Ford Is Reportedly Slashing 10 Percent Of Its Workforce

We may earn a commission from links on this page.

1st Gear: I Mean, We’ve Peaked ... Right?

A downturn, a cooling-off period, a sales plateau—whatever you want to call it, I think the latest from Ford shows it’s pretty safe to say we’re moving quickly toward it. The Wall Street Journal is reporting the automaker is set to reduce its workforce by roughly 10 percent, a decision that could be firmed up as early as this week:

The move comes as Ford targets $3 billion in cost reductions for 2017, a plan intended to improve profitability in 2018 even as U.S. auto sales plateau. Ford’s share price has suffered during Mr. Fields’s three-year tenure, and the company’s market value has slipped far behind those of Tesla Inc. and General Motors Co.

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 has 200,000 employees globally, half of which work in North America.

So, let’s see, 200,000 people. If math is our guiding light, 10 percent means Ford’s looking to shed some 20,000 people. And since roughly half of Ford’s workforce is in the U.S., up to 10,000 American jobs. A lot of pay stubs. And while the company didn’t confirm or deny the news to the WSJ, it said “reducing costs and becoming as lean as efficient as possible” is key to Ford’s growth.


But to be clear, for now, Ford said it hasn’t announced any new “people efficiency” decision, which is Ford’s dystopian word choice.

The way the industry’s shaping up this year, I think more people efficiency actions are forthcoming.


2nd Gear: Trump’s Infrastructure Plan Is Coming Any Day Now

We’ve talked briefly about the proposed $1 trillion infrastructure plan from the Trump administration, a privatization-happy outline that would lean heavily on private investment. Our new transportation secretary, Elaine Chao, has been saying for weeks that a finalized proposal is shaping up, but we’re still waiting. On Monday, Chao offered some further clarity and said it’ll come in the “next several weeks.”


But the specifics Chao described Monday differ from what was originally proposed. As The Detroit News reports, the $1 trillion figure is actually more like $200 billion in federal spending; the remainder coming from private companies. That should be a welcome, heartwarming development for anyone who likes the idea of private entities having full control over how a road generates revenue. From the News:

Speaking at an event in Washington, Chao said the transportation bill will include $200 billion in federal spending that will “be used to leverage $1 trillion in infrastructure investment over the next 10 years.” The remainder of the money would come from private companies that would enter into partnerships with local and state governments to provide financing that is necessary to complete expensive construction projects in exchange for revenue that would be generated by things such as road tolls or rail fares.

The so-called “public-private partnerships” have been controversial because they typically involve states turning over operations and maintenance of public infrastructure to private companies that are seeking to make big profits.

Chao said Monday “a key feature of the infrastructure plan will be unleashing the billions of dollars in private capital available for investment in infrastructure.”


It’s still unclear if she understands how autonomous vehicles function.

3rd Gear: Tesla Lost A Buddy

Tesla, AKA The Future, has a busy few months ahead of itself with the planned production of its Model 3 sedan set to begin. But the future doesn’t look as bright, according to one of its longtime faithful Wall Street analysts, who now says Tesla’s going to burn through way more cash than expected. Bloomberg has the story:

Adam Jonas, Morgan Stanley’s top auto analyst, has been one of the biggest advocates for Tesla stock, envisioning offerings of a ride-for-hire service that could double the value of the company. He now sees operating losses continuing through next year and estimates the company will consume $3.1 billion of cash this year, compared with an earlier estimate of $2.3 billion.

“We expect much larger and more well capitalized competitors to unveil strategies that directly address sustainable transport and mobility,” Jonas wrote in a note to clients. The expansion by Alphabet Inc.’s Waymo of its self-driving Chrysler Pacifica minivan fleet and Apple Inc.’s plans to test autonomous cars in California amount to “an assault” of the market by large tech firms, he said.


Expectedly, Tesla’s stock took a nosedive upon the word from Jonas. Business Insider says Jonas forecasts that Tesla will only deliver 2,000 vehicles this year, while selling 90,000 in 2018—far less than Tesla’s own expectations to sell 500,000 vehicles by next year.

Given the importance of Tesla’s $35,000 vehicle to the company’s future, if Jonas is right, that wouldn’t be a decent look.


4th Gear: GM’s In Its Suppliers’ Good Graces

I’m sure it wasn’t the case several years back, but General Motors earned high honors this week from suppliers, according to Automotive News.

According to the just-released Henke survey, which evaluates the purchasing policies of North America’s six biggest automakers, suppliers ranked General Motors just behind Toyota and Honda.


GM’s ascent and Nissan’s decline have gained momentum over the past two years, according to the survey.

GM “is making really great strides in their overall relations,” said John Henke, author of the survey and president of Planning Perspectives Inc. of Rochester, Mich. “The suppliers are saying, “We can really do a great job.’”


As recent as 2015, Automotive News reports, GM was tied for last with FCA, which is probably the last time Sergio had a partner for FCA. (ba dum tss)

5th Gear: PSA And Renault Can’t Get In The U.S., So They’re Into Iran

Iran has an election this week, and current president Hassan Rouhani is banking on the country’s auto market, which is, as Reuters puts it, “still off-limits to foreign rivals fearful of sanctions under Donald Trump’s administration.” Particularly, French automakers PSA and Renault are driving investment in Iran:

The French investment has been seized upon by Iranian President Hassan Rouhani, who is seeking re-election this week, as evidence that his pursuit of a nuclear detente and attempts to attract foreign money will pay off for the economy.

PSA - the maker of Peugeots and Citroens - and Renault have pushed hard into Iran since its 2015 deal with world powers that saw international sanctions lifted in return for curbs on Tehran’s nuclear activities. PSA has signed production deals worth 700 million euros ($768 million), while Renault has announced a new plant investment to increase its production capacity to 350,000 vehicles a year.


Since both lack any manufacturing or sales operations in the U.S., Reuters reports, it doesn’t have to worry about violating U.S. sanctions with the country, something that could be extended under Iran nuclear deal hater Trump.

That’s not to say automakers don’t want to get into Iran. Reuters, citing anonymous industry sources, said Volkswagen and BMW have put plans for the country on hold. Iran’s the place to be. Who’d of thought.


Reverse: And It’s Still Around Today


Neutral: This Road Is Not Owned By You™

Roads are trash everywhere, but the government’s not funded properly to maintain them. Are you into handing the reins over to a private entity?