By on May 20, 2019

Image: Ford

The steep white-collar job cuts that simmered on Ford’s back burner for a year have come into clear focus. In a letter to employees on Monday, CEO Jim Hackett announced the elimination of 7,000 salaried positions — some 10 percent of the automaker’s global workforce.

The move, part of Ford’s $11 billion restructuring plan, also calls for a 20-percent reduction in the company’s upper tier management. In the U.S., much of the pain will start being felt this week.

Hackett’s effort to reduce overhead and firm up its struggling overseas business is already well underway. Amid a cooling Western auto market and trouble in China, the company has taken steps to stem the flow of red ink, cutting plants, models, and jobs in Russia and Brazil. Workers in Germany and the UK, both salaried and otherwise, are on notice for looming cuts above and beyond those already announced.

Of the 7,000 white-collar jobs slated for elimination, Ford says 2,300 reside in the United States. Buyouts and layoffs are in order, with the company claiming 500 of the 900 jobs expected to be cut this week will be U.S.-based positions. The rest will come to an end by August.

According a Ford spokesman that spoke to CNBC, 1,500 of the 2,300 U.S. cuts came in the form of voluntary buyouts in 2018.

In his letter, Hackett said, “We are now entering the final phase of Smart Redesign,” adding that impacted employees would be notified beginning Tuesday. By May 24th, the “majority” of these employees will learn of their termination. Overseas, layoffs will take longer to complete, ending by the end of August.

Hackett has made streamlining his company’s workforce Job One, claiming the employee reduction should save the automaker $600 million a year and make for speedier decision making. Product-wise, Ford is betting that consumer thirst for trucks and SUVs will never wane, while gambling on an electrification push. That electric product wave starts with a sporty crossover due in 2020, with an EV F-150 following it at a later date. The automaker recently teamed up with Michigan-based electric vehicle startup Rivian, with Ford investing half a billion dollars to support a jointly developed vehicle — most likely a midsize SUV.

While Ford’s cost-cutting mission aims to make the company nimble, lean, and recession-proof (Hackett has dared one to happen), it also aims to bolster investor confidence and earn the automaker a big thumbs-up from Wall Street. The company’s share price, which is up since the start of the year, received a boost from a better than expected first-quarter earnings report.

[Image: Ford]

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28 Comments on “Hackett’s Axe Falls in Earnest As Ford Announces 7,000 Salaried Cuts...”

  • avatar

    Is Ford really that overloaded with salaried employees? This could prove to be a counterproductive brain drain

    • 0 avatar

      If it follows the usual pattern of CEO bonus plans, Hacket’s 2019 bonus is tied to operating profit – which means that the salaries these people would have received in 2019 were they not fired is a savings that goes towards increasing Hackett’s bonus payout.

      The cost of the buyout packages and other severance costs, however, is typically treated as an extraordinary event (i.e., a 1-time cost). The hits the P&L below the operating profit line, so it doesn’t count against his bonus payout.

      It sounds perverse, but CEOs make money from firing people – the more people they fire, the bigger their bonus payout. Which is why so many of them love cutting jobs.

      I believe you are right to suspect that this will turn into a counterproductive brain drain that will ultimately cost Ford considerable money. However, by the time the bill must be paid, Hackett will have moved on, so it’ll be somebody else’s problem.

      Not that I’m cynical….

  • avatar
    SCE to AUX

    “Smart Redesign”

    How nice. I’m sure the cut workers are glad to be part of the plan formerly known as “Dumb Design”.

  • avatar

    I’m so glad to be out of the ups and downs of the auto markets, finally after over 40 + years (retired for 8 now). I pity the ones who went to school and maybe have worked for years only to find out that there are NO Guarantees! At least the white collar can usually find a job with another manufacturer, maybe not the big 3 and may have to relocate, become an auto gypsy like a lot of the blue collar!

  • avatar

    Will the new self-driving Fords also design, test, and manufacture themselves?

