Retrenchment waiting for automobile companies

According to the report of Economy Online; Leaders of the Dearborn, Michigan-based automaker announced the news in a company-wide email Monday, saying 2,000 full-time salaried workers, along with 1,000 contract workers, would be out. However, Executive Chairman Bill Ford and CEO Jim Farley said in the email that Ford will offer significant benefits and help workers find new jobs.

They wrote in this email that Ford has the chance to be the leader in the new era of connected and electric cars, and this change requires fundamental and progressive changes.

“Building a different future will require reshaping almost every aspect of the old ways we’ve worked for more than a century,” the email said. This means reviewing and reformulating our resources and addressing our cost structure, which is completely uncompetitive with traditional and new companies.

Farley and Ford wrote that they reviewed each team’s turnaround work to decide where costs could be cut and traditional structure changed. In this regard, this company has now recognized that the cost structure of this company cannot compete with General Motors, Stellantis and Tesla as the leading electrification companies.

“We are currently eliminating processes, as well as reorganizing and streamlining cost-intensive functions across our business,” they wrote in an email.

A company spokeswoman said the cuts were made across all company divisions, including cuts to a large workforce of internal combustion engineers. Farley has repeatedly said the company has too many people and needs to cut costs to move faster in the transition to electric cars.

On the company’s earnings conference call in July, Farley said the company’s workforce is too complex and its costs are not competitive. Also, in some areas, there are a large number of employees, which should be reduced in order to improve the cost situation.

“We have businesses that no longer work, and we also have businesses that need to change,” he said.

Farley has said it will produce many versions of its internal combustion vehicles. He said he plans to build more models from the same electric vehicle underpinnings and invest in areas that touch customers, such as software, digital displays and self-driving systems.

Areas that will see cost reductions will be determined by reviewing work flow and electrification, Farley said. Ford has divided itself into three business units, one for electric vehicles, another for commercial vehicles, and the last unit for internal combustion vehicles, which is the least important to the company’s costs.