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Ford Motor Company announced that as part of its restructuring efforts, it would remove over 3,000 positions from its global workforce. Jim Farley, Ford CEO, made the declaration.
On Monday, the company began to inform its workers about the plan to lay off a portion of its workforce. The company’s chairman, Bill Ford, informed the staff via email that a massive layoff would affect 1,000 agency workers from the United States, Canada, and India and 2,000 salaried positions.
“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,” the message said.
Ford’s choice was a reaction to the impending economic crisis being felt by countries worldwide. Reduced spending and a smaller workforce are two difficult but necessary choices that must be made to guarantee the company’s continued operation. The recession has undoubtedly broken all previous records and is now at an all-time high.
Ford had previously declared that it had an excessive number of employees. Ford has also been restructuring, as evidenced by the division of 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,” said the Ford spokesperson.
Ford has about 31,000 salaried employees in North America alone. This increases the company’s overall global workforce of 186,769 employees. Of those figures, 90,873 or 48.7%, are based in the United States.
Ford enforced the Ford+ reorganization when Farley took over as CEO in October 2020. The program would reallocate its $3 billion in structural spending to its investment in the commercial vehicle and electric vehicle departments.
“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,” added the company message.
Ford’s stock fell by 5% on Monday, bringing the year-to-date share decline to 27%.
Industries suffered during the pandemic
According to Julia Pollak, chief economist at ZipRecruiter, the business environment has changed significantly since the pandemic. It can be seen in how many businesses have consistently changed how they go about hiring, marketing, and restructuring. Companies that have hired numerous employees are currently attempting to undo their actions.
“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,” said Pollak.
While this is going on, inflation has reached a 40-year high, which has executives concerned about the state of the economy. The Federal Government has made every effort to lessen the difficulties; however, recent changes in politics, the weather, and international conflict have increased the already pressing issues brought on by the pandemic.
“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,” said Sunday Pichai, Alphabet CEO.
“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,” stated Harvard Business School professor of management Joseph Fuller.