Ford Motors Restructure of Workforce
“Ford Plans to Gut Workforce, Cut Thousands” – 24/7 Wall St. (247wallst.com), Douglas A. McIntyre, July 21, 2022.
Gasoline or electric is the question for product. Ford could take a gradual change to electric from gasoline. It does not appear to be in the cards for Ford CEO Jim Farley. The Ford CEO wants to get a jump on technology and be a leader in improving the environment improve Ford margins according to “24/7 Wall St. And they are going to do this how? Ford Motor Co. (NYSE: F) will cut either 4,000 or 8,000 salaried workers according to the Wall Street Journal. This cut is “part” of a plan to eliminate “$3 billion in annual costs by 2026.” Costs deriving from a Dearborn-based salaried workforce.
Ford cutbacks could also be tied to preparation of an impending recession forthcoming in the next few months. “Car sales nosedive in a recession. Ford and other companies have also had short supplies of new cars like the reproduction Mustang body for months because of supply chain problems.”
Let me remind you, much of the supply chain issues rest with the OEMs. Their failure to maintain a minimum of replenishment orders with their supply base while operating on a minimum safety stock less than manufacturing time and transit time rests with them as there are many vehicles being shipped to dealerships all over the world including the Ford dealership near orange county.
This scenario is reminiscent of 2009/10 after Wall Street blew up the economy with their gambling using funds they never had and expected to have. Car sales dropped, plants closed, inventory orders were nonexistent, etc. As this unfolded, many turned to alternative investments and pastimes, with a notable increase in interest in the best online casinos, seeking both entertainment and potential financial relief. The OEMs cut their experienced salaried staffs by offering early retirements with nice bonuses.
No one maintained orders and when the economy started up again, production lagged demand. Meetings were held, questions asked, suppliers to the Tiers were on the line to no avail.
One supplier conversation with Panasonic Semiconductor (Japanese management) in the Philippines, ourselves, and a host of Chrysler execs (including the head of Purchasing) was particularly memorable. After ten minutes of conversation, the Japanese manager in charge told the Chrysler VP they should give us a portion of their inventory to cover production at our plant (not a huge amount).
It was difficult not to laugh as Chrysler caused the shortage, not us.
Is cutting your workforce a wise move? Only if you are sure the product is going to happen and if you have a proven prototype in hand. Still issues with refueling especially in mountainous areas from my understanding. Long refueling times and hours of usage can be less.
basically the supply chain problem is because of just in time manufacturing, which requires that parts arrive just in time to be used for production, and parts are stored . Toyota invented this, and just about every other manufacturer adopted it. it also seems that part of the OEMS problem is they got used to low price for parts, and now they cant get that any more (seems like lots of providers either went bust, or moved on to a new market)
also pretty much the cause of ‘recession’, since prices of vehicles, and just about every other product, have skyrocketed. course how will be raising unemployment and interest rates address a supply crash (caused by a pandemic)? seems just a way to punish workers not in the top %.001
dw:
I have Yasuhiro Monden’s Toyota’s Production System (paperback) in my library of manufacturing books. The OEMs may have thought they were using JIT outside of their facility, but their ordering practices and the location of their supplies could not and did not align with the practice of JIT. Ford, Chrysler, and GM’s version of JIT was far different than Toyota’s.
I appreciate your explanation and my reply is not meant to discourage you. After 40-something years in supply chain domestically and globally running purchasing, production planning, and managing a $250 million / year warehouse for Yazaki, I do know exactly what you are explaining. If you really want to be successful, spend time at your suppliers and begin to learn how they manufacture their parts. “Go-See”
Finally, suppliers going out of business or changing what they sell is the result of OEMs failing to do exactly what I discussed. It parts take 10 weeks to make they would claim responsibility for only six weeks. That liability for the remainder of the inventory is costly if you can not get suppliers to match delivery.
I was successful because I knew the supplier process to make parts. Inventory turned 20 -23 times a year. Thank you for your comment.
My first guess is that Ford is trying to get rid of a good chunk of its senior workforce, the more expensive and experienced part. They’re dumping a lot of people, but it’s not like they are giving up on the gasoline vehicle market and there is a lot of engineering overlap between electric and gasoline powered vehicles. I suppose this will position them for the anticipated recession, but it isn’t going to position them for the ensuing recovery. (Of course, they could be assuming another very long recovery.)
Kalesburg
They will use the next three years to transition and the move to electric vehicles will be the excuse. Like I said, all three dumped people with decades of time in 2009 using the 2008 blowup by Wall Street as an excuse. They were realigning their workforce. The recovery after 2008 went on for several years. It was nowhere near as fast as what we are seeing today with the labor force. You also can’t fix supply chain driven problem inflation by raising interest rates (FED).
And business is responsible for driving much of this.
i suppose Ford could be just getting rid of the dinobabies as one company put it (with the add on that they usually make the most money too), then of course when they leave, they will have lost lots of experience with doing the jobs. course that company is getting sued, as targeting older workers is illegal.
and there are lots of things that EVs and ICE vehicles have in common, like tires, 12 volt batteries (for now anyway), suspensions, bodies, and more. the biggest change really engine, transmission. another big change is packaging of the vehicle.
all of this to fix a problem that it wont fix? its like trying to fix a water leak with a hammer?
Culling the herd.
