Ford Motor Co. has recently held meetings with manufacturer’s senior management to discuss ways to cut costs. Jim Hackett, CEO of Ford Motor Co., is working closely with manufacturers of other car companies to create joint ventures that can save them money in the future. The tariffs set up by President Trump are likely to cost Ford about $1 billion. Hackett is currently working on his goal of lowering expenses by $11 billion. One of the easiest ways to do that is to cut jobs. While rough estimates claim thousands are going to be affected, it could be in the tens of thousands to reach his budget-cut design.
Ford’s ventures focus on working with India’s Mahindra & Mahindra, as well as Volkswagen. Their mutual goal is to cut factory costs and product development. Hackett has done the math and realizes that layoffs usually come when manufacturing efficiency falters. He’s noticed, and so has the CEOs of Volkswagen and India’s Mahindra & Mahindra, that they aren’t experiencing any sales increase, but they still have the same expenses. Therefore, his only recourse is to cut significant numbers of people to prevent their costs from soaring even more.
The tariffs are going to cost Ford millions of dollars to purchase their metal, and the company has no other way to offset those costs.
Present and Future
Ford is currently trapped between their present situation and their hopes for the future. While many carmakers want things to stay the same, the future is full of autonomous and electric cars.
The problem Hackett and many other CEOs have is that their brand isn’t in the race to control the future of vehicles. Ford (and many other carmakers) are up against high-tech companies and start-ups who are all moving in the same direction. Companies like Alphabet’s Waymo have already created self-driving vehicles and are working on patenting them. It could take Ford decades to catch up to that technology and advancement. The trouble is that once they catch up, things are already going to be changing in the marketplace.
Even Wall Street doesn’t believe that Hackett can be successful with his current course of action. Ford shares are already down by more than 25 percent for the year and aren’t expected to rise anytime soon. Hackett now has no other place to turn, as most large companies with cost issues focus on dropping worker headcounts as a way to save money.