Times are tough in the American car business. Ford, who may be the hardest hit, will cut 7,000 jobs in the in the coming months.
The reason for the cuts has to do with cutting costs. Of the 7,000 proposed jobs cuts, about 2,400 will be sourced from North America. Of those, 1,500 will see their job be eliminated through voluntary buyout offers.
Ford’s been working on the cost-cutting for a few months now by slicing out fat from management and other such levels of bureaucracy. At the same time, Ford has committed $11 billion in order to remain to competitive and relevant – in times of slipping sales and market shares here and elsewhere in the world, the job has become quite difficult.
Ford CEO Jim Hackett admitted a short while ago that “we overestimated the arrival of autonomous vehicles” which is fine in and of itself. The problem, however, arises one considers the hundreds of millions of dollars already invested in this technology that will see little to no returns for years to come. Throw in heavy spending in EV development once more with few returns and the picture becomes clearer.
As though this was not enough, Ford sales dropped 14% in the US in the 1st quarter of 2019 as they continue to lag behind is main competitors. In 2018, losses were reported in South America, Asia and Europe.
In an attempt to leap forward, Ford’s deals with Volkswagen and Rivian make loads of sense. The fruit of these alliances will need to be serious success stories.
In a nutshell too late, Ford is in critical survival mode, or more specifically, bracing themselves to survive in the hopes of surviving the near future.
Like GM however, the decisions are difficult ones but may signal the difference between surviving and shutting down the entire operation.