Ford Motor Co. will cut roughly 10 percent of its global salaried staff by August as part of a companywide "redesign," the company told employees Monday. The move will eliminate 7,000 white-collar jobs and save the U.S. auto giant about $600 million a year.
The cuts represent the latest phase of Ford's global restructuring, meant to make the company more agile and less bureaucratic in the face of industry tumult that has forced carmakers to pivot away from sedans and shutter plants nationwide. Ford is working to cut $25.5 billion in operating costs over the next few years, the Detroit News reported. That's coupled with the $11 billion redesign, which includes the salaried workforce cutbacks.
"We understand this is a challenging time for our team, but these steps are necessary to position Ford for success today and yet preparing to thrive in the future," the company said in a statement.
The 7,000 job cuts - most of which have already taken place - include salaried employees who took buyouts within the past year, as well as positions that were never filled and later eliminated. About 20 percent of the positions were senior-level management roles. Ford is also looking to restructure its ranks globally, including in Europe, China and South America.
In North America, about 500 workers will lose their jobs this week but the total will climb to 800 by the end of June, the company said. Some contract employees in the U.S. also will be let go.
By some estimates, the cutbacks could have been much more severe; one Wall Street analyst had projected as many as 20,000 job losses worldwide, the Detroit News reported.
CEO Jim Hackett, who announced the cuts Monday in a note to employees, has been stressing the need to reduce bureaucracy to make Ford more "physically fit" in the long term, said David Whiston, an auto industry analyst at Morningstar Research.
"White collar or salaried job cuts are not surprising when you hear management talking that way," Whiston said. "What can they do now to right the ship?"
The U.S. auto industry has run into some turbulence after years of steady growth. Sales fell 5 percent in 2017, according to CNN Business, after climbing more than two-thirds from 2010 to 2016. Foreign carmakers are streamlining their operations, too, by opening more U.S. plants, thus cutting down on shipping costs and delivery times. Consumer tastes also have changed: Americans have shifted away from sedans and smaller cars to SUVs and trucks, a trend line that prompted Ford to retool a plant making Ford Focus compacts to accommodate new Ranger pickups.
"It's possible that with fewer models to produce, you need less people, too," Whiston said.
But even as automakers scramble to change course, it may not be enough. General Motors has laid off roughly 4,500 workers since early 2017. In March, GM shut down production in Lordstown, Ohio, an area where manufacturing jobs have declined in recent years. About a quarter of America's metro areas have been similarly affected, many in the Rust Belt, according to data provided by the Federal Reserve Bank of New York.
Last week, President Donald Trump said he would hold off, for six months, on deciding whether to put import taxes on foreign cars. The auto tariffs would have had a particular impact on Europe and Japan. Trump announced the delay after a Commerce Department report found that rising imports of foreign autos and auto parts would have consequences for national security by threatening U.S. automotive research and development.
Ford's announcement had impact on its stock, which was hovering around $10.25, down 0.33 percent, in late afternoon trading.
This article was written by Rachel Siegel, a reporter for The Washington Post.