In March the company came out against the rumors that predicted the breakup of its business into different companies. They are almost right, in fact Ford Motor Company has divided its business into different divisions: Model and for electrical and software, Blue for the conventional and recreational range, Pro for industrial, Credit to give loans, Drive for mobility, and the brand Lincoln.
This division between the business of all life and one with more expectations for the future was a preview of what was going to happen: a transition from business as usual to something new had to be made, and that would end up costing jobs, since one thing implies the other. However, at the time that was not said, Jim Farley, CEO of Ford, made a much more kind forecast:
The Reuters news agency had access to an email sent from the highest levels of Ford, written by Jim Farley and Bill Ford, announcing the dismissal of 2,000 workers with a fixed salary and 1,000 subcontractedalthough the details would be known throughout this week.
In the electronic letter, the directors comment that Ford right now not competitive neither with traditional manufacturers nor with the new ones that have been appearing. This is in line with a recent speech by Jim Farley, who said that Ford had “too many people”. She said it in June, she had said it before too.
The thickness of the cutouts will be given in North America and India, and the most expendable jobs are those that do not involve necessary skills for the future. Those who are currently dedicated to software and new technologies should be the least worried of all. But in any division of Ford there can be layoffsalso in Model e.
Ford’s strategy seeks to combine the speed of reaction of a new manufacturer with the acquired experience and capabilities of one of the greats, which has been doing its job for decades (at Ford for more than a century), to put itself in a more competitive position. It’s more, in 2026 they intend that a third of their production will be electric cars2 million a year.
A higher bet on software It will give Ford the opportunity to charge for more after-sales services to its customers, or to maintain features, or to unlock them. Some voices in the industry believe that a leech-like approach will end up being suicide in the long run, because it is overly ambitious.
In the meantime Ford Blue is the profit cow to be milked to finance Model eThis is how Stuart Rowley, head of transformation and quality at Ford, explained it -in different language- in the March corporate video. To maximize profits you have to cut expenses where you can, and Ford has assumed many expenses incurred by inflation, logistics, etc.
Ford’s future, the Oval City
The once-in-a-lifetime opportunity, as the current situation has been described, will not only serve to retire employees with expendable skills, it will be used to reorganize and streamline functions. Some of these layoffs will soon be compensated with new hires from the world of connectivity and software.
The consolation remains that 3,000 layoffs is much less than what Bloomberg believed there would be, 8,000. In the past Ford has had to tighten its belt other timessuch as when Henry Ford II took over the company in 1945, or due to the changes forced by the oil crisis in the 70s. Ford has put up with everything since 1903, and they will come out of this too.
Of the three largest North American manufacturers (the “Big Three”), Ford is one of those with the most audacious plans, even unveiling plans to massively supply raw materials to manufacture so many electric vehicles. Ford has the potential to regain positions among the most important manufacturers, it is a matter of time.
Font: Reuters