    • 0 avatar

      They won’t have enough buyers for regular Fords, the way they’re planning for reduced production, so there won’t be enough customers for self driving Fords either. By then, Tesla’s problems will cause states and the feds to put restrictions and liability on them to the point they’ll be too expensive for people to buy, too expensive for automakers to sell, or both.

    • 0 avatar

      Or better yet, sell themselves?

  • avatar

    Once the layoffs are complete, word is that Hackett will rename the company to Ford Mobility Solutions.

  • avatar

    You just don’t need that many people, when your product mix changes from labor intensive cars, to less labor intensive stocks, bonds, empty promises and hype.

    As long as the Fed keeps buying; a couple of guys running the printers, a well paid lobbying firm to steer regulations your way, a CEO naive enough to peddle whatever nonsense is currently fashionable with genuine, true conviction…..; and them bonuses keep rolling in.

  • avatar

    What it’s been like in the salary trenches at Ford these last few weeks:

    Managers, supervisors and plebs are cleaning out their cubicles, so that when or if an axe falls on them, they won’t face a humiliating walk back under guard from the exit interview to “collect their things”.

    This is what happens when a self-described visionary with a strange taste in motivational books, decides to retrench rather than renew and motivate. Lofty words, but same old sacking. We’ve all heard the BS before – this time it’s in a new wrapper courtesy of a nitwit who hasn’t a clue about the industry he’s in. Hackett must be as good a snake charmer as Musk, since the Ford family go along with the grand acting performance.

  • avatar

    It’s time for white collar, salaried employees of the Detroit-3 to form a union.

    • 0 avatar
      R Henry

      Yes, the auto-industry most certainly needs un-fireable marginal white collar employees.

      Why does anybody harbor an expectation for lifelong employment?

  • avatar

    According to the local metro Detroit news reporting at noon, many of the high level people being tossed are engineers and R&D people. One would think that with the challenges of EVs and autonomous cars that management keeps touting, they would want their best, most experienced, people on the job.

    Of course, crippling the in house capability to design vehicles may be confirmation of the discussions of Ford becoming nothing but a marketing company, taking products developed by Rivian, Mahindra, Jiangling and VW and slapping a blue oval on them.

    • 0 avatar

      Actually Ford might well consider a recombination with someone they are fairly familiar with – Mazda. That company has big ideas and dreams with designing for the future but not much cash. Fords downsizing of the ranks may allow for bringing some of that designing talent onboard as well as Mazda’s renowned premium level products from an old familiar friend at a reasonable cost. The Blue Oval fit on Mazda’s before and it might just work again.

      • 0 avatar

        “Actually Ford might well consider a recombination with someone they are fairly familiar with – Mazda”

        Not likely anymore. Toyota bought in to Mazda a couple years ago.

        The 6PM local news expanded on the coverage of the story more: most people being canned are senior engineers and R&D and mostly from outside the US. Speculation among analysts that Ford is staging a general retreat from everywhere other than North America.

      • 0 avatar

        Mazda doesn’t do mobility and electricity. So no.

  • avatar
    R Henry

    Hackett = Robert Nardelli

  • avatar

    Thats how it works in Valley – layoffs every year. Then hiring spree of new graduates and new fresh brains with new disruptive thinking and knowledge of new tech. What Hackett will do – hire new engineers who have no clue about ICE technology but are good with mobility and new tech, cloud, AI, Computer vision, Machine learning, new battery technology and so on.

  • avatar

    Laid off Ford Proud.

  • avatar

    At least they bought that garbage train station. That should make the laid off employees happy.

  • avatar
    Jeff S

    With Hackett’s business furniture experience Ford could put their name on cheap office furniture made in Vietnam. I can see it now metal credenzas made out of recycled Fords.

  • avatar

    Most of Ford’s current problems were self inflicted by Hackett himself. The Hatchet-man Hackett is merely doing what he does best, which is cutting back on employees. Meanwhile former Fusion and Focus customers will be lining up at Toyota dealerships.

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