The move is an effort to cut bureaucracy within the company and flatten the management structure in addition to its desire to cut costs, according to a letter CEO Jim Hackett sent to employees Monday morning.
Ford has been making cuts over the past several months as part of a massive restructuring that is expected to cost thousands of jobs across the globe. The company committed last year to spending $11 billion to reshape its business, hoping to boost sales overseas and modernize its fleet of vehicles by focusing more on electric and autonomous driving tech.
In March, the company said it was cutting roughly 5,000 jobs in Germany through a “voluntary separation” program. It also said it would cut a number of jobs in the United Kingdom, but did not provide more information about those positions at that time.
Ford faces pressure to improve its profitability. Its profit margin has lagged those of some competitors. It has announced the costs of commodities it buys, such as steel and aluminum, have increased about $1 billion annually after tariffs were imposed on those products, even though it sources most of those raw materials from domestic mills. But its executives have said the effort to reshape the business is part of a longer term strategy and not a response to those increased costs.
Because of its restructuring efforts Ford’s stock is up by about a third so far this year, though its was slightly lower in morning trading on the news. Still, that’s more a reflection of how low Ford shares were coming into the year.
“It’s Ford today. It was GM. All the automakers are looking to do this,” said Michelle Krebs, senior analyst with Cox Automotive. “Everyone cut to the bone during the great recession, then they beefed up since then. They have to figure out how do you wring more money out of today’s business to free up money for future business. The problem is we don’t know when that future business will pay off.”
Ford is playing catch-up with other automakers, which are further along in their ambitions for electric and self-driving vehicles. It does not currently offer any battery-only electric vehicles, because it halted production of the electric Focus when it discontinued production of the gas version of that vehicle. It lags some other automakers in the race to bring self-driving vehicles to the market, though like other automakers it does have test versions of those vehicles on the road.
— CNN’s Vanessa Yurkevich contributed to this report