New York(CNN Business) Ford is cutting 3,000 white collar jobs as it prepares to shift from traditional internal combustion engine vehicles to electric vehicles.
Two thousand of the jobs are salaried positions and another 1,000 are contractors, Ford ( said. Affected employees will be notified they are losing their jobs later this week. )
"Building this future requires changing and reshaping virtually all aspects of the way we have operated for more than a century," CEO Jim Farley and executive chairman Bill Ford wrote in a message to Ford employees first reported by Automotive News. "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."
Ford aims to generate half of its global sales from fully electric vehicles by 2030. The move had been expected for some time. When discussing second quarter earnings with analysts a month ago, Farley confirmed reports of coming layoffs.
"We absolutely have too many people in certain places, no doubt about it," Farley said at the time. "And we have skills that don't work anymore. We have jobs that need to change."
He admitted that Ford's costs are not competitive with those of other automakers, but he said the cuts are not just the traditional effort to reduce costs, but to refocus the company.
"We are reshaping our company," he said. "And on our ICE [internal combustion engine] business, we want to simplify it. We want to make sure the skills we have and the work ... we have are as lean as possible."
Monday's notice to employees acknowledged the human cost of the shift in focus.
"None of this changes the fact that this is a difficult and emotional time," the letter said. "The people leaving the company this week are friends and coworkers and we want to thank them for all they have contributed to Ford. We have a duty to care for and support those affected — and we will live up to this duty — providing not only benefits but significant help to find new career opportunities."
Ford assembly lines will not be closed as part of the shift to EVs. In fact, Ford is building new EV and battery plants.
Tesla has also announced plans to cut about 10% of its salaried staff even as it adds hourly workers to increase production at two new factories in Austin, Texas, and Berlin.
CEO Elon Musk said the cuts are necessary because "we grew very fast on the salaried side and we grew a little too fast in some areas, and so it requires a reduction in salaried work force." But he also has voiced concerns about a possible recession, saying he had a "super bad feeling" about the state of the economy.
A growing number of job cut announcements have come across multiple industries recently, even though the overall US labor market remains very strong, with more job openings than there are unemployed people looking for work.
Although GM CEO Mary Barra said the company is preparing for a possible recession and the impact that could have on operations, CFO Paul Jacobson said GM is "not running any scenarios right now where we contemplate layoffs."
To fund its planned shift to EVs, General Motors closed several US plants in 2019, sparking a strike at GM later that fall.