Ford Will Slash 7,000 Jobs, Refocus on Pickup Trucks, Vans

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Ford announced 7,000 salaried layoffs, only 800 in the US. But that is on top of 1,500 buyouts.

In another sign of troubling auto sector news, Ford Announces Restructuring Plan to Eliminate 7,000 Jobs.

Ford Motor Co. said it is cutting 7,000 salaried employees, or about 10% of its white-collar workforce, as part of Chief Executive Jim Hackett’s broader plan to revitalize the auto maker.

In an email sent to employees Monday, Mr. Hackett said the cuts include some buyouts and layoffs that already have occurred, and the process will be completed by August. The cuts will save about $600 million annually and are part of a broader, multiyear restructuring that will result in about $11 billion in charges.

The reductions will include 800 layoffs in North America, where Ford already has made about 1,500 voluntary buyouts, a company spokesman said.

US and European Changes

  • Europe: Ford will shrink operations in Europe and South America by moving away from traditional retail car buyers to focus on sales of vans and trucks to commercial customers.
  • US: Ford will phase out car lines like the once-popular Fusion family car. It will add more-lucrative pickup truck and sport-utility vehicles, like a new Bronco rugged SUV slated to go on sale next year.

Does Everybody Want Trucks and Vans?

Millennials are not buying much of anything, at least compared to their boomer parents. And I keep wondering when the boomer love affair with trucks and huge SUVs ends.

A major stock market decline perhaps? Or will it take a boomer die off?

The latter is not too far off, at an accelerating pace.

Also on deck are self-driving vehicles that will reduce the need for cars in large cities altogether.

The two huge drivers going forward are massive demographic changes coupled with huge shifts on the role of cars and how those cars function.

In 10 years, neither Ford nor GM will look like they do today.

Mike "Mish" Shedlock

Comments (37)
No. 1-15
Stuki
Stuki

It's just a reversal of the Ford policy of a century ago. Back then, Ford paid those building the cars well enough to buy them. Hence contributing to massively growing the market for its own output. Now that those who produce things have been safely corralled back on the plantations again, there's just not nearly the same market for passenger cars anymore. So, just as before Ford, a few coachbuilt one-offs a la Ford GT, for those on the Fed's payroll; and commercial vans and buses to ferry the rest back and forth to the quarries, cotton fields, servant's quarters and bordellos.

her_hpr
her_hpr

And I keep wondering when the boomer love affair with trucks and huge SUVs ends.

Once gas hits 'unaffordable' . . . we say that people could save if they just bought less lattes . . . they would save even more if they didn't commute singly in vehicles that get 25 mi/gal or less. Expensive to buy, expensive to fill, expensive to maintain.

Menaquinone
Menaquinone

Henry ford had a mass production planned obsolescence philosophy. Planned obsolescence is fraud. His philosophy cannot compete with the high quality long service life philosophy of many competitors outside of Detroit. I guarantee I would not purchase a Ford truck. Ford can buck up their philosophy or go out of business. I see they made their choice. Sell the stock.

Casual_Observer
Casual_Observer

We stopped buying American cars in the 1980s. Of course the ones we buy are produced in America. The engines are just from Japan or Korea or Europe. Ford and GM and China trade issues will trigger a recession in the midwest. This wont be felt on the coasts but it will flip the White House in 2020 to Biden. You heard it here first.

AWC
AWC

Slap 50% Tariffs on GM and Fiat Chrysler. That will preserve Fords inefficiencies, and profits will result,,,,,,you see?

hmk
hmk

I am afraid that they will be making a mistake as gas prices are volatile and a period of high gas prices will result in a shift in consumer preferences. Hopefully they will be able to shift production if needed. US car makers are not alone in a decline in demand for passenger cars, its also happening to Japanese and European car makes. I drive only GM vehicles and have no quarrels with their quality.

Sechel
Sechel

If it weren't for the 'chicken tax' would Ford even make trucks?

Webej
Webej

Guess they're banking on the US not doing away with the 50-year old import tariffs on light trucks (25%).

Sechel
Sechel

Domestic trucks are protected by a 25% tariff on imported vehicles, the famous chicken tax. Ford can pretend to blame their failure on auto worker wages but the Germans and Japanese aren't exactly cheap labor. It's a slam dunk this is one company that won't survive the transition to electric vehicles. G.M. can't be far behind. What product Ford & GM sell largely depends on subprime financing. Not exactly a good business model.

On a personal note I tried to give Ford my business in the 1980's. I was so burned I vowed never to go back. Since then its been Honda and BMW

Sechel
Sechel

@Mish Editor Why link to a story behind a pay wall when there are other sites. Are you promoting the Wall Street Journal? If the WSJ were the only one reporting the story it would make sense, but that's not the case. In most cases you are posting to a story your readers can't view

SMF
SMF

How can kids buy cars with their debt load?

everything
everything

Niche markets, and cut your losses while you still can. They know they can't build a better car than others so why try.

JonSellers
JonSellers

Pick-up trucks and SUVs provide more belly room for boomers. I have fun watching those guys with extended everything F150s trying to park at Walmart.

Brother
Brother

Ford is only going with three models next year. The auto business is in a war with climate science, regulators and road planners one they are going to lose.

Sechel
Sechel

Ford is retrenching from cars to trucks but there is a sea change coming and its electric vehicles. The process of building a car will simplify, barriers to entry come down. Things like starters, combustion engines, alternators go away and Ford will need to compete with businesses without the legacy infrastructure that served it well decades past against companies operating from a clean slate without pension liabilities and aged plants