DETROIT (AP) — About 3,000 employees at Ford Motor Co. will lose their jobs as the company cuts costs to help make the long transition from internal combustion engine vehicles to battery powered vehicles.
Leaders of the Dearborn, Michigan automaker made the announcement Monday in a company-wide email, saying that 2,000 full-time wage earners would be laid off, along with another 1,000 contract workers.
The cuts represent about 6% of the 31,000 full-time salaried workforce in the US and Canada. Ford’s 56,000 union factory workers are not affected. Some workers will also lose jobs in India.
The job losses come at a time of unprecedented change in the auto industry that has been making a living selling petroleum-powered vehicles for more than 100 years. Governments around the world are pushing for the elimination of combustion engine cars to mitigate the impact of climate change. Companies like Ford are orchestrating phasing out their combustion operations over several years, even though they still generate the money to fund electric vehicle development.
Ford has said it plans to get half of its global production from electric vehicles by 2030.
Executive Chairman Bill Ford and CEO Jim Farley said in the email to employees that Ford will provide severance pay and significant assistance to employees in finding new jobs. They wrote that Ford has an opportunity to lead the way in the new era of connected and electric vehicles.
“Building on this future requires changing and reshaping virtually every aspect of the way we’ve worked for more than a century,” the email read. “It means we have to reallocate resources and tackle our cost structure, which is not competitive against traditional and new businesses.”
Farley and Ford wrote that the company examined each team’s shifts to decide where to cut spending. The company determined that its cost structure was not competitive with General Motors, Stellantis and Tesla. Ford has previously said it has a goal of reducing $3 billion in structural costs for internal combustion vehicles by 2026.
“We are eliminating work and reorganizing and simplifying functions across the company,” they wrote in the email.
Farley has repeatedly said that the global workforce of 182,000 is too large and that it needs to cut costs and simplify processes so that it can move to electric vehicles more quickly.
The company has already restructured in Europe, Asia and India.
The austerity measures may not be over yet. Company spokesman TR Reid said Ford will continue to change with the industry and more job losses are possible. He said it is common for companies to constantly add people where they need them and crop where fewer jobs are needed. “With the rapid pace of this industry, we are going to smartly manage the business for these rapidly evolving priorities,” he said.
Ford shares, already under pressure after a $1.7 billion verdict against the company over a fatal accident in Georgia, fell nearly 6%, leading automakers down amid a broad sell-off in markets Monday.