#Carmageddon Now: Ford to Slash 10% of its Workforce

“According to people briefed on the plan.”

Ford’s shares have gotten hammered as it struggles with plunging car sales, and in April even with weak truck sales, mired as automakers are in the US “car recession.” At $10.94 at the close on Monday, shares are down 37% from their high in July 2014, when Mark Fields became CEO. Shares hit a new 52-week low on Friday, despite two consecutive years of record earnings. But Ford announced that profits would decline in 2017, and at a “strategy session” last week, Ford’s frustrated directors put the heat on Fields.

After announcing in March that Ford would create 700 jobs in Michigan, more or less an optical illusion as a nod to Trump, it is now time to throw Wall Street a bone. A huge bone.

Ford is considering cutting 10% of its global workforce of around 200,000 employees (about half of them in the US), “according to people briefed on the plan,” cited by the Wall Street Journal.

That’s about 20,000 people, globally. If these cuts, or some of these cuts, hit US workers, there’s going to be some wild tweeting from the White House. But that too shall pass. Because Wall Street should be happy.

This is part of a drive to slash $3 billion in costs for 2017. Doing what American companies do best: cost cutting. The WSJ:

The job cuts, expected to be outlined as early as this week, largely target salaried employees, these people said. It is unclear if the plan includes reductions in the hourly workforce at Ford’s factories in the U.S. and abroad.

Ford is taking a “hard look” at global costs, though no official decision about the cuts has been made, “a ranking source” told The Detroit News. The source also said that the 10% cut cited by the WSJ seemed high.

Whatever the final number, we now know that these “sources” are fanning out to spread the news for maximum effect on Wall Street. Ford however said in an emailed statement of bland corporate speak:

“We remain focused on the three strategic priorities that will create value and drive profitable growth, which include fortifying the profit pillars in our core business, transforming traditionally underperforming areas of our core business and investing aggressively, but prudently, in emerging opportunities.”

“Reducing costs and becoming as lean and efficient as possible also remain part of that work. We have not announced any new people efficiency actions, nor do we comment on speculation.”

Ford has embarked on a quest for the Holy Grail. It invested $4.5 billion in its electric-vehicle program and is building up a massive self-driving car program. These are key investments for its future. But it also invested in tech ventures that are not directly related to making cars, such as artificial intelligence and its much hyped Ford Smart Mobility LLC.

Whether or not these programs pan out will take years to determine. Meanwhile, sales are skidding, and something has to be done.

After six years of booming sales and soaring prices, the industry plateaued in 2016 and is now suffering once again from overcapacity, declining sales despite record incentives, ballooning inventories on dealer lots, and falling used car values that hit the leasing business particularly hard.

Production cuts and layoffs have been rippling through the industry since last fall. But the layoffs were “temporary,” a few hundred people here and there, nothing like a 10% permanent cut of the global workforce. That would be a big move. It would be a paradigm shift. Other automakers would soon follow with similar cost-cutting announcements to goose their shares. It would be a sign that “#carmageddon not yet,” as I called it earlier this month, is becoming “#carmageddon now.”

Demand from businesses in the real economy is slumping too. Read… What the Layoffs at Ford’s Medium-Duty Truck Plant Mean

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  62 comments for “#Carmageddon Now: Ford to Slash 10% of its Workforce

  1. Guido says:

    Big firms like Ford hire contractors and use them as slack for lean times. The non-permanent workers are the first to go. The fact that Ford is laying off the employees means that the situation is much worse that the 20K layoffs. Ford treats its core employees well and is usually averse to letting them go.

  2. Willy2 says:

    – And how much of those jobs slashed are in China ? I do think that the outbreak of the WannaCry ransomware in China could/will have a MAJOR negative impact on the chinese economy in the near future.

