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Ford slashing 3,000 jobs as it looks to make EV transition

The move comes as automakers grapple with the transition to zero-emission cars and trucks, and the prospect of job losses industry-wide

Ford F-150 Lightning pickup trucks sit on the production line at the Ford Rouge Electric Vehicle Center on April 26, in Dearborn, Mich. The F-150 Lightning is positioned to be the first full-size all-electric pickup truck to go on sale in the mainstream U.S. market. (Bill Pugliano/Getty Images)
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Ford Motor Co. announced plans to cut 3,000 jobs on Monday as the automaker restructures and reorients its business around electric vehicles.

A spokesman said the layoffs, first reported by trade publication Automotive News, will affect about 2,000 salaried and about 1,000 contract employees in the United States, Canada and India. The company notified its staff of the decision via email Monday, confirming reports from several media outlets last month that projected thousands of job cuts were looming as the company worked to shave costs and transition toward production.

The company is “not as cost-effective” as it needs to be, a Ford spokesman told The Washington Post. “Priorities of the business are changing and expanding to include EVs, which will be predominant over time, and we’re reinventing the business in terms of how we do things,” T.R. Reid said.

That comes with a price, he acknowledged. “It’s not lost on folks that even changes that are necessary affect real people, and we don’t take that lightly.”

The move comes as automakers grapple with the transition to zero-emission cars and trucks and the prospect of job losses industry-wide. “There is a reasonable expectation that the number of jobs will go down over the next decade,” said Brett Smith, director for technology at the Center for Automotive Research in Ann Arbor, Mich. “Other companies have been finding ways to do this over time, through attrition. But some companies may be headed down the same pathway as Ford.”

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Electric vehicles, Smith said, have about 30 percent fewer parts than gas models and thus require a smaller workforce to build. At the same time, the industry is going through other major transitions that are reducing its workforce, including the shift toward driverless vehicles, a more digitally oriented manufacturing process, and advancements in recycling and battery technologies aimed at improving the life span and sustainability of every vehicle built.

The open question, Smith said, is whether the major policy shifts embedded in the climate package President Biden signed last week will offset those losses with new jobs. The legislation provides incentives for automakers to move their production lines away from China and other countries and back to the United States. Before the legislation passed, the Economic Policy Institute, a liberal-leaning think tank, projected that 75,000 autoworker jobs could be lost by 2030 in the transition to electric cars and trucks without strong federal policies that protect and promote American employment.

About a month before Ford’s layoff announcement, the company released healthy second-quarter earnings, beating Wall Street’s expectations as its adjusted operating income tripled year over year to $3.7 billion. Domestic sales jumped nearly 2 percent. Chief executive Jim Farley said he was focused on pushing aggressively toward growing its electric vehicle business while “improving profitability.”

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“We’re moving with purpose and speed into the most promising period for growth in Ford’s history — to innovate and deliver great products and connected services, raise quality and lower costs,” Farley said at the time in a news release.

Ford plans to release reports for three separate business units: Ford Blue, the traditional models; Ford Model e, the EV division; and Ford Pro, focusing on its commercial and government customers.

A week before the earnings call, Ford executives announced that the company expected to manufacture 600,000 electric vehicles globally by late 2023, and confirmed the company had secured 100 percent of the battery supplies needed to make those cars. The automaker said it is on track to make more than 2 million electric vehicles by the end of 2026, having already sourced 70 percent of the battery capacity needed to meet that goal.

In the email Monday to employees, reviewed by The Post, Farley and Executive Chairman Bill Ford wrote that workers will learn of their futures with the company this week. Ford is gearing up for change in “virtually all aspects of the way we have operated for more than a century,” they noted, and is preparing by cutting costs both in materials and personnel.

EV demand is high but still represents just a sliver of the total market; such vehicles represented 5.6 percent of new vehicle sales in the second quarter. They are also expensive — the average price in June was more than $66,000, according to Kelley Blue Book, a 13.7 percent increase compared with last year. That compares with the U.S. average of $48,000 for all new vehicles.

The Inflation Reduction Act includes new tax credits for electric vehicles that will ultimately make climate-friendly cars more affordable. The credits go into effect next year and will stay in place until 2032. Consumers who buy a new EV will get a $7,500 tax credit, while those who buy used get a $4,000 credit.

Ford shares fell 5 percent Monday to close at $15.08.