Layoffs 2023: Ford Cuts Engineering Jobs As It Focuses On Electric Vehicles

Automobile giant Ford is reducing its workforce, citing the company's Ford+ growth plan that seeks to focus on value creation and capitalizes on the electric vehicle industry. The cuts will reportedly affect engineering roles in the United States and Canada.

The layoffs this week will affect at least 1,000 salaried employees and contract workers, people familiar with the matter told the Wall Street Journal. However, a spokesperson for Ford reportedly declined to provide the exact number of employees that will be affected by the cuts.

"This is related to the Ford+ growth plan we introduced in 2021 and have been increasingly implementing over the past year. Delivering on the plan includes adjusting staffing to match focused priorities and ambitions, while raising quality and lowering costs," Ford spokesman T.R. Reid said in an emailed statement, CNN reported.

The latest round of cuts is expected to affect all three of Ford's business units namely the electric vehicle unit Model e, fleet service operations Ford Pro, and the traditional combustion engine operations Ford Blue, as per CNBC.

People familiar with the situation told CNBC that leaders whose teams were affected were notified Tuesday afternoon, while affected workers were expected to be informed about their job status through Wednesday.

Workers in affected units were also reportedly instructed to work remotely this week.

Ford said affected workers will be offered severance pay and benefits, adding that the layoffs will affect other units, not just engineering positions.

In the auto giant's Ford+ plan, the company seeks to increase its investments in electric vehicles to over $30 billion through 2025.

Ford is also looking to expand its connected vehicle fleet. "I'm excited about what Ford+ means for our customers, who will get new and better experiences by pairing our iconic, world-class vehicles with connected technology that constantly gets better over time," CEO Jim Farley said when the strategy was announced in 2021.

Farley previously said Ford had too many employees and there was not enough people with the skills necessary to build on the company's plan to shift to EVs and digital services.

Ford laid off around 3,800 roles in Europe in February this year, affecting Germany and Britain the most. At the time, competition in the EV industry was intensifying.

"We recognize the uncertainty it creates for our team, and I assure them we will be offering them our full support in the months ahead," said Martin Sander, general manager of Ford Model e Europe.

The company reduced its workforce again in March, laying off 1,100 jobs in Valencia, Spain.

At the time, the company said it will "work constructively" with union partners to reduce the impact of the job cuts on employees at the Valencia factory, their families and the community.

Last year, the company cut about 3,000 jobs globally. The said layoffs affected around 2,000 salaried employees and around 1,000 agency jobs in Canada, India and the U.S. At the time, company leaders attributed the reductions to cost-cutting measures.

In a Securities and Exchange Commission (SEC) filing last month, Ford said it was expecting to incur charges between $1.5 billion and $2 billion over restructuring measures. The company noted that the charges will largely go toward "employee separations and supplier settlements."

Ford joins a few other auto companies that reduced their headcount this year.

In March, EV manufacturer Lucid said it was laying off around 1,300 workers, or about 18% of its workforce. It said it was expecting to incur charges between $24 million and $30 million.

Lucid CEO Peter Rawlinson told employees that the cuts will affect "nearly every organization and level, including executives," adding that severance packages will include healthcare coverage and equity vesting.

Earlier this year, General Motors eliminated 500 workers, affecting both salaried employees and executive-level positions. The company cited cost-reduction efforts.

Meanwhile, Ford recently announced that Ford EV customers "will have access to more than 12,000 Tesla Superchargers" across the country and in Canada starting in early 2024.

The partnership between the rival automakers marks the first step in Tesla's commitment to open up thousands of its charging stations by the end of next year to other EV brands.