    • MC says:

      Ford’s Asian operations have long been focused in South-East Asia, with manufacturing hubs in Taiwan (joint venture with Lio-Ho) and Thailand (joint venture with Mazda).
      Here the axe has already fallen: Ford has already announced a complete shutdown of their Indonesian operations, including the whole dealership network.
      Like most US corporations, Ford has a love story with India, where they invested a lot of money over the last decade. And like most US corporations (starting from Harley-Davidson), Ford is having second thoughts about the Indian market as sales have been disappointing to say the least.

      • Lee says:

        Ford finished auto production in 2016 in Australia after a 91 year run. The imported Ford Mustang though is selling quite well here though.

        I also understand that in addition to Indonesia shutting down this year, they are also leaving Japan.

        When I lived in Japan I never knew Ford was active in the Japanese market and for that matter I never, ever recall seeing a Ford on the road there………..

        Never owned a Ford and never will.

  3. d says:

    Ford was the ONLY 1 of the big three, not to take Govt money in the US auto bailout.

    Chrysler is now part of Fiat.

    GM costs the US taxpayer Billion’s, and is now effectively a chinese company.

    Ford is doing what it has to do, interestingly most of these job losses are allegedly white collar.

    This also paints an unpleasant picture of Global Auto Industry over capacity. Yet china is still putting on more to survive the new chinese, have to eat somebody’s lunch.

    • nick kelly says:

      The reason Ford didn’t need gov money was because it had the ‘good luck’ to almost go bankrupt BEFORE the 2007-8 financial crash.
      It was able to get an absolutely last chance loan by mortgaging everything. For the first time it had to pledge the buildings and land- the business alone could no longer borrow the money.
      It even pledged the iconic Ford logo.

      But there was not a snowballs chance in hell that even this loan could have been obtained once the Crash hit.

      The logo at least has since been redeemed from hock.

      • robt says:

        Their ‘good luck’ was foresight. They arranged commercial financing BEFORE the meltdown and didn’t need government assistance, as usual, or to be invaded by financial engineers.

        • nick kelly says:

          Read up on it- it was an emergency loan, not a carefully arranged loan. That’s why the land under the factories was pledged as collateral something the company had never had to do.

          They no more saw Lehman going bankrupt later on which lead to the crash than anyone else. The smart move would have been to sell stock but by the time the SHTF that possibility was gone.

        • robt says:

          New York Times, April, 2009:
          “Still, Ford’s decision to borrow billions in 2006 when the capital markets were thriving will go down as one of the most significant moves in the company’s 105-year history.”


        • d says:

          Unlike GM They did the responsible thing when they needed to do it, instead of staving it of with hope.

          It made them a better company.

          The Bailouts, followed by GM’S move to china, showed those in the US willing to see. What GM really is, a leech. That changed hosts, after sucking the US almost dry.

        • wkevinw says:

          I agree, Ford was in critical condition before GM, that’s all there is to the timing. They had a terrible product cycle and GM was killing them. Ford would have been as bankrupt as GM a couple of years before 2008- which shows even less management skill than GM. At least GM can blame the financial crisis (in part).

          Neither Ford nor GM are paragons of executive management skill. If Ford is better than GM, it’s mostly by luck of timing of their down cycle in the 2005-2007 time frame.

      • d says:

        Unlike the American, now based in china Hero GM. Which cost the American taxpayer billions, so Obama could have the UAW vote.

        Ford still stood on its own shaky legs, and still does.

        Ford Pioneered the “Your Employees should earn enough to be able to buy your product” Trueism.

        Ford has been in Global Retrenchment since the late 80’s.

        Is it nearing the end, or is it gearing up for another round staring at the bottom again.

        What happens to ford, happens to most others, much more aggressively.

        Ford sees the overcapacity VW is being forced to complete in china, as it agreed to build when times were good, and the general global overcapacity. unlike may others, is willing to read the writing on the wall.

        Ford don’t always build the “BEST Cars”. Frequently they build the best cars, for the man in the street, That he can afford.

