Ford Plans to Layoff Its Labor Workforce, Putting More Than 70,000 Employees At Stake!
As if Tesla’s controversies weren’t enough to shake the whole car industry, thousands of Ford fans, customers, and investors all over the world were shocked when the company announced its plan to cut down their salaried workforce.
The Controversial Announcement
Last Friday, Ford announced its plan to layoff its salaried workers, putting over 70,000 employees at stake to increase the company’s efficiency. While the said number is just an estimation, the company expects to give out more details by the first half of 2019.
This, after Ford’s shares, fall more than 1% at $9.12. The latest downward trend amounted to a total of 27% stock downfall of Ford since the beginning of 2018. Hackett says it’s one of the strategies he needs to implement during his time to protect the company from going bankrupt.
Streamlining the Costs
The restructuring plan announcement came after a few analysts and investors were pressing the recently-appointed CEO for more details regarding his plans and strategies to revitalize and salvage the company. Ever since the year 2018 started, its shares and profit have been sliding and trailing behind General Motors Co, Tesla, and others, whose performances remained steadfast and strong.
Ever since Mr. Hackett took the job last May 2017, he emphasized his desire to improve Ford’s overall fitness by streamlining the process of how engineers and employees build and reinvent cars while saving more money in the process. After the layoff announcements, the analysts suspect Hackett plans to achieve his financial fitness plan by buyouts. The company targets to cut an astounding $25.5 billion in costs by 2022.
The Restructuring Process
According to Ford, they plan to cut more than $11 billion of restructuring costs for the next 3-5 years. The analysts suspect most of these cuts would come from overseas businesses which have struggled for years, particularly in the European and South American continents.
According to Ford’s spokeswoman, the company will let the workers know in advance in case they’re included in the layoffs, as well as their other plans of reorganization since they want to be transparent with their workers.
Furthermore, each management layer will be tasked to restructure their own group to allow for an easier transition process. According to Morningstar Inc analyst David Whiston, the early announcement was made to condition the minds of Ford’s employees and ease their shock of an impending job loss. Or if not, Ford hopes that some people may opt to resign and leave early instead of waiting for the layoff.
Ford’s Performance Over the Years
Prior to Hackett’s management, the company already underwent a massive restructuring process under former CEO Alan Mulally. The costs have increased in the past few years as they increased their workforce especially in critical areas like engineering, research, and development.
The company also spent an astounding $8 billion budget for engineering and RD, outpacing GM’s budget by 10%. Despite the bigger budget, GM’s cars sell more in the global market compared to Ford. While Ford offered buyouts in the year 2017 to layoff 1,400 jobs, Hackett pushed the deeper cuts and layoffs since taking over the company.
Ford also says they’ll be targeting areas and most profitable business lines, specifically the sports-utility vehicles and notable trucks in North America to use their funds and increase their sales and profits effectively.
During the company’s second-quarter conference call with investors and analysts, Adam Jonas, the analyst of Morgan Stanley criticized Hackett and his new management for not spelling out their specific moves to boost Ford’s performance and pull its sales and profits back up. He even questioned whether or not Mr. Hackett has the ability to salvage Ford and if he’s still expected to retain his job when the company is ready to announce their restructuring plan.
More in Business
This Is The Secret To Not Get Tricked By Deferred Credit Cards
The holidays are making its way which is why more and more people are starting to get the best deals not...December 2, 2018
Refinancing Mortgage Application Rates Hit It’s Lowest In Almost Two Decades
Mortgage applications continue to weaken as the rates go up once more. This has been affecting the affordability as well as...December 2, 2018
Amazon Workers Say They’ve Had Enough Of Inhumane Treatment
As one of the biggest companies in the world, Amazon has a name to protect. With thousands of workers working...December 1, 2018
How Should You Request For A Job Reference?
When asking for a reference, it is essential to note that the person whom you ask and the manner in which...December 1, 2018
Here’s What To Do With Your Healthcare Insurance Plan After Divorce
It may begin as something so beautiful and magical but not every marriage ends in happily ever after, unfortunately only a...December 1, 2018
Find Out The Credit Score Requirement For Federal And Private Student Loans
Federal Loans Generally, the necessary credit score before you can get any student loan depends majorly on whether the loan is...November 30, 2018
How To Teach Your Kids Saving And Spending Lessons
Learning Spending And Saving Habits The chief executive officer of RoosterMoney, William Carmichael, said that parents are having more difficulties holding...November 30, 2018
5 Major Signs It’s Time For You To Say Goodbye To Your Job
Young people usually think that having a job when they get older would mean that they will be able to buy...November 29, 2018
Home Owner? Here’s How To Know If Your Fire Insurance Policy Is Sufficient
According to the founder and CEO of Lionshare Partners, Chris Jackson, a lot of insurers have made consumers’ ability to get...November 29, 2018