Ford Motor Co. is eliminating about 10% of its global salaried workers or 7,000 employees. This move is part of the company’s plan for global restructuring, saving about $600 million annually.
The recent announcement was made by CEO Jim Hackett in a letter. Hackett admitted that this decision is ‘difficult and emotional.’
Hackett wrote, “We have moved away from past practices in some regions where team members who were separated had to leave immediately with their belongings, instead of giving people the choice to stay for a few days to wrap up and say goodbye.”
Ford’s biggest company restructure will be expensive and could cost more than $11 billion, however, according to the company, this will help the company cut massive expenses in the long run.
According to CNN, about 2,400 jobs In North America will completely end this coming August and 1,500 positions will be eliminated through a voluntary buyout.
Approximately five manufacturing plants will close; three in Russia, one in Europe and another one in Brazil.
Lag in Sales
One of the reasons why the company is going for this move is because of the sales slump in the last quarter of 2018, losing about $116 million.
Although trucks and SUVs’ sales in the United States are good, the automobile company is losing sales in other parts of the world, particularly in China.
The profit margin of the company has been in the critical level after the increase in the price of aluminum, other raw materials and commodities used in manufacturing cars. Approximately $1 billion increase has been seen, which adds up to the expenses annually.
What Ford is experiencing is part of the automobile future. While self-driving cars are in-demand these days, there is a possibility that more people will likely choose to buy a ride instead of a car.