        • Smingles says:

          “Ford Pioneered the “Your Employees should earn enough to be able to buy your product” Trueism.”

          No, this is totally bogus.

          Henry Ford raised wages because their employee turnover was so high that it was cheaper to pay more and retain employees than pay less and keep the revolving door going.

          Total myth that he paid them more so they could afford his products– even after the raises, most Ford employees still could not afford a Ford vehicle, and Henry Ford was a RUTHLESS employer.

        • Wolf Richter says:

          I think d agrees with you, from his prior comments. Don’t get him started about Henry Ford.

        • d says:

          “Henry Ford raised wages because their employee turnover was so high that it was cheaper to pay more and retain employees than pay less and keep the revolving door going.”

          Considering that when Macnamara went to work at ford. They were still estimating their due invoices, by weighing them, I doubt that.

          Henry went bankrupt multiple times, as he simply had bad accounting practices.He blamed these bankruptcies on the Jewish bankers.

          Then published various baseless anti Jewish writings, proving he was a very bad businessman and a Racist Hypocrite, with some good ideas about manufacturing system’s.

          Henry was not a ruthless employer.

          He did however, employ some people to manage his labour, that were totally ruthless.

          A Culture the Company still retains today.

      • nick kelly says:

        Mulally got the loan in December 2006.
        Six months later no one would have considered lending anyone 23 billion.
        No luck to see here folks.

  4. marco says:

    I think the corporations, and their alliance with the government against all the rest of society is very cool.

    Mussolini agrees : that’s his suggestion- “We should call it corporatism, not fascism”.

    Take it from an expert

  5. Meme Imfurst says:

    Our local Ford dealership just sold the property to a ‘car group’ dealership.
    It will now become a dealership for:
    and one other show-off car

    This is in a town of 25,000 where 50% work three jobs and or share the space of a garage with four other people. And in season, maybe 40,000 seasonal and or tourists who seem to have the wallets locked in a safe. Everyone is saying….. WHAT the heck?

    The Ford dealership should have sold to a bar or drive in fast food company, that would have made more sense….I mean what is one more in the scheme of things.

    • TJ Martin says:

      WTF is more like it !

      Yet another sign ;” Its the end of the ( automotive ) world as we know it ‘

      I just received a letter from my preferred Mercedes dealership the likes of which I’ve never seen before [ from any Mercedes dealership I’ve dealt with nationwide ] trying to push me into the 2017 model .. giving me all the hard numbers ; e.g. – trade in value of my car – bottom line price of the equivalent 2017 model – the difference I would owe [ if paying cash ] not to mention all the details should I chose to lease or finance .

      From any other brand this’d come as no surprise [ my wife gets at least three of these a year on her car ] .. but from Mercedes ? Especially when its the most successful Mercedes dealership in the city ?

      Things must be worse than even I imagined .

      • Rob says:

        Just this morning in Atlanta I saw an ad for leasing a new Maserati – $950 a month. Never seen that before.

        • Wolf Richter says:

          Remember who owns the brand: Fiat. It wants to turn it into a sort-of mass-market product (with some success).

        • TJ Martin says:

          I’ll add to Wolf’s reply that FCA across the board is deep in the weeds with even JEEP sales now on the wane and they are desperate for sales from the lowliest FIAT in Europe right up to their beloved Ferrari despite what the popular automotive press would have you believe . So them pushing Maserati sales .. which have never been good since the 80’s ? Hell .. I’m surprised they’re not slashing and burning prices in order to get the POS off the lot.

          Sigh .. if Agnelli could see what his Jet setting party boy grandsons the Elkann’s are doing to the inheritance he left them .. he’d be spinning in his grave faster than an F1 engine .

    • MC says:

      You literally have no idea of how overstocked BMW and Jaguar-Land Rover dealerships are right now. I wouldn’t be surprised if they were engaging in a bit of old fashioned channel stuffing, or as close as local laws allow.

