Ford gives “underperforming” employees a choice between a severance package or a six-week improvement plan
The Ford ultimatum: The automaker is giving “underperforming” employees a choice between a severance package or a six-week improvement plan amid $3 BILLION in cuts and shares plummeting 39% this year
- Underperforming employees with at least eight years of experience are offered a payout
- You can also opt for an intensive “enhancement plan” that lasts up to six weeks
- The Michigan-based manufacturer posted a loss of $827 million in the most recent quarter
- Ford also plans to cut 3,000 jobs as it shifts its focus to electric vehicles
Ford will offer severance packages to veteran underperforming employees as it seeks to cut spending by $3 billion amid huge losses.
Employees with at least eight years of experience, viewed as a pattern of declining performance, may receive cash compensation or complete an intensive four- to six-week “improvement plan.”
But those who opt into the improvement plan and don’t improve won’t be eligible for severance pay, an internal email reveals.
The program comes as the Michigan-based manufacturer, which employs 30,000 people in the US, relocates there Cut 3,000 jobs as part of a plan to reduce annual costs by $3 billion by 2026.
The company’s recent earnings also show that it posted a loss of $827 million in the third quarter of 2022.
Ford CEO Jim Farley said the company has “too many people in certain places.”
Ford’s stock price is down 39% since the beginning of 2021 and recently posted losses of $827 million
Ford’s share price has fallen 39 percent since the turn of the year. Shares peaked at $25.19 on Jan. 14 but are currently trading around $13.26.
The email detailing the new severance policy seen by the Wall Street Journalwas sent to managers on October 4th.
It wasn’t immediately clear what payouts would be offered to workers who opt for severance pay.
A Ford spokeswoman said the change, which went into effect Oct. 1, was aimed at making it easier for the company to deal with underperforming.
Employees with fewer than eight years of work experience can skip the advancement course and instead opt for the involuntary separation, which comes with several perks and benefits, including help finding another job.
Ford’s cost-cutting plans are part of attempts to fund its transition to electric vehicles.
Ford heir William Ford Junior said the new F-150 must succeed or the company risks failing
The company’s latest earnings report, released last week, shows that it posted losses of $827 million in the third quarter of 2022. This compares to a profit of $1.8 billion in the same period last year.
Revenue rose to $39.4 billion in the most recent quarter compared to the same period last year, but profits suffered from increased costs and supply chain issues.
Chief Executive Jim Farley said in July: “We have absolutely too many people in certain places, there’s no doubt about that. And we have skills that don’t work anymore and we have jobs that need to change.’
In September, employees were told that rising interest rates would mean lump sum payments for those choosing to retire would fall by as much as 25 percent from December 1.
The company’s heir, William Ford Jr., also said this year that the company’s $40,000 F-150 “Blitz” truck must be a success or it risks failing the company.
The financial woes Ford is facing mirror the struggles faced by other manufacturers trying to make the move to electric vehicles.
Ford is headquartered in Dearlove, Michigan, and has approximately 30,000 permanent employees in the United States
Stellantis NV, the parent company of Jeep, Chrysler and more than a dozen other global manufacturers, announced last week that some US employees would be offered voluntary placements.
Large companies in other sectors are also taking radical cost-cutting measures as they grapple with an uncertain global economy.
Meta, the parent company of Facebook and Instagram, has announced a hiring freeze and reorganization plan that will reduce headcount for the first time since Facebook was founded in 2004.
Mark Zuckerberg, founder and CEO, announced the plans last month. Tech giants Twitter and Google have also implemented similar policies.
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