Ford CEO Jim Hackett has plans to cut costs by $14 billion in coming years to fund electrification, but Hackett’s emphasis on cost-cutting has unnerved the United Auto Workers.
Major automakers including Volkswagen and General Motors have all committed to electrification. Volkswagen was spurred by the diesel emissions scandal and government intervention. General Motors is eager to get ahead in the Chinese market and announced a slate of 20 new zero-emissions vehicles by 2023. Other automakers like Volvo, BMW, and Mercedes-Benz sense an opportunity to enter the growing market for luxury EVs inspired by Tesla. So far, investors have rewarded Tesla while larger automakers have struggled to attract Wall Street attention.
This leaves Ford in the lurch as they struggle to identify future opportunities in a shifting automotive landscape. While domestic rival General Motors is fueling their electrification push with domestic profits and aiming straight at China, Ford needs to cut costs and trim their operations to free up cash for EV development. It’s clear that the Ford board is worried that the company is falling behind after they ousted former CEO Mark Fields and installed Jim Hackett, head of Ford Smart Mobility, in May.
Ford’s first round of streamlining focused on cutting the salaried workforce in Asia and the United States and targeted $3 billion in savings. But it’s clear that auto workers are also on the table now that Hackett has announced a second round of $14 billion in savings to shovel money into electrification. The UAW was quick to speak up about potential job losses. UAW Vice President Jimmy Settles, head of the Ford union, announced that the union wants to be part of any cost-cutting discussion. Obviously, Ford needs to identify reasonable ways to save money and focus on EV development. But they can’t afford any labor strife if they want to build any future EVs that they develop in time to battle GM and other competitors.