Expected Reduction of Ford’s Global Work Force by 10%

According to recent reports by people high up in Ford’s management Ford might be seeing a large reduction  in worldwide workforce due to Ford’s CEO Mark Field’s renewed efforts to raise profits and try and bring up the company’s stock price that has recently been dropping. According to the reports Ford might try and slash its work force in North America and Asia by 10% by offering generous early retirement incentives to bring employment numbers down by Oct 1st. However these incentives wont be joined by cuts to Ford’s hourly workers or production. In Germany, according to IG Metall union official Witich Rossmann,the company has followed a similar path by making “voluntary buyout offers” to some of their staff members over the past few months in hopes of reducing their workforce without forcing cuts. (Automotive News)

These renewed efforts by Ford’s management are in line with their current target of $3 billion in cost reductions this year to try and beef up their earnings in 2018 as U.S. light-vehicle demand  has started to slow down despite seven straight years of gains. When asked about the cuts Ford mentioned that “reducing costs and becoming as lean and efficient as possible also remain part of that work. We have not announced any new people efficiency actions, nor do we comment on speculation”. (Automotive News)

Some groups are afraid that Ford could face potential fallout from President Trump who has made increasing U.S. employment, with a special focus on the auto industry, a top priority. The company plans to emphasize that these reductions are voluntary in nature and are not cuts. Either way we will have to wait to see if the incentives offered to the workers lead to the reduction Ford’s management hopes to see.

3 comments to Expected Reduction of Ford’s Global Work Force by 10%

  • So … what are the potentially redundant white-collar workers doing? Is Ford improving its internal efficiency such that they no longer need certain sorts of workers? Are they cutting back on the number of new models they’re developing?

    Another possibility is that they are merely rearranging the chairs on the deck: turning to outside suppliers. If such firms pay lower wages, then “whipsawing” workers saves a bit of money at the cost of some initial disruption. But with tight labor markets, there may not be much difference. (Ford didn’t announce that they’re outsourcing jobs, that would be politically inept in the current environment.)

    Is the stock market blind to such games? I suspect “yes”.

  • granirerj

    This would make sense to me after having looked at Ford’s financials for the past couple of quarters. They seem to have been losing a fair amount of revenue; even more so than some of their competitors. It will be interesting to see moving forward how they will balance out their losses while still trying to remain as a competitive member of the industry.

  • wheelers19

    I wonder what percentage of this decrease is reflected in the government seizure of Ford’s operations in Venezuela. Also, the automotive market is due for a decrease in sales, as has been apparent over the past quarters, and this decrease in costs could likely be a preventative measure to protect, not increase, profit margins.

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