Whatever you’re thinking about the latest news from Ford, just know that its CEO Jim Hackett is stressing that the Big 3 automaker is “not in a crisis.”
Unfortunately these words will likely do little to quell the panic from Ford’s workforce when it was announced Thursday that the company would begin trimming jobs from its pool of 70,000 salaried employees.
Hackett is calling this a reorganization – and an “orderly” one, at that – but there are few details about exactly who will be on the chopping block. All we know is the eliminations are expected to be wrapped up by the second quarter of 2019.
Big shifts aren’t new strategy to Hackett, who took the helm at Ford in 2017 and began making swift changes to cut billions in cost. Well into this streamlining, Hackett told Bloomberg in September that new tariffs on steel and aluminum “took about $1 billion in profit” from Ford.
This challenge was echoed also by Honda who said hundreds of millions in new costs had been added to its operations.
So is this the reason for the latest layoffs at Ford? Well… it certainly isn’t helping, but it’s not really the direct cause: Ford’s reorganization plan has, from the start, been targeting billions in costs, in an effort to make the company leaner. Previous efforts have included eliminating all-but-two sedan models from the North American market, a critical move one analyst said proved Ford does not have any “sacred cows.”
Other experts, according to NBC News, suggest that these job cutbacks were expected even sooner than they’ve materialized.
So perhaps Ford isn’t exactly responding to the impacts of tariffs, though Reuters suggests its not really ‘game over’ as it relates to the changes in supply chain. Besides the metals drama, it’s still up in the air as to whether the U.S. will go through with a 25 percent tariffs on imported vehicles and parts, a strategy that research firm IHS Markit says could add anywhere from $1,800 to $5,700 to each new vehicle's price, and cost the auto industry as a whole an estimated 300,000 jobs. From that perspective, these cuts may not be the last we see from Ford.
