Job cuts may loom as Ford plans a ‘major redesign’
Ford Motor employees are warily awaiting details of CEO Jim Hackett’s promised “fitness” plan and the serious possibility of significant job losses as the company faces pressure to improve its operations.
The company has warned of $11 billion in restructuring costs over three to five years, which could mean thousands of worker buyouts, according to analysts.
Hackett is under fire from investors to make the company more efficient.
For starters, the company’s money-losing European division could face massive cuts of up to 24,000 jobs, according to the Sunday Times of London.
Jon Gabrielsen, a market economist who advises automakers and auto suppliers, said Ford simply can’t achieve its goals without cutting salaried jobs “quite significantly.”
Morgan Stanley analyst Adam Jonas recently projected a 12 percent cut in Ford staff worldwide.
“Ford’s operations need restructuring. We do not see restructuring at Ford as a ‘nice to have’ … but as a crucial step to set the global business on a more balanced footing,” Jonas wrote Aug. 20.
In an interview Wednesday, Ford Chief Financial Officer Bob Shanks declined to comment on the job cuts forecast. He acknowledged the term restructuring often suggests “workforce reduction and closures.”
“A year ago, we started a journey that’s going to be a very fundamental redesign of our traditional auto business,” Shanks said. “It’s a huge, huge transformation.”
Shanks said Ford is “looking at a major redesign in our business, particularly overseas markets. That performance is not good. After years of hard work, restructuring, new products and changes, it just isn’t what it needs to be. Parts of the business are very attractive and profitable, but too much are not. The bottom line is unacceptable.”
Analysts are openly annoyed at what they say is Ford’s failure to articulate a clear plan of attack.
“What is the actual path for Ford? It’s hard to see,” said Ivan Drury, senior analyst for Edmunds. “There are a lot of trees and weeds, and they need to take a machete and really clear that path for consumers and investors.”
Jonas has been harsh with Hackett publicly, pressing him for details, openly criticizing him for canceling an investor briefing and asking him directly in August whether he would be around to explain details.
Hackett, whom Ford declined to make available for this story, emphatically replied to Jonas that he has no plans to leave.
Other automakers have already taken steps to slash inefficient operations. For example, General Motors sold its perpetually unprofitable European division, earning praise for CEO Mary Barra.
To be sure, Ford is making money, having earned adjusted pretax profit in 2017 of $8.4 billion. But second-quarter 2018 profits were off 50 percent from the year before, and the stock price has been on a downward trend for four years.