As part of a restructuring effort to catch up to Tesla Inc (TSLA.O) in the race to produce software-driven electric vehicles, Ford Motor Co (F.N) announced it will eliminate 3,000 salaried and contract positions, primarily in North America and India.
Jim Farley, the CEO of Ford, has made it clear for months that he thinks the Dearborn, Michigan-based manufacturer employs too many people and that not enough of them possess the skills needed as the industry transitions to electric vehicles and digital services.
“In addition to cutting work, we are also rearranging and streamlining operations across the entire company. Later this week, you will learn additional specifics from the executives in charge of your sector of the company “Bill Ford, the chairman of Ford, and Farley exchanged emails.
In noon trade, Ford shares fell 4.8% alongside larger drops on Wall Street.
Ford has a staff that is primarily employed to support a classic combustion technology product lineup, similar to other well-known automakers. Farley has outlined a plan for Ford to create a wide range of electric vehicles in the future. Ford hopes to increase revenue through services that rely on digital software and connection, just as Tesla.
This year, Tesla’s pre-tax profit margins were higher than Ford’s, and Farley has been clear about the need for cost reduction.
At the new model’s debut in London, the 2018 Ford Focus’s wheel is on exhibit.
The company’s cost structure “is uncompetitive versus old and new competitors,” Farley and Ford said in an email to the workers on Monday.
Ford and other manufacturers are already under pressure from rising battery, raw material, and shipping costs. Ford has nevertheless maintained its full-year profit target despite $3 billion in inflation-related cost increases.