      The funny part is this year BMW has tightened the screw on loans and is incentivating cash payments: the more you pay cash, the bigger the discount/incentive, especially on 2017 models.

  6. michael Engel says:

    Ford rotate from consumption products to become a part of
    the defense industry.

  7. mvojy says:

    Sad that in this monetary society we choose to not keep everyone employed, housed and fed, all for the sake of “shareholder value”

    • BradK says:

      It’s a diminishing curve to be sure. Initially, of course, cost cutting does benefit the share price and the all important “shareholder value” metric. But especially in the consumer goods space, once you’ve kicked enough employees to the curb you soon realize that there’s no one left to afford to buy your products.

      The dual miracles of Financialization and Globalization have allowed for a temporary moratorium on this effect through ever more risky consumer loans and access to new, alternative markets which have not yet been gutted. I think even these factors are beginning to diminish in efficacy though. The lower hanging fruits of Globalization have already been picked and what remains is simply out of reach.

      • TeeJay says:

        Exactly BradK – Cost cutting has a very limited useful life because at some point you are “burning your furniture to heat the house”. And that’s the beginning of the end!

      • mvojy says:

        Debt is keeping it all afloat. Even the poor can afford to buy using credit. Businesses won’t feel the repercussions of their deep cost cutting until we consumers have no access to borrow and show that without INCOME we cannot buy their goods/services.

  8. Kasadour says:

    This gets confusing when today’s news automotive production is up 5%. Is this the point where human workers are being replaced or is it something else? What am I missing . .?

    • Wolf Richter says:

      You’re missing the context…

      Today’s numbers were part of the “Industrial Production” numbers from the Fed’s Board of Governors – survey-based estimates of production.

      And they were NOT strong. They’re measured in millions of units, at a seasonally adjusted annual rate, which for April (today’s number) was 11.93… while that was up from March, it was up only because March was so low. The entire first quarter was low (11.53 average), and below the average of the year 2016 of 12.18. So the trend this year, including April, is below last year. And it’s all making sense once seen in context.

      They’re good numbers to look at, but enjoy them with a big grain of salt (like all survey-based monthly numbers). Over the longer term, I think they give a pretty good indication of trends in the industry. But be careful with headline numbers that compare April to March and that then don’t explain the broader picture.

      • Kasadour says:

        I appreciate you response.

        After reading your response, to me it seems the media compartmentalizes these metrics, in order to enable itself to justify and control the establishment narrative.

        when you consider the the big picture– the context, these numbers make perfect sense.

        Thank you again. I learn so much from this blog. I feel a donation is in order for all your hard work an attention to these important matters.

  9. william says:

    First of many cuts. Layoffs at the start of a downturn are nearly always followed by more layoffs.

    If you look at Ford’s shrinking line-up, they are not nurturing any new lines and just milking profitable, well-established product groups. There’s no product strategy for growth or innovation. This is a valid business model, yes, but makes me skeptical of long-term value creation.

  10. Mike R. says:

    Just another nail in the slowly constructed coffin. According to press reports, most of these layoffs are salaried folks….marketing, engineering, finance, etc.

    Ford CEO recently reported under extreme pressure from big shareholders because of crappy stock peformance. Crappy stock performance because this long sales cycle has peaked and is declining. Shareholders should get a life and understand the industries they invest in. Of course, all the high paid financial planners and wealth management hanger ons tought these solid American manufacturing companies. What can go wrong?

    Ford will survive but like most big companies, in a much smaller form.

  11. Avg Joe says:

    I think you mean “carpocalypse now”, that’s a more apt pun.

  12. Random Thinks says:

    The irony is shareholders buy into this zombie logic.
    Cut ALL the workforce, and wow, huge gain in profit, till the inventory has gone.
    If Ford are saying they can cut workforce and make less cars and increase margin, something doesn’t stack up.
    Unless quality drops.

