And It Begins - Ford to Cut 10% of Workforce

[davewindsor]

I said not enough of them. Otherwise, Ford's profits wouldn't be declining and they wouldn't be considering layoffs [[something a growing business with growing demand for their products doesn't do).

Did you just say a manufacturing company in 2017 "a growing business with growing demand for their products doesn't" consider layoffs? Are you living in communist Cuba? That's such a bad argument. Have you ever heard of automation over the past several decades taking away jobs in most sectors? New technology allows companies to do more with less people. Ford has made huge investments in technology and continues to do so. BTW Ford hired 15,000 factory workers between 2011 and 2015. With constantly improving technology, you don't need all those extra workers.

I
Several consecutive months of sales decline [[aside from the erreneous fleet dumping that took place in December to achieve another record year in sales), 100+ day inventories, a decline in SUV / Pickup Truck / CUV sales and declining production industry-wide are all pretty good signs, I'd say.

Proof?

I
A year old article from the Motley Fool?

Yeah, how about a more recent article from a more reliable source...
http://www.wbrc.com/story/35134791/d...at-8-year-high

https://www.bloomberg.com/news/artic...l-into-default

But, it's relevent unlke yours. Who gives a crap about whether Ally Financial does more subprime financing auto loans or has more subprime defaults. Why would it impact Ford if Ford can offer inhouse financing through Ford credit? Ford's inhouse financing also has much lower default rates. Your articles are not referencing GM and Ford's financing arms like mine did, but auto loan lenders as a whole.

FED fund rates were at all-time lows back in December 2015 [[0.25%). Since then, they're risen to 1%. Also, Janet Yellen has signaled that she intends to raise the rates further to around 2-3% between now and next year.

While historically, these are still fairly low interest rates, the fact is an economy that's only growing at less than 2% with virtually no wage growth and declining money velocity can't handle too much of a increase in borrowing costs.

The federal government is already running huge deficits. So, they are going to double to triple it to 3% to make it even more out of control. There's a difference between a threat and actually doing it. It won't happen.

I
The all-time low for oil prices was back in the winter of 2015-2016, when they fell to around $25/barrel and gas prices were around $1 in majority of the country. While $48/barrel is still fairly low, the fact is with OPEC extending its production cuts and the supply glut slowly balancing out, the trend in oil prices is upward. Once those prices at the pump start hitting $3/gallon [[and they're not far from that now), that will really turn consumers off from those highly profitable trucks that they've been buying like candy.

I highly doubt it with Iran entering the oil market and Trump allowing new offshore oil drilling that previous administrations adamantly refused. Even if they did, consumers would still buy Ford trucks because they have significantly improved the fuel economy of their trucks. Do you know the 2.3L Ecoboost F150 has a tow rating of over 10,000lbs? Chrysler needs a 5.7L Hemi 1500 to do the same. So, it would be more market share for Ford anyway.

I

I didn't say any of that. I merely said you can't extrapolate future trends based solely on what happened in the past [[that's a textbook example of normalcy bias).

It's not a bias, but a prediction that's historically based. Have you ever heard the saying "History repeats itself"? If you ignore history, it will repeat itself. Giving into too many union demands is what got GM and Chrysler into backruptcy requiring taxpayer bailout loans in 2009. Chrysler keeps making the same mistake. Ford, wisely so, is preempting upcoming union talks by announcing layoffs, even though they are still quite profitable.

[Cincinnati_Kid]

313WX, I believe it's your serve.

[313WX]

Ok, so where to start...

Did you just say a manufacturing company in 2017 "a growing business with growing demand for their products doesn't" consider layoffs? Are you living in communist Cuba?

Companies [[regardless of the industry) create and eliminate jobs based on growing or shrinking consumer demand for their products. That's a basic economic concept and doesn't have anything to do with "Communist Cuba."

Have you ever heard of automation over the past several decades taking away jobs in most sectors? New technology allows companies to do more with less people. Ford has made huge investments in technology and continues to do so. BTW Ford hired 15,000 factory workers between 2011 and 2015. With constantly improving technology, you don't need all those extra workers.

What does automation have to do with the cuts that Ford announced?

Admittingly, I don't work for Ford, so I can't say this with 100% certainty. However, I'd say it's very unlikely that the 20,000 salaried workers who will soon be out of work are being replaced by robots, as technology has not become sophisticated enough to the point that computers can do the jobs of Buyers, Sales Managers, Financial Analysts, Recruiters, etc.

Furthermore, they also said these cuts aren't going to affect the hourly workers [[for now that is).

Proof?

Sure!

US Car Sales Down in April, Compounding Several Months of Declines


http://www.news18.com/news/auto/us-c...s-1390415.html

GM has a huge supply of unsold cars

https://www.msn.com/en-us/money/comp...ars/ar-AAofFfZ

MIDSIZE PICKUP TRUCK SALES CONTINUE TO DECLINE IN APRIL 2017 [SALES REPORT]


http://www.tfltruck.com/2017/05/mids...-sales-report/

Domestic Auto Production

https://fred.stlouisfed.org/series/DAUPSA

But, it's relevent unlke yours. Who gives a crap about whether Ally Financial does more subprime financing auto loans or has more subprime defaults. Why would it impact Ford if Ford can offer inhouse financing through Ford credit? Ford's inhouse financing also has much lower default rates. Your articles are not referencing GM and Ford's financing arms like mine did, but auto loan lenders as a whole.

