Ford Lay-offs are the Newest Hurdle to Green Transition

As part of its efforts to reduce costs and shift toward electric vehicles and digital services, Ford Motor Co. (F) announced plans to cut 3,800 jobs in Europe this week. This represents 11% of Ford's European workforce. 

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Changing product portfolios to battery-powered models has caused disruption in the automotive industry, eliminating old jobs and creating new ones. Global powers are battling for the throne in the battle against climate change, from the U.S. to Europe. 

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As Ford aims to catch up with the industry leader Tesla (TSLA), it plans to offer an all-electric fleet in Europe by 2035, as well as half of its global sales coming from electric vehicles by 2030. Electric vehicles require much leaner teams due to the fact that they are less complex. Electric vehicles require much leaner teams due to the fact that they are less complex. 

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CEO Jim Farley has acknowledged that much of the company's workforce is not equipped to support electric vehicles because they are employed to support combustion technology products. A total of 3,000 jobs were already cut by the automaker in the last year, mostly in North America and India.

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Ford needs to broaden its focus on developing, building, and selling vehicles sustainably if it is to build a profitable future in Europe, said Martin Sander, technical manager of Ford's electric car unit. In the future, this will change our organization, our talent, and our skills."

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Others may find restructured pain beneficial. Ford has committed to investing over $50 billion in EV transition through 2026 despite plans for over $3 billion in annualized savings and thousands of job cuts.

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An EV battery plant will be built in Marshall, Mich., one day before Ford announced a layoff for Europe workers. 2,500 jobs will be created at first, and eventually, more capacity may be added. Production is scheduled to begin in 2026.

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EV and battery production in the U.S. will be funded by Ford and its affiliates with $17.6 billion in capital investments since 2019. As a result, the company estimates more than 18,000 direct jobs will be created and 100,000 indirect jobs will be created.

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Ford says its new battery plant will make "one of the least expensive U.S.-made batteries" through the Inflation Reduction Act passed last year. The company also claims bringing the new plant to America could reduce standard shipping and import costs. 

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Subsidies for climate adaptation and emissions reduction will be allocated by the IRA in the amount of $369 billion. Several other countries are concerned that the U.S. would attract more green investment due to the attractive incentives provided by the spending package -- the largest of its kind from a national government.

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Applicants for green manufacturing permits are being accelerated, the rules for green subsidies are being loosened, and the gap in skills for green jobs is being closed. EU lawmakers have drafted a new "Green Deal Industrial Plan" that would address these threats. In the UK, industry leaders are also urging the government to implement clean energy manufacturing and job creation practices.

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As Ford targets an all-electric fleet in Europe by 2035, it has been investing in its EV transition in Europe as well. An electric model factory is being built in Cologne with a $2 billion investment and a battery plant in Turkey. The government and union approvals still make restructurings in Europe difficult and expensive, Benchmark analyst Michael Ward reported.

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As a result of the transition to electric cars in Europe by 2030, the Boston Consulting Group estimates 630,000 fewer jobs at combustion-engine car manufacturers and suppliers, while 580,000 new jobs will be created in batteries, charging infrastructure, and other related industries. 

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EV production alone could create 275,000 new jobs by 2040, according to an analysis by the European Association of Automotive Suppliers.