    In the meantime we’ve seen stealth inflation for 10 years, and I believe it’s been rife in cars like Fords.
    This generation of used cars has aged quickly, and is in huge supply. Values are going to be shockingly low soon imo.

    My wife’s 2000 Ford was like a tank, and despite average bodywork and wheel care, it looked tidy last year when we sold it.
    Roll forward to our new Fiesta ST and it’s ‘not bad’
    The stark warning to me is simple inner/outer wheel road chips on 8k miles of mostly summer miles, with a good cleaning regimen, and there are corrosion spots all over.
    I hate to think how crap they’ll look by 5yrs old.
    The bonnet and front bumper chips are also poor for an 8k rural mileage car!

    The only issue with older cars generally is primary monocoque corrosion.
    Give me a pre-crisis built (08) car any day if it’s got a good monocoque reputation.

    I think you’re best buying a cherished older car, keep cherishing it, and avoid the (eventual) stupendous depreciation crash that is coming soon!

    Suddenly that ‘cheap running cost’ new car will get back to a 20% annum dep curve, add another 5% because they’re ‘cheap’ made too.


  13. HudsonJr says:

    I’ve been looking for a 3 row SUV new or used, and there don’t seem to be many deals to be had on anything I want.

    Only “deals” seem to be:

    * Domestic luxury, especially used. These seem to be no man’s land price-wise. You can opt for a new, nicely equipped, fully warrantied cousin for close to the same price.

    * Out of favor models like Ford Flex, probably because it looks like a bread van. Have seen new ones $6000-7000 off MSRP before any haggling.

    * Models with lots of inventory due to flaws. Most of the issues seems to be around tech trying to better fuel economy and emissions. Things like variable cylinder management on Honda/Acura and the variable transmission on Pathfinders.

  14. michael says:

    I received an offer from a Toyota dealership last week that wanted to buy my 8 year old SUV and sell me a new one. They say they will offer me top dollar for my trade in. Right, despite declining used car prices. Apparently they are using the Toyota service data base (I have not ever had service there) to look for potential sales. That strikes me as desperation. I am definitely not looking for a new vehicle

  15. roger says:

    Can get VERY bad with 7 years record carsales…there are oversupply of second hand cars obviously. If Trump cannot get his 4,5% growth,,,carmanufactors can get terrible.

  16. roger says:

    Tesla will be very bad hit if economy going down…

  17. Petunia says:

    I saw a story on GM Maven, a car sharing by the hour business, now expanding in NYC. They were pushing it even to people who wanted to work as Uber drivers, no need to buy a car to taxi people around, just rent it for the day. None of this is expansionary for the car industry.

    • alex in san jose says:

      Petunia – that’s a workable model, as cab companies do it that way – the driver rents the cab by the day.

      The pedi-cabs downtown where I am are done that way too. You rent the pedi-cab for $30 and make what you can, hopefully more than $30 for the evening.

      • nick kelly says:

        Thirty bucks to rent an effing pedicab? That sure makes the 19.95 per day weekend truck rental (Budget Rental ) seem good.
        A pedicab surely can’t cost more than 1500- 2000

        At that rate a car would be 200 a day.

        • BradK says:

          Those Budget Trucks are $19.95/day plus something like $4.00/mile.

        • alex in san jose says:

          nick kelley – Indeed, $30 to rent a pedicab that you won’t have to put gas into, or pay insurance on, and will earn you maybe $100 after a few hours of dedicated pedaling and clever repartee with your passengers.

          That’s *big* money here.

          And yeah the rigs they rent out probably do cost a couple thou.

      • d says:

        Its also a third world model .

        In the Philippines, they rent the car for the minimum 1 day (24 hours) and share it between 2 drivers ( Or 1 on Meth). They generally make a small profit.

        A lot of the second rivers do not have correct licenses.