Many of the Chrysler people I knew waited for the right package. Since I worked for the Tier1s, I got nothing other than severance.
Automotive is always late to the game. Their practice is to slaughter the peasants.
8,000 workers are potentially about to lose their jobs
The Verge – July 22
Ford is eyeing major cuts to its workforce in the midst of a shift to electric vehicles. According to a recent report in Bloomberg, the Blue Oval is gearing up to lay off 8,000 salaried workers — about a quarter of its workforce in the US — as it aims to reduce $3 billion in operational costs by 2026.
The cuts will be coming from Ford Blue, the company’s legacy internal combustion engine business. Earlier this year, Ford split itself into two entities, with Ford Blue covering ICE vehicles and Ford Model E focused on electric vehicles and software projects. At the time, Ford said that Ford Blue would generate the revenue that would help power Ford Model E to develop new and innovative products. …
Ford will reportedly slash a quarter of its workforce to fuel EV expansion
is 8000 jobs lost a major cut?…seems like Ford has less than 60,000 now days, so maybe it is for them? no longer a major employer any more
dw:
Like retooling a factory for a different model of auto, this may be a move to retool manpower (salaried) for a different direction. It is interesting the lower levels are changed and yet they place little value in them. Throwaways. (edited)
It would appear the layoffs are (mostly?) coming from plants that build internal combustion engines. The new Ford lineup is not going to use such engines.
So, what to do?
Harry
They are not talking about hourly labor on the line. Ford is looking at salaried people. It is easier to dispose of them than union personnel. That may come later when they decide which plants to keep or shutdown.
They are talking about laying off salaried workers who will apparently be redundant in internal engine mfg plants which are to be less utilized or closed, it seems. It’s not really surprising that they would be non-union, if that is the case.
“According to Bloomburg reporting, the job cuts are part of the automaker’s effort to liberate $3 billion of corporate operational costs from the its internal combustion engine business. The company would then transfer savings garnered from the layoffs to build electric Ford F-150 Lightning and Ranger pickups at Ford’s Michigan Assembly Plant in Wayne, a new Mustang coupe at Flat Rock Assembly Plant, and a $35 million Ford Customer Service Division packaging facility in Monroe.” Layoffs.
In 2008 Ford, Chrysler, and GM all did the expunging of corporate. Ford will layoff a bunch, give them packages according to years and level of employment. As they sort things out, they will call some of the back to fill the gaps. The middle and upper management types do not know how to run the systems at Ford, etc. So they lay some off and then call some of them back.
This is mostly Dearborn/Detroit cuts and maybe in their Blue Oval facility down south too in what they call the Ford Blue unit that makes gas-powered vehicles
This is like a rerun of 2008-10 with the big three. The other two will probably follow.
one does wonder why their first cost cutting ‘solution’ is cutting workers. course that is US business 101. that and eliminating workers seems to always be the first solution. do wonder, did the workers make the choices of what is to be done? or was that somewhat higher than those getting the axe?
dw
In 1980ish, I was a Production and Inventory Control Manager for a major manufacturing company planning and scheduling production and inventory for hydraulic and air cylinders. The recession started and I asked the plant manager if he would build components which were short runs as opposed to the longer production runs. He said no, keep scheduling the longer runs.
Demand was decreasing and I could not do it. So, I did not. Instead, we reviewed our orders and we started to cancel them because demand disappeared or was no longer needed in the short term. For a year, we kept that up with rescheduling or canceling orders. The division controller stopped by and asked me what I was doing. I asked why?
In the last 14 months, we broke even 8 months, were profitable 3 months, and lost money 3 months. They attributed it to our efforts at managing production which resulted in less inventory of components and purchases of material. Parker Hannifin of Desplaines, IL weathered 14 months of few layoffs until we could do no more. And then the layoffs of direct labor in the plant started.
In the end I was laid off with good references and two weeks of severance after 5 years. A pittance for sure for what I did and also after implementing a MRPII System. Ons sales-person needed manufacturing experience and they gave him my job. He was scared sh*tless of me. I said nothing to him. My boss said he would never forget what I did for the company by implementing the systems. I just looked at him.
In reality I paid for myself and my people by reducing costs. We were still a part of Overhead which included building, etc. The people on the floor making the parts were Direct Labor. The parts and the raw steel tube and bars inventory and the planned purchases (which we reduced) were Materials.
Whacking Direct Labor makes little sense as it is <10% of the cost of manufacturing. Materials is generally 50+%. And the rest is Overhead. Watching inventory and minimizing it makes sense as long as you cover lead times.
The plant was basically dead and there was no work.t made little sense to build oodles of inventory beyond what raw material we had. I made sure we built out the weird parts we would need when demand picked up on the popular parts.
I was middle management and paid for myself.
Think this way, "what can I do to minimize costs?"
Culling the herd.
Many of the Chrysler people I knew waited for the right package. Since I worked for the Tier1s, I got nothing other than severance.
Automotive is always late to the game. Their practice is to slaughter the peasants.
not really sure this will work out as Ford hopes. while EVs have different propulsion systems than ICE vehicles have. but for the most part have lots other parts in common. but design is different. their MACH-E is more of a rework of an ICE SUV than a clean sheet EV SUV. its pretty good, but that F150 lightning is a better rework of an ICE vehicle, and a better fit as an EV, with lots of the ICEs queues