Ford Job Cuts: Why Is The Automaker Cutting 7,000 Jobs?

In a letter to employees on Monday, Ford Motor (F) company said it is laying off approximately 7,000 salaried employees as it looks to save $600 million annually. The layoffs are part of the automaker’s restructuring plan that it announced last year.

The layoffs will affect 10 percent of Ford’s global workforce and will be completed by the end of August, Jim Hackett, Ford CEO, said in the letter. The majority of jobs lost will come from overseas with approximately 2,300 jobs cut in the U.S. of which 1,500 were buyouts from last year; a Ford spokesman told CNBC. Employees will begin to be notified of the job cuts on Tuesday.

To reduce bureaucracy, Hackett said about 20 percent of upper-level manager jobs will also be cut as part of the7,000 total employees lost. Around 900 jobs are expected to occur this week as Ford continues to restructure its North American and international markets by the end of August.

“To succeed in our competitive industry, and position Ford to win in a fast-changing future, we must reduce bureaucracy, empower managers, speed decision making, focus on the most valuable work, and cut costs,” Hackett said in the letter.

Ford announced the job cuts following its $11 billion commitment to overhauling its business with the modernization of its vehicle and a focus on electric and autonomous vehicles. Ford has also been struggling with its global business, announcing job cuts, plant closures and earning losses in South America, Asia, and Europe, despite growth in North America, CNN reported.

Ford is also making strides in its electric and autonomous vehicle technology, recently announcing a partnership with Volkswagen and a $500 million investment in electric truck manufacturer Rivian.

Shares of Ford stock were down 0.72 percent as of 12:19 p.m. ET on Monday.