Trump’s tariffs have already cost Ford around a billion dollars and the company is now contemplating laying of employees as a result of the cut in production of certain models. Te company has around 70,000 employees in white collar positions and is now planning to go in for a revamp and have a workforce that is leaner, and empowering employees to take decisions easily without having to contend with many layers.
The company has not made any announcements about the number of jobs that are likely to be cut . The CFO of Ford, Bob Shanks reported that the reorganization is not only about cutting costs but to bring about a business process transformation. In his words the company was going through a process of becoming more fit. In this context it is important to check a report by Morgan Stanley that predicted a cut in the workforce of Ford to the extent of almost 12 percent. In other words Ford’s global workforce of 202,000 is likely to be pruned by almost 24,000. This level of downsizing is not new in business, as per the analysts of Morgan Stanley.
Ford has launched a massive reorganization plan to the tune of $25.5 billion, and part of this plan includes cutting down expenses to the tune of 6 billion. Jim Hackett, the CEO of Ford, in his earlier position as head at Steelcase had slashed around 12,000 jobs at Steelcase, and his reputation built expectations that he would launch a downsizing operation quickly. However, the massive cutback has not yet materialized. This new downsizing will be the first, when it happens.
From being a pioneer, Ford is now much behind the competition with a present average of 32.8 vehicles for every employee. The effect of reorganization and downsizing will have an impact on the operations, though it is still unclear how exactly the changes are likely to occur.
The company had sounded out warnings about the impact of the US President’s tariffs. The company has suffered losses to the tune of 1 billion dollars and additionally, the trade policies are also likely to hang as a dangerous Damocles sword over the reorganization.
From the time that Trump began his election campaign as a presidential nominee, he had actually warned that he would impose tariffs on Ford’s vehicles that were planned to be imported from Mexico. Consequently, Ford scrapped the whole idea of importing vehicles from Mexico, but instead of bringing the production to the US, the company moved the production to China.
On its part, Ford planned to pull out completely from the US passenger car market, and intended to focus more on SUVs and CUVs in addition to the pickups. The plan was to do away with the Focus models. This means that the company is more or less relying on light trucks that that have given the company most of its profits last year. The downsizing will most likely determine who the company will fare in the future.