CEO Hackett: Ford Motor to lay off 500 US salaried workers this week, more by June

May 20, 2019 in News, Video by RBN

Jim Hackett outlines his method of leading Ford Motor Co. in an interview with the Detroit Free Press.Ryan Garza, Detroit Free Press

Ford workers opened their email Monday to find a note from CEO Jim Hackett with an 8:30 a.m. time stamp and an explanation of how many salaried workers would be leaving the auto company this week and why.

The company will have 500 salaried U.S. workers leave involuntarily this week and more by June.

By the end of August, Ford expects 7,000 voluntary and involuntary separations globally since it began reorganizing in fall 2018, the company said. Also this week, Ford will do 400 layoffs outside the United States.

Hackett’s email does not specify how many people in Dearborn or Michigan would be impacted. Employees interviewed by the Free Press have indicated a significant portion would be leaving world headquarters. The majority of salaried U.S. employees at Ford work in metro Detroit.

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In the letter to employees, with the subject line “Smart Redesign Update,” Hackett wrote:

Team,

As we enter the final weeks of Smart Redesign in North America, I want to update you on our overall progress. But first, I want to thank you for your focus and dedication … To succeed in our competitive industry, and position Ford to win in a fast-changing future, we must reduce bureaucracy, empower managers, speed decision making, focus on the most valuable work, and cut costs. This required intensive work across multiple layers of our company.

The letter continues, “We are now entering the final phase of Smart Redesign. Notifications to employees in North America affected by wave four of Smart Redesign will begin tomorrow (May 21). The majority will be completed by May 24.”

He noted that restructuring will continue in Europe, China, South America and elsewhere with hopes of completing the reorganization by the end of August.

“The time and effort from so many of our team members is helping to make us a stronger company, well positioned for the future,” Hackett wrote.

His email followed 6 a.m. posting of a Free Press story that some white-collar workers last week were packing boxes in case they are laid off, with manager meetings scheduled in several departments Tuesday-Thursday.

More: Ford supervisors’ calendars may reveal big clue about layoffs

More: Ford made bold decision to stop making sedans: How it’s working out 1 year later

Hackett said when “Smart Redesign” is complete:

  • More than 80% of our managers will have healthy spans of control of six or more direct reports, up from 35% before Smart Redesign.
  • Our average span of control for managers will have increased from five direct reports to more than seven, reducing management bureaucracy by one-third.
  • By year end, most of the organization will be structured with nine layers or less, resulting in a flatter and more agile team. At the beginning of the redesign we had up to 14 organizational layers.
  • We identified more than 5,000 concrete ideas to change the way we work — identifying new initiatives as well as work that was not value added.
  • We created the new Enterprise Product Line Management organization, which will ensure we manage our product lines end-to-end for maximum customer centricity and profitability, as well as our Customer Experience group.
  • We also created the International Markets Group, to focus on the customer and ensure these markets receive the attention they need to thrive and grow.
  • Each skill team fundamentally redesigned their work. For example, Product Development created a new vehicle architecture and testing team, a new systems engineering and design assurance group, and expanded future investments for in-vehicle infotainment, software, electrification, and other areas. Clearly, cost reduction is a key aspect of Smart Redesign.

Overall, by the end of the process later in August, Ford will have eliminated about 7,000 salaried positions, or about 10% of its global salaried workforce, Hackett wrote.

“This includes both voluntary and involuntary separations over the past year. Within that total, and consistent with our goal to reduce bureaucracy, we will have reduced management structure by close to 20%,” he said. “This will result in annual savings of about $600 million. We also made significant progress in eliminating bureaucracy, speeding up decision making and driving empowerment as part of this redesign.”

‘Say goodbye’

Hackett added, “Ford is a family company and saying goodbye to colleagues is difficult and emotional. We have moved away from past practices in some regions where team members who were separated had to leave immediately with their belongings, instead giving people the choice to stay for a few days to wrap up and say goodbye. We also have a range of resources and services in place to support employees in managing this transition. I hope that you take a moment to thank them personally for their service and commitment to Ford.”

Hackett ends his letter saying he is in “awe” of the skill and dedication of the Ford team.

“I hope you can feel the momentum building as we work together transforming Ford into the world’s most trusted company, designing smart vehicles for a smart world,” he wrote. “Thanks for all you do for Ford.”

And he signed the letter, “Jim.”

Mark Truby, vice president of global communications, told the Free Press mid-morning on Monday, “We were very careful. We wanted to make sure we had the number correct and understood what was going on in all the regions. We’re in this position now where we can give the data.”

‘Sword over my head’

Shortly after the CEO sent his email to employees, Kumar Galhotra, president of Ford North America, emailed his team to explain a delay in layoffs for information technology and human resources, a department overseeing the departures of others.

“Team: Building on Jim’s note, I want to provide you a North America specific update on the Smart Redesign process. For the majority of our skill teams, the notification process will be completed by May 24. However, HR IT and our team in Mexico will need until the end of June,” the note said.

Galhotra added, “This has been challenging for everyone. Thank you for your patience and fortitude. As Jim suggests, let’s thank the team members who will be leaving us and honor their contributions. Thank you, Kumar.”

A Ford employee reacted on thelayoff.com site, “Great — now we have to wait another month. … This is just wonderful & peachy as all get out … another month with a sword literally hanging over my head. I’m just so happy I can cry.”

Fact is, mystery can actually make the job loss experience even worse, said Marick Masters, a Wayne State University business professor.

“The problem with the way that many companies approach layoffs is that employees do not understand the criteria by which decisions will be made,” he said. “This creates a great deal of anxiety, and people will often anticipate the worst. All in all, it is demoralizing and painful.”

Ford stock was largely flat on a mildly down day for the market.

Contact Phoebe Wall Howard at 313-222-6512or phoward@freepress.com. Follow her on Twitter @phoebesaid. Read more on Ford and sign up for our autos newsletter.