When subprime auto loans make up 20% of the business [[or to put another way, almost 4 million sales), the growing rate of those defaults *should* be a very big deal for everyone in the industry [[not just specifically to Ford or GM or whoever else). It also symbolizes a deeper structural problem with the US economy, that being people are flat broke [[due to being buried under all of the debt they accumulated during the 80s/90s/2000s credit binge) and can't no longer afford these vehicles under normal lending standards.

BTW, last I heard, I don't think Ford or GM dealers are discriminatory when it comes to getting a buyer into the car, whether GM Financial / Ford Credit gives them a loan or Ally Financial.

The federal government is already running huge deficits. So, they are going to double to triple it to 3% to make it even more out of control. There's a difference between a threat and actually doing it. It won't happen.

As of the 2017 budget that Obama put into place, the federal government's budget deficit actually continues to decline from the peak of $1.4 trillion dollars that Bush left behind in his last year. But even them, rising interest rates has no direct impact on the deficit [[maybe you're thinking of US national debt servicing, which is different?).

Besides, at this point the FED has no choice but to raise the interest rates as much as they can in order to have at least some cushion to lower rates again when the next severe recession arrives soon.

I highly doubt it with Iran entering the oil market and Trump allowing new offshore oil drilling that previous administrations adamantly refused.

Both of those factors have already been priced into the market.

BTW, as far as Iranian oil output, don't count on them to cap the rising oil prices. They've already agreed to cap / cut their output as a part of the OPEC deal, despite Obama lifting their sanctions. The fact is, like the other Arab / Muslim nations, they simply can't make money with oil prices less than $70/barrel.

Even if they did, consumers would still buy Ford trucks because they have significantly improved the fuel economy of their trucks. Do you know the 2.3L Ecoboost F150 has a tow rating of over 10,000lbs? Chrysler needs a 5.7L Hemi 1500 to do the same. So, it would be more market share for Ford anyway.

Please spare me from the shameless commercial.

All of the trucks AND cars sold by every other automaker in the US are becoming just as "fuel efficient" as Ford's, thanks to regulations put in place by the Obama administration.

None of this changes the fact that Sedans / Compact Cars, just for the simple fact that they still have much smaller tanks, are significantly cheaper to fill up [[and always will be significantly cheaper to fill up) than trucks.

Have you ever heard the saying "History repeats itself"?

If you ignore history, it will repeat itself.

Fair enough. I'd swear your post was yanked out of a 2001 time warp, and I think we all remember the blood bath that gradually developed in the subsequent years.

Giving into too many union demands is what got GM and Chrysler into backruptcy requiring taxpayer bailout loans in 2009.

Who mentioned anything about the unions? I didn't and Ford certainly didn't in their recent cuts that were announced.

Chrysler keeps making the same mistake.

FCA's definitely a clusterfuck [[even their own CEO admits it). No disagreeement with you there.

Ford, wisely so, is preempting upcoming union talks by announcing layoffs...

Again, who mentioned anything about unions?

Ford and the UAW just reached an agreement that went into effect last year. Negotiations won't take place again for another 2-3 years. So it's a stretch at best to assume the layoffs of salaried workers that were recently announced have anything to do with *potential* union talks so far into the future [[versus the actual reasons they gave, which was to cut costs in anticipation of the pending downturn).

even though they are still quite profitable.

But as stated before, clearly not profitable enough.

[313WX]

BTW, I love how GM was slick enough to have this buried inside an unrelated local article from a newspaper in relatively tiny Minneapolis...

http://www.startribune.com/ford-to-c...sia/422743684/

Last month, General Motors Co. Chief Financial Officer Chuck Stevens said GM was considering cuts to its white collar staff in order to rein in costs.

[Danny]

The auto industry has always been cyclical. Good times of year/bad time of year and good years/bad years. Regular work/crash overtime work/regular work/layoff rinse/repeat.

That is why I don't want to work in any automation alley.

[Lowell]

Wow! Mark Fields to be Fired tomorrow.

https://www.forbes.com/sites/joannmu.../#6f8446a379dc

[fanniemae]

Being a lifelong Michigander, it pains me to see Ford or GM struggling. The auto work force such a big part of our economy. I have noticed a lot more foreign cars being driven by the younger crowd. That is what they can afford usually. Kia comes to mind. Not sure about Kia's quality, but there are a lot rolling around here.

[Cincinnati_Kid]

Being a lifelong Michigander, it pains me to see Ford or GM struggling. The auto work force such a big part of our economy. I have noticed a lot more foreign cars being driven by the younger crowd. That is what they can afford usually. Kia comes to mind. Not sure about Kia's quality, but there are a lot rolling around here.

Don't forget Hyundai, I see a lot of those as well. They must be undercutting the Big 3, although I've heard Kia's quality metrics are very good.