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Ford Motor Company announced that it would relieve over 3,000 positions from its global workforce to reduce costs as a part of its restructuring process. CEO Jim Farley made the announcement.
On Monday, the company began to make the pronouncement to lay off a chunk of its workforce to its employees. The company’s chairman, Bill Ford, informed the staff via email that 2,000 salaried positions and 1,000 agency workers from the US, Canada, and India would be affected by the widespread layoffs.
The message said, “Building this future requires changing and reshaping virtually all aspects of the way we have operated for more than a century. It requires focus, clarity and speed. And, as we have discussed in recent months, it means redeploying resources and addressing our cost structure, which is uncompetitive versus traditional and new competitors.”
Ford made this decision in response to the impending economic crisis being felt by countries all over the world. As a result, a few difficult but necessary choices must be made to ensure the company’s continued operation, including cutting back on expenses and hiring fewer people. The current recession is at an all-time high and will inevitably break all previous records in 40 years.
Ford stated that it had an excessive number of employees in its workforce prior to the announcement. Ford has been restructuring, for example, by splitting its internal combustion and electric departments.
“There are opportunities to be more efficient and more effective in all the business units and all the functions that support them,” a Ford spokesperson said.
The workforce of Ford
Ford employs about 31,000 people in North America. This brings the company’s total global workforce up to 186,769 people. Ninety thousand eight hundred seventy-three of those individuals, or 48.7%, are based in the US.
The Ford+ corporate restructuring was implemented when Farley took over as CEO in October 2020. The program would realign its fund and direct it with its investment in the electric and commercial vehicle departments, cutting about $3 billion from its structural expenditures.
“We worked differently than in the past, examining each team’s shifting work statement connected to our Ford+ plan. We are eliminating work, as well as reorganizing and simplifying functions throughout the business,” the message added.
The stock price of Ford dropped by 5% on Monday, bringing the year-to-date share decline to 27%.
Many industries were impacted by the pandemic
The business environment after the pandemic is very different from the one before, according to Julia Pollak, the chief economist at ZipRecruiter. It is evident in how many businesses have repeatedly changed how they approach marketing, hiring, and restructuring. Many companies employing individuals at the height of the pandemic are attempting to undo their hiring decisions.
Pollak said, “The pandemic created very unique, once-in-a-lifetime conditions in many different industries that caused a dramatic reallocation of capital. Many of those conditions no longer apply so you’re seeing a reallocation of capital back to more normal patterns.”
Executives are unsure about the state of the economy as a result of the fact that inflation has reached a 40-year high. The Federal Government has attempted to lessen the difficulties; however, recent developments in politics, the weather, and global conflict have exacerbated the issues already brought on by the pandemic.
Alphabet CEO Sunday Pichai said, “It’s clear we are facing a challenging macro environment with more uncertainty ahead. We should think about how we can minimize distractions and really raise the bar on both product excellence and productivity.”
“When we look at labor shortages related to travel, you can’t just flip a switch and suddenly have more baggage handlers that have passed security checks or pilots. We’re still seeing people not opt-in to come back because they don’t like what their employers are dictating in terms of working conditions in a post-lethal pandemic world,” said Joseph Fuller, Harvard Business School professor of management.
Opinions expressed by CEO Weekly contributors are their own.