In response to a tough economy and a decline in demand for SUVs and pickups, Ford is going to “cut salary costs by 15%” by Aug. 1, sources said.
”Cutting salary costs” is industry-speak for white-collar workers losing their jobs, though Ford won’t put a number on just how many employees will be affected.
“The cuts and the impact will be large,” a Ford source said without elaborating on the number of workers. Some have already been notified, and the rest will be by Aug. 1.
A rumor has also surfaced that not only will salaried workforce be cut, but those remaining will be forced to take a hefty pay cut. That announcement is supposedly going to be made soon on a “Black Friday.”
One source disputed that.
“Salary costs will be cut, but salaries won’t be cut, and it will happen on an incremental basis by Aug. 1, not on one single day,” the source said.
“When the F-Series truck is your main source of revenue, yet sales are down 19%, you don’t have a lot of choices,” said Rebecca Lindland, associate director of consulting firm Global Insight. “Either find another source of revenue or cut costs.”
Ford has already announced a shift to using global products in the U.S. in the very near future, which would reduce R&D costs. We’ve already seen cuts made at factories and among the company’s hourly workforce. Usually when that happens, salaried workforce is next. With more products developed globally, Ford won’t need as many people in downtown Dearborn as it did before.
“With the market in chaos now and with no other source of revenue, Ford has to cut the payroll to achieve any gain,” Lindland said. “And to cut salary costs by 15% means there has to be a significant cut in the white-collar workforce.”