Not long ago, some within Ford were making headlines by complaining that CEO Jim Hackett hadn’t cast a clear enough vision of the future he saw for the automaker — a clear contrast to former CEO Alan Mulally, whose One Ford plan carried the company for nearly a decade beginning in the midst of the Great Recession.
But now, two years into his tenure, Hackett’s road map is becoming clearer. And now some of the same folks inside his company aren’t liking what is coming into focus.
That’s because Ford just announced it is cutting 7,000 salaried employees, or about 10 percent of its white-collar work force worldwide, as part of Hackett’s broader plan to impose “financial fitness” on the company and jack its profit margins back up to the levels being enjoyed by cross-town rivals General Motors and Fiat Chrysler.
The cuts are expected to save about $600 million annually as part of Hackett’s broader, longer-term restructuring that calls for billions of dollars more in cost reductions and a total of $11 billion in charges. The reductions will include 800 layoffs in North America, where Ford already has executed about 1,500 voluntary buyouts. Ford had a total global work force of nearly 200,000 people last year.
The strategy in part reflects Hackett’s decision to phase Ford out of the sedan business in North America. In doing so, Ford has been moving more slowly than Fiat Chrysler, which stopped making sedans in the U.S. a couple of years ago, and GM, which has been scrapping most of its sedan fleet this year as well as closing some plants.
In the meantime, like its rivals, Ford has been upping its bets on the continuation of the industry’s new era in the U.S. in which purchases of pickup trucks, sport-utility vehicles and crossovers have surged to about two-thirds of the market, about twice the proportion of less than ten years ago.
While its F-150 trucks, America’s best-selling nameplate, continue to hold down the high-profit full-size truck segment for Ford, the company also will soon be introducing a couple of vehicles that should help it gain some share: an all-new resuscitation of the Ranger mid-size truck nameplate, and an all-new revival of its Bronco SUV franchise. Meanwhile, Ford has been substantially overhauling important existing properties in its light-truck lineup including the Ford Explorer SUV.
The financial and product-line restructurings Ford’s moves also are expected to free up more financial resources for Hackett to bring Ford closer to its goal of being able to afford its huge technology bets on electric, connected and autonomous vehicles.