Ford Motor Co. (F) said on Monday that it would be cutting around 3,000 salaried and contract jobs, mostly in North America and India, as it undergoes changes to keep up with Tesla Inc. (TSLA) in the race to develop software-driven electric vehicles.
Ford Chief Executive Jim Farley has been saying for months that he believed the automaker had too many people, and not enough of its workforce had the skills needed as the auto industry makes the shift to electric vehicles and digital services.
“We are eliminating work, as well as reorganizing and simplifying functions throughout the business. You will hear more specifics from the leaders of your area of the business later this week,” Farley and Ford Chairman Bill Ford wrote in a joint email to company employees.
Like other established automakers, Ford has a workforce largely hired to support a traditional combustion technology product line-up. Going ahead, Farley has drawn out a strategy for Ford to develop a wide variety of electric vehicles. Like Tesla, Ford wants to generate more revenue through services that depend on digital software and connectivity.
Tesla’s pre-tax profit margins have exceeded Ford’s this year, and Farley has been open about the need to cut costs.
In Monday’s email to staff, Farley and Ford said the company’s cost structure “is uncompetitive versus traditional and new competitors.”
Ford has begun separating its operations into electric, combustion engine and commercial vehicle operations. Farley said in July “cost reduction will happen” in the combustion operations. But Ford said on Monday the staff cuts will affect all areas of the company.
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