Trump's tariffs have already cost Ford $ 1 billion; now he's planning layoffs

Ford will reduce its white-collar workforce by 70,000 people, what it calls a "redesign" of its staff to lighten its staff, reduce its number of levels and offer more decision-making power to its employees, announced the society.

The number of jobs deleted is unknown at this stage.

"Much of the (reorganization) is about making different strategy choices," Shannon, CFO, Shannon told NBC News, adding that the goal was not just to reduce expenses, but improve the "physical condition" of society.

However, according to a recent report by Morgan Stanley, "a global workforce reduction of about 12%," or 24,000 of Ford's 202,000 employees worldwide. "A reduction of this magnitude is not unprecedented in the automotive sector," analysts wrote in the investment note.

This decision is part of Ford's $ 25.5 billion reorganization plan, which includes a $ 6 billion reduction in capital gains. According to some observers, Jim Hackett, Ford's CEO, who had removed more than 12,000 positions at the head of Steelcase's office furniture maker, is expected to make cuts even sooner. Hackett took over from Mark Fields, a Ford veteran, when he was ousted from the company in May 2017.

Ford is lagging behind the competition and sells 32.8 anemic vehicles per employee. GM, its longtime rival, produces 52.7 vehicles per employee. But it is not clear how increased efficiency will affect potential job cuts.

Ford has already warned that President Donald Trump's auto tariffs had a $ 1 billion impact on the company and that the president's trade policy threatened to disrupt Ford's ongoing reorganization, Shanks told NBC News.

Trump and Ford argue well ahead of the 2016 elections, when the presidential candidate threatened to impose heavy tariffs on vehicles that Ford was planning to import from a factory in Mexico. The automaker finally rejected this plan, but rather than returning production to the United States, he decided to transfer it to China.

Earlier this year, Ford had announced that it would almost pull out of the US passenger car market, citing the rapid transfer of demand for sedans, coupes and wagons to SUVs, LCVs and vans. He was going to eliminate the classic Focus models in favor of a crossover, Active version. Now, with the abandonment of this model, the Mustang, still popular, will remain the latest model of passenger car in the range. Ford will rest almost entirely in the future on light trucks – like the F Series vans that have generated nearly all of its profits.

Ironically, Ford may need to reduce production of the Mustang and some other models – which could reduce jobs in the US – because of China's tariffs on US-made vehicles in a exaggerated commercial war. The Mustang was one of the most popular American vehicles sold in this country.

In Latin America, Europe, Asia-Pacific and the Middle East, Ford has experienced a haemorrhage of about $ 800 million in the first half of this year. The automaker was struggling even in China, the largest auto market in the world, where key competitors such as General Motors and Volkswagen are generating significant profits.

Given the strength of Ford's operations in North America, the general consensus is that the domestic market will be less affected than that of Europe or Latin America, but the impact could be significant.

Meanwhile, Europe could see product reductions similar to those described for the United States. According to reports, several models of passenger cars could be abandoned, including the Mondeo, the European version of the Fusion, about to disappear from American showrooms. Ford denied such cutbacks and said it planned to sell or enter into a partnership with a foreign player to fix its fragile operations in Latin America.

That said, "we see the need to collaborate much more than in the past," said Shanks, highlighting agreements with automakers such as Mahindra and Mahindra Indians, German Volkswagen, as well as China's Baidu technology giant. and the Amazon of Silicon Valley.

The last two reconciliations show that Ford's reorganization is not limited to traditional business lines. Hackett is a strong supporter of the projects his predecessor has launched to become a "mobility company." The new CEO is committed to providing nearly $ 1 billion to set up a new campus in the booming neighborhood of Corktown, Detroit, to develop technology for autonomous vehicles and other mobility alternatives, as well as electrified vehicles.

Morgan Stanley recently wrote: "As in most cases of Ford's investment thesis, it is" a telling story of restructuring and realignment of capital. external validation. "

Considering that many aspects of the Ford 2.0 strategy could take several years to materialize, investors could wait a long time.