Ford Motors Restructure of Workforce

“Ford Plans to Gut Workforce, Cut Thousands” – 24/7 Wall St. (247wallst.com), Douglas A. McIntyre

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.

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. 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.