Ford cuts 3,000 jobs as it moves to EVs, software

Aug 22 (Reuters) – Ford Motor Co (FN) said it will cut a total of 3,000 wage and contract jobs, mainly in North America and India, as it restructures to catch up with Tesla Inc (TSLA.O) in the race to develop software-controlled electric vehicles.

Ford Chief Executive Jim Farley has said for months that he believed the Dearborn, Michigan automaker had too many people and not enough of its workforce had the required skills as the auto industry shifts to electric vehicles and digital services.

“We’re eliminating work and reorganizing and simplifying functions across the company. You’ll hear more details from the leaders in your industry later this week,” Farley and Ford Chairman Bill Ford wrote in a joint email.

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Ford shares fell 4.8% in afternoon trading amid wider declines on Wall Street.

Like other established automakers, Ford has a workforce largely hired to support a range of products using traditional combustion technology. Going forward, Farley has mapped out a strategy for Ford to develop a wide range of electric vehicles. Like Tesla, Ford wants to generate more revenue through services that rely on digital software and connectivity.

Tesla’s pre-tax profit margins have been higher than Ford’s this year, and Farley has been blunt about the need to cut costs.

The wheel of a 2018 Ford Focus is on display at the new model’s launch in London, UK, on ‚Äč‚ÄčApril 10, 2018. REUTERS/Hannah McKay

In Monday’s email to staff, Farley and Ford said the company’s cost structure is “uncompetitive against traditional and new competitors.”

Rising prices for batteries, raw materials and shipping are putting additional pressure on Ford and other automakers. Still, Ford has stuck to its full-year profit forecast despite $3 billion in higher costs due to inflation.

Ford has begun dividing its business into electric vehicle, combustion engine and commercial vehicle businesses. Farley said in July “cost reduction will occur” in the combustion operations. But Ford said Monday that the cuts in staff will affect all parts of the company.

Rival General Motors Co (GM.N) made the move in late 2018 to cut 14,000 jobs as it prepared to accelerate its electric vehicle strategy.

The North American operations of Ford, GM and Stellantis will face a new workforce challenge next year as they begin contract negotiations with the United Auto Workers union, which represents the automakers’ American factory workers in Detroit.

UAW leaders have expressed concern that electric vehicles will lead to fewer manufacturing jobs and more jobs that will be dispersed to non-Union battery and EV hardware factories.

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Editing by Bernadette Baum

Our Standards: The Thomson Reuters Trust Principles.

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