- Ford announced on June 27 that it will reduce its hourly workforce in Europe by 12,000 workers before the end of 2020.
- On May 20, Ford CEO Jim Hackett put out a memo to U.S.-based employees saying 500 salaried people were being cut; the cuts were expected to reach 800 by the end of June and 7000 worldwide by summer's end.
- Although Ford reported $1 billion in profit in the first quarter, that's down 34 percent from the previous year.
UPDATE 6/28/19: Ford announced Thursday that it will cut 12,000 hourly workers across Europe before the end of 2020. The automaker will also close or sell off six factories and cut production in others. Ford of Europe president Stuart Rowley said that streamlining the company in Europe will help it focus on utility vehicles and EVs and said, "Our future is rooted in electrification."
It has been a theme for U.S. corporations soaking in profits, low taxes, and a raging bull market over the past year: cut, cut, and cut some more. Ford is joining the ranks of shaving-razor companies, media publishers, and automakers including General Motors by sacking salaried employees.
According to a memo from CEO Jim Hackett published by the Detroit Free Press, only 500 people are getting the ax right now. By August, Ford will have cut 7000 employees, at a savings of $600 million per year. Hackett was paid $17.8 million in 2018, or 276 times that of the average employee's salary of $64,000, according to Bloomberg.
Months after GM shut down multiple plants in North America and continues to shrink its U.S. workforce by 10,000 or more employees, Ford is following a similar but less extreme formula. In 2018, Ford lost money everywhere in the world except North America, where China's consistently huge growth is now slowing down. Hackett, in an internal memo, had called the year "mediocre" and said that employees should "bury the year in a deep grave" while doubling profit goals for 2019. Total industry sales fell 2 percent last month and annual industry-wide light-vehicle sales for 2019-about a million down from all-time records in 2015 and 2016-have been projected below 16.5 million.
Ford earned more than $1 billion in profit during the first quarter of this year, although it was down 34 percent from the previous year. After slumping about 40 percent during 2018, Ford stock is recovering this year and has risen more than 25 percent since January. But that's not enough. Hackett has cited years of unchecked spending increases before he became CEO in May 2017 that has since been "arrested," according to Bloomberg. Hackett, in his analysis, said Ford's "structural costs" increased by $1.7 billion each year from 2013 to 2017. The automaker is also retreating from sedans and hatchbacks and soaking $11 billion into electric and self-driving cars.
Regardless of whether Ford is reaching another Alan Mulally moment-the CEO who, in the years before the recession crisis of 2009, shrank Ford and mortgaged everything, including the Blue Oval logo itself-is unclear. But Hackett has to show Wall Street that it can make more money, which means these job cuts are only the beginning.
This story was originally published on May 20, 2019.
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