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Ford notifies U.S. workforce of buyout program; 1,400 jobs to be cut

Jordyn Grzelewski
The Detroit News

Ford Motor Co. is launching a voluntary buyout program with the goal of cutting 1,400 white-collar jobs, the company told all of its U.S. employees on Wednesday. 

The Dearborn automaker's workforce received an email from Kumar Galhotra, president of Ford's Americas & International Markets Group, informing them of a "voluntary incentive program" for salaried employees who are eligible for retirement as of Dec. 31.

Buyouts will be offered "across certain skill teams," including corporate jobs in North America and at Ford Credit, the automaker's financial services arm. The program will not be offered to certain unspecified "critical talent." Eligible employees will have until Oct. 23 to opt in, and would leave the company by year's end.

Ford Motor Company Henry Ford II World Headquarters in Dearborn, Michigan on September 2, 2020.

While the buyouts are voluntary, Galhotra noted that "involuntary separations may be required" if Ford doesn't meet its target of 1,400 job cuts.

The cuts, which were first reported by Bloomberg News and StreetInsider.com and which The Detroit News confirmed Tuesday, are part of an $11 billion global restructuring effort announced by CEO Jim Hackett in 2018. Hackett recently announced he will retire as CEO Oct. 1, and hand over the job to chief operating officer Jim Farley.

"The program is part of Ford's multiyear process to increase global fitness and effectiveness, including reprioritizing products and services so we are more streamlined and successful," spokeswoman Cassandra Hayes said. "This is consistent with fixing parts of the business that aren't working, accelerating in other areas and growing through investments in new technologies and businesses."

In a statement following Ford's announcement, U.S. Rep. Debbie Dingell, D-Dearborn, said: “Strong manufacturing has ripple effects throughout the entire economy. We can never forget how fragile the auto industry is, and how important public policies are in maintaining a strong base in this country.

"We have much work to do to ensure the American auto industry stays at the forefront of innovation and technology and can compete on a level playing field in the global marketplace," she added.

The cuts, while not prompted by the novel coronavirus pandemic, come as Ford and its competitors work to recover from an eight-week North American production shutdown earlier this year due to the pandemic. The shutdown cost Detroit's automakers billions of dollars.

Ford employs about 188,000 people worldwide. It has shrunk its global workforce by about 7%, or 14,000 jobs, from the end of 2017, according to the company. 

Ford said Wednesday it would not publicly disclose the cost savings the restructuring has yielded to date. However, during the automaker's second-quarter earnings release in July, executives said the redesign is on track and had achieved about $1 billion in structural cost improvements since late 2018.

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Many of the cuts have taken place in Europe, where the automaker recently has closed plants and slashed thousands of jobs. Last year the automaker announced it would eliminate 7,000 salaried positions worldwide, including 2,300 in North America.

The automaker's financial challenges in recent years have been exacerbated by the pandemic. Ford managed to eke out a profit in the second quarter thanks to a one-time gain on an investment, but its pre-tax earnings, not taking the investment gain into account, took a $1.9 billion hit — albeit better than the $5 billion loss it had forecast for the quarter. 

The automaker expects to post a net loss for the full year, due in part to costs associated with ramping up production for the next-generation F-150 pickup truck that will begin rolling off assembly lines later this year.

The Blue Oval has several key product launches — including the profit-rich F-150, as well as the Mustang Mach-E and the resurrected Bronco SUV — in the coming months and years, as part of a major shakeup of a lineup concentrated on profit-rich SUVs and trucks.

jgrzelewski@detroitnews.com

Twitter: @JGrzelewski