Ford share price down 1% after cutting 7000 jobs
The US carmaker announced the elimination of 7000 jobs by the end of August.
Ford share price has slightly dropped after announcing the termination of 10% of its workforce. The car company will cut 7000 workers by August.
Why is Ford eliminating workers?
Ford is cutting its workforce to reduce costs and potentially save the corporation $600 million a year. The employees were salaried senior managers and about 2400 of them will take voluntary contract buyouts from Ford. Chief executive officer (CEO), Jim Hackett, wrote in a note to employees that there was a need to streamline the company from 14 layers of management to nine.
‘To succeed in our competitive industry, and position Ford to win in a fast-changing future, we must reduce bureaucracy, empower managers, speed decision making, focus on the most valuable work, and cut costs,’ said Hackett.
The corporation also wants to recover the $1 billion it spent on imported car parts because of US President, Donald Trump, imposing tariffs on the products in 2018. Trump has recently delayed the taxes on auto parts for six months.
While Ford is terminating thousands of positions in a short amount of time, Hackett also noted that Ford employees won't be terminated immediately.
‘Ford is a family company and saying goodbye to colleagues is difficult and emotional. We have moved away from past practices in some regions where team members who were separated had to leave immediately with their belongings, instead giving people the choice to stay for a few days to wrap up and say goodbye,’ said Hackett.
Will eliminating jobs help Ford’s future?
Ford says the elimination of the positions will help the company have funds to invest in electric cars of the future that can compete with Tesla. The car company is partnering with Volkswagen to work on new technology for vehicles. Ford is also investing $500 million in electric truck startup Rivian to develop gas-free cars.
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