Ford to Lay Off 3,000 Employees in Electrification Bid

Opponents to electric vehicles have long argued that ditching fossil-fuel-powered cars for EVs would have dire consequences on the people who earned their living in the automotive industry. The segment that would be most affected would be internal combustion engine manufacturing as automakers slow down the production of traditional cars in favor of zero-emission electric cars.

An Ernst and Young study revealed that around 150,000 employees in the automotive industry are involved in internal combustion engine (ICE) manufacturing. American automaker Ford recently announced news that could potentially spell doom for hundreds of thousands of workers in ICE manufacturing, especially if they aren’t reskilled and deployed to EV manufacturing plants.

Ford plans to lay off 3,000 contract workers and employees as part of the automaker’s efforts to reshape its labor force. The Dearborn, Michigan-based carmaker will invest a whopping $3.7 billion to develop and produce more electric vehicles. An internal memo from CEO Jim Farley and executive chair Bill Ford revealed that the automaker is looking to terminate 1,000 contract workers and cut another 2,000 salaried employees from its workforce. This comes nearly two months after Ford warned of major staff cuts in June.

The memo states that while these cuts will be concentrated around Ford’s headquarters in Michigan, they will also be spread out across Canada, India and the United States. The executives explained that compared to other legacy automakers and EV startups such as Tesla, Ford’s cost structure was uncompetitive. They said that Ford had the chance to lead the EV revolution, and this would require changing and reshaping virtually all aspects of the company’s long-established operations.

In March, the Michigan-based automaker split its business operations into two entities, with one working on electric vehicles and the other on internal combustion engine cars. Ford ended the year 2021 with 183,000 employees, down from 186,000 at the end of 2020. But despite laying off employees in the internal combustion engine section, Ford stated that it expects its internal combustion engine business to keep growing.

Farley noted in July that the company’s workforce would need to evolve for Ford to remain competitive in the changing automotive landscape, stating at the time that the automaker had skills that didn’t work anymore now that it was turning its attention towards electric cars. Ford plans on achieving 30% electric vehicle sales in the U.S. market by 2026 and going up to 50% by 2030.

Startups that are purely manufacturers of electric vehicles, such as NIO Inc. (NYSE: NIO), don’t have to deal with laying off staff or having them retrained, and this may give these new players an edge over the legacy automakers that have to modify their production lines and equip their employees with the needed skills of EV manufacturing.

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