Ford Layoffs 3,000 White-Collar Employees and Contract Workers

Ford announced Monday that it is planning to cut costs as it makes the long-term transition towards electric vehicles, according to an internal email sent out on Monday. These reductions will affect salaried and contract employees worldwide.

These job cuts are part of Ford's restructuring and cost-cutting initiative that was initiated earlier this year. The move is being done to free up cash for them to invest in electric vehicles (EVs) and batteries.

1. The Company’s Need for a Leaner Organization

Lean management is a production method that prioritizes efficiency and reduces waste. Its foundation lies in the philosophy of defining value from the customer's perspective and continuously improving how value is delivered. To accomplish this goal, Lean managers empower all employees to maximize their abilities while eliminating any use of resources that does not contribute towards this objective.

Henry Ford pioneered lean manufacturing with his systematic approach that put emphasis on the flow of production. This philosophy, centered around part interchange and movement through the manufacturing process, enabled Ford to manufacture millions of vehicles during the early decades of the 20th century.

Ford faced criticism from environmental organizations for not doing enough to reduce pollution at their plants. To improve its reputation in this area, the company implemented a number of strategies designed to create a more sustainable business.

One of these strategies was the implementation of a lean six-sigma production philosophy. This combined Toyota Production System (TPS) with Lean production methods to reduce variation costs and wastes.

Ford's strategy was instrumental in their rise to success and become a major player in the automotive industry, helping it reduce costs while increasing profitability.

Ford has achieved total quality through its one-step approach and use of Six Sigma methodologies, making it one of the top automakers in America. This strategy has allowed Ford to establish a dominant position within the industry, particularly for commercial vehicles.

However, even successful organizations sometimes need to cut back in order to reach their objectives. For instance, car manufacturers that wish to develop electric vehicles may need to let go a significant number of employees in order to achieve this objective.

Ford is currently embarking on a leaner organizational approach in order to fulfill their electric vehicle (EV) goals. This move not only saves the company money in the long run, but it also allows it to be more environmentally friendly. Ford strives to meet customers' demands while building a reputation as an industry leader.

2. The Company’s Need for More EVs

Ford faces a major obstacle as it transitions away from gas-powered vehicles: producing an abundance of electric cars. Although EVs are typically more eco-friendly, they may also be costlier than gasoline models.

Automakers are investing heavily in developing a range of electric vehicles over the next decade. Some plan on having fully electrified lineups ready within five years, while others anticipate launching dozens of all-battery electric models by 2024.

BMW is among the automakers with an array of electric vehicles coming to market soon, such as its i4 and iX crossovers. Ultimately, it hopes to introduce electric versions of all its production models.

At present, Ford only offers a few electric vehicles on the market - the Mustang Mach-E crossover and E-Transit van. Recently, however, they announced their intention to accelerate EV adoption across Europe with nine all-electric models expected by 2024.

Ford plans to invest $2 billion into its Cologne, Germany factory and join forces with a Chinese joint venture to construct an additional electric vehicle in Craiova, Romania. This investment will enable Ford to double the amount of commercial EVs it produces annually throughout Europe, according to Automotive News.

However, the company must stay ahead of other manufacturers like Tesla and Toyota that are actively investing in the electric vehicle revolution. That means investing more in batteries, assembly plants, and other essential areas to guarantee a seamless transition from traditional ICE vehicles to electric ones over the next decade and beyond.

Even after this massive investment, Ford is losing money on its electric vehicles and doesn't appear to be near reaching its target profit margins anytime soon. In fact, Ford anticipates losing $3 billion this year from EV sales alone.

Ford revealed in a statement Thursday that its losses from electric vehicle operations in the past two years combined amount to approximately the same. This is the first time the company has provided an exact breakdown of how much money is lost from these operations.

3. The Company’s Need for More Cash

No surprise here that Ford needed to spend big dollars in order to assemble a winning team. That said, the company has made significant strides toward modernizing from being just another car manufacturer to an automaker today. Not only has Northfield headquarters been reconfigured with more efficient offices, but Ford also took steps towards better managing its carbon footprint. David Strobel - Ford's CFO - spearheaded both changes along with other initiatives designed to drive growth within the business long after formal restructuring has taken place.

4. The Company’s Need for a More Sustainable Business

Ford has been around for decades, yet it wasn't always known for its eco-friendly practices. Indeed, its use of fossil fuels to power its products and large trucks has been widely criticized by environmental organizations as contributing to the climate crisis.

Ford has made significant strides to become a greener company, investing in solar panels and other renewable energy projects to reduce emissions and minimize its environmental impact. Furthermore, it was one of the first automakers to sign on to the Paris Climate Agreement and has spearheaded the transition toward electric vehicles.

Despite its sustainability initiatives, the company still has a lot of work to do before it reaches its objectives of becoming carbon neutral and creating a net positive business. To reach these milestones, it needs to optimize its manufacturing process and use better materials in its products.

Ford has joined Manufacture 2030, an initiative designed to assist suppliers reduce their carbon emissions. Furthermore, they collaborated with Ceres - a coalition of investors and environmental groups that offers advice on sustainable business practices - on this endeavor.

In its 2022 Integrated Sustainability and Financial Report, the automaker outlines its strategy to increase the number of electric vehicles it produces globally by 2022, with half of their sales volume going electric by the end of the decade. Furthermore, they intend to construct an EV supply chain that complies with their commitments towards sustainability and human rights.

These initiatives will enable Ford to boost its annual run rate for electric vehicles (EVs) to more than 600,000 by late 2023 and 2 million by 2026. To reach these objectives, Ford plans on investing $50 billion worldwide over the next two years in developing EVs and their batteries.

The electric vehicles it is producing are engineered to be more energy-efficient than their internal combustion counterparts, saving drivers money on gas. Furthermore, these new vehicles will feature EcoBoost technology which uses direct injection and turbo charging to enhance fuel economy and reduce CO2 emissions.