Ford Responds to Rumors of Large-Scale Layoffs in China
It was reported that Ford China had started to lay off employees and would compensate them with N+3 salary compensation. The number of employees affected exceeded 1,300. In response to this, on May 10, Ford China stated to the Chinese media that “China is a crucial market for Ford. We remain committed to promoting sustainable development in our business operations in China.
However, Ford China also stated that the company is building a more streamlined and flexible organizational structure, investing resources in core businesses with advantages, and striving to achieve business goals in China.
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The rumor may be related to Ford’s declining market share in China and its readjustment of the Chinese market strategy. Data shows that in 2022, the firm’s annual sales volume in the Chinese market was 496,000 vehicles, a year-on-year decrease of 33.5%. It had a market share of only 2.1%, down by 0.3% from the previous year, and pre-tax losses reaching $572 million.
Against this backdrop, Ford has formulated a new plan to reduce investment and improve profitability in China, the world’s largest automobile market. Jim Farley, President and CEO of Ford Motor Company, stated during the first quarter earnings conference call that Ford will not attempt to serve everyone. In order to reverse the sales decline, Ford’s new strategy in China will focus on commercial vehicle business, electric vehicles and exports.
This is not the first time that Ford was reported to conduct layoffs. As early as August last year, it cut a total of about 3,000 jobs in the United States, Canada and India to reduce costs and provide more funding for accelerating entry into the electric vehicle market.
In early May, Ford announced a new restructuring plan worth $1.5 to $2 billion, which aims to help its electric vehicle business Blue Oval achieve profitability as soon as possible by exiting loss-making regions and implementing other transformation measures such as layoffs.