      • Petunia says:

        Back in the 70’s my uncle rented a hotdog cart in NYC. For $100 a day he got the cart stocked and clean. He made an under the table living that way for decades.

  18. Thunderstruck says:

    Question for Wolf:

    Along the lines of the auto industry, how are RV sales going as a whole?
    Two reasons I ask this:

    1 – right now, as far as gasoline powered Class A motor homes, Ford has the industry locked-in with its F53 chassis. Since the Workhorse brand collapsed, there are no other competing Class A/Gas chassis suppliers. As far as Class C goes, both GM and Ford have van cutaways in play, and the newer Ram Van cutaway is gaining traction too.

    2 – it sure seems to me that the number of RV dealerships are growing. In the smallish town not far from me (Cleburne, TX) there are three major RV dealerships. Their lots are full, and they always seem to be doing brisk business when I drop in for parts. Even one smaller dealership with three North Texas lots has just been gobbled up by Camping World (flush off of their acquisition of Gander Mountain/Overtons).

    It seems the fate of RV sales may not be the same as overall car sales – that is unless I’m not seeing the full picture here…

    • Wolf Richter says:

      Thanks for the report. It confirms my impression. Yes, from what I’ve seen, RV sales are marching to a different drummer than auto sales (except during recessions). Last year, RV sales, in terms of shipped units, were up 16% yoy.

      Shipments were up every year since 2010. But they’re very volatile, ranging over the past decade from +46% annual gain yoy (2010) to -33% (2008). Double-digit increases and decreases are common.

      Here are annual numbers. Click on “RVIA Historical Glance” near the bottom for annual data going back to the 70s. You can get monthly data when you log in:


      • Thunderstruck says:

        “Yes, from what I’ve seen, RV sales are marching to a different drummer than auto sales (except during recessions). Last year, RV sales, in terms of shipped units, were up 16% yoy.”

        Thanks Wolf, that’s an even better number than I’ve heard from idle chatter. I just wish that they would have broken those numbers out between towables and motorized sales.

        As an anecdote – last week while we were in a dealership picking up parts, there were at least two families (or couples) looking to make an RV their new home. I think that I see a new trend in mobility coming along. There are several vlogs on youtube where you can track younger couples that have gone fulltime and work from their new “mobile platform” – a newer version of telecommuting I guess?

      • Petunia says:

        My son knows a vet who moved back in with the parents and lives in an RV in the backyard.

        Some of the retired ladies I know have an RV lifestyle. They vacation on some sort of well know RV events circuit. One of the RV dealers even hosts a convention for them in Texas.

        • Meme Imfurst says:

          The KOA here is $100.00 per day and up. In season there are spaces available…..hummmm.

          That is like renting a house for just an RV space 3 feet from the next one. Well…party on !

          Inflation? 15 years ago it was 25.00

        • DK says:

          There’s a strong trend developing in “mobile living”. Even the tiny houses are mostly on wheels. Vlogs on YouTube about this are many, and growing.

        • DK says:

          No need for KOA. They use “stealth camping” in cities, national forests and BLM land. All at no cost

  19. Robert Dryden says:

    Went to my Ford dealer in Santa Fe, NM for minor service today. As I drove around the building(s) looking for the service bay, It struck me that there are LOTS of new cars on their property. Many of the driving lanes were packed bumper to bumper, 2 cars/trucks deep. Lots of shiny vehicles and very few shoppers.

    • T.J. With periods says:

      I can second that. Took my 2YO, 30,000 mile Fiat in for service and there wasn’t room ANYWHERE to park it. Put it in front of a gate door and tasked them with moving it. Sold the Fiat after service. Bought it cheap and sold it cheaper($106/month depreciation). Waiting for the tumble to buy something more reliable.
      Both other cars have over $100k on the odometer, too. Will be upgrading three times when the bottom falls out.

  20. Willy2 says:

    – It seems that in all 3 big car markets (US, Europe & China) all have seen car sales slump.


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