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Meanwhile, GM's been on a hiring freeze for non-Engineering positions since the beginning of the year [[not including regions they've siphoned off). I imagine they will begin reductions soon as well...
I suppose things were "fun" while they lasted
Ford considers cost cuts, reducing workforce
http://www.detroitnews.com/story/bus...rce/101735754/
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.
Correct. They predicted early this year, that sales would start to slow. Probably the beginning of a downturn. Most bought a new car of truck, the past 2-3 years.Quote:
Originally Posted by Hermod
Back when my father was a blue collar worker at an automotive fastener supplier, my mother had to be pretty nimble adjusting to 40 hour paychecks from 58 hour paychecks in budgeting the household. Even later when I was in high school and my father became salaried, there was a difference between a good year [[high bonus) and a bad year [[no bonus).
I work at Ford and we have also been on a non-engineering hiring freeze for some time now. All OT was cut unless you are an essential function to product launch for non-salaried. Should be an interesting week over here!
Someone with a bit of inside on Ford describes them as truck maker with a sports car, that is, beyond the F 150 and the Mustang they have problems. They are having a struggle over image and direction. They are making money but the future appears dim.
Sometimes I think they were a bit of a sucker for playing it straight when they dramatically mortgaged the ranch right down to the blue oval in the mid 2000's. They survived and revived, avoided the bankruptcy experienced by GM and Chrysler, but missed out on shedding debt. Admirable, but maybe not the best business move in an age of corporate beggary and welfare.
The stock market values them at a slightly higher P/E ratio than GM or Fiat-Chrysler even though they have twice the debt.Quote:
Originally Posted by Lowell
They might have missed out on shedding some debt, but I would disagree that not filing for bankruptcy was a bad business move. On the contrary, the Ford family would have risked losing their control of company from their two tier stock structure under a bankruptcy where they each of their class A equity shares are worth 16 votes which allows them to have majority control of the company even though they only hold a small minority amount of equity stock. I doubt a judge or the federal government would let them maintain a two tier voting share structure for bailout loans. From the Ford family standpoint, it was probably their best move. The worst business move one can make is giving up control of their business.Quote:
Originally Posted by Lowell
It's hard to make sense of such a vague article. The article ends by saying that Ford's first quarter profits were down 35% from last year, but the unions also got a lot more than they did in the prior half decade. How do the union negotiated employee bonuses, wage increases, and benefits factor in for this loss in profits? The article didn't say they are reducing truck and car production. Maybe the announced employee cuts are just a bargaining chip for future union contract negotiations.Quote:
Originally Posted by 313WX
The vehicles are cutting edge, the company is still profitable, and they are making quite sizeable reinvestments into the company. Not an indication of a troubled company.
Compare the competition to an aluminum bodied F150 with a V6 twin turbo ecoboost, 8 speed transmission, 10,000lbs+ tow rating with all kinds of new computer technology. Base model F150 ecoboosts are flying off the dealership. If you want a whole bunch of options that doubles the price, not many want it and they're sitting around dealers lots making it look like sales are poor. Why is it whenever they announce a sale, you never see a base model F150 V6 ecoboost on the dealer's lot of 40 pickups?
As far as the vehicles being cutting edge, that means nothing if enough customers aren't buying them [[for whatever reasons).Quote:
Originally Posted by davewindsor
Concerning the rest of your post, we're clearly at the start of a downturn, one that could be fairly severe if the trend in subprime auto loans, interest rates and oil prices is any sign. What's been going on the past couple of years [[as far as profitability and bonuses) shouldn't be used to extrapolate what is projected over the next couple of years.
I've been noticing for some time that the car makers have been putting what seems to be incredible amounts of money on the hood to get rid of units, which is always a sign of trouble in the market.
We'll see what this means for the overall economy in Michigan. My sense is that Snyder and the Reps have been riding the normal auto-led recovery and haven't really attracted new jobs to the state. Time will tell.
In the meantime, prudent steps Ford takes to prepare for an inevitable downturn in sales is good news for me to the extent i'm relying on Ford to keep paying for my health insurance until I turn 65 and to keep paying the part of my pension that is the early-retirement supplement and doesn't come from the General Retirement Plan.
A couple of thoughts/comments on this latest news.
1) There is a good probability that they are over-headcount in the salaried positions due to lower than anticipated attrition and retirements. I've heard some crazy statistics that 20-30% of the salaried workforce could be eligible for retirement but many aren't doing so, working longer, etc. that they are in a position where people haven't left. They may be positioning to offer packages some can't refuse. Also, in recent years Ford has become a destination of sorts for many of those who've come up in the supplier world, that a job at the OEM is highly coveted.
2. In some schools of thought its better to prepare for the downturn before than when you are actually in the midst of it. Its inevitable, with the peak of the sales cycle, the increasing age of the fleet on the road, increasing lifespan of new generation vehicles, millennials not buying cars in the same volume as previous generations, baby-boomers aging out of their peak driving and peak spending years, and hyper-urbanization with a disproportionate amount of population and economic growth in the large coastal cities, growth in the current form is highly unlikely in the short to medium term.
3) We are exiting a period that had a huge number of new product launches, refreshes, and product development. Now that there aren't as many new launches on the horizon, how many extra heads were carried to support all the launches over the past 3-5 years?
4) How many of these lower-level salaried positions are likely to be off-shored or out-sourced to contract positions?
Yes, there are cars underwater fiscally ala the subprime auto loan bubble near bursting. And people drive cars longer and supposedly [[though I am not convinced of the longevity of Ford products) cars are built to last longer somewhat....
Quote:
Originally Posted by 313WX
I have a 2011 Ford Taurus and it's still driving like a champ.Quote:
Originally Posted by Zacha341
I think Ford's quality / longevity [[along with GM's) really improved roughly after the 2008-ish time frame, on par with the Japanese OEMs.
I hear that. I worked for FOMOCO for a bit, long ago. There was a change, and had to be once the Japanese cars [[and associated durability found in certain models) started to be taken seriously going back to the mid-nineties.
Do you find the brake and suspension areas [[struts) to be strong in Fords? I never have. Maybe just my bad luck... Braking components bad to the core - ala pads, calipers, rotors seemed weak and in need of changing frequently...
Yet I can drive other cars without changing out those components as much.
Considering like 90% of Ford's profit comes from North America and of that 80% of it is F-150, I'd agree with that assessment. But I don't agree with the "future is dim" comment. I think the issue is that Mark Fields vision of turning Ford into a mobility company is the right direction, but the capital investment and time to get there is massive and hurting the bottom line. Yea, it's great to make those kinds of investments for the future with pre tax profit is $9-$10 billion, I'm sure the board can go along with that. But when things start to level off, not necessarily tank, but just level off and that profit is now $8-9 billion, those investments that aren't bringing any returns yet start to glare at you.Quote:
Originally Posted by Lowell
I work at the Product Development Center in Dearborn and it is bustling with activity. The campus makeover is in full swing, construction of parking decks and site work for new buildings is underway, and we are bursting at the seams with people in our workplace. Nevertheless, there is a nervousness about what is going on. Are all these projects and investments going to halt if truck sales slip? Are they going to cut more than just salaried employees through buyouts? We have ridden this wave for the past 7-8 years with growing and even record sales, so it's about time things slow a bit. It doesn't mean it's going to go in the shitter, but it isn't going to be another record year either. I have confidence in Ford and GM for that matter. FCA, well, who knows.
Ford and GM are having a Wall St. problem... they are making money and showing strong profit, however their stock price is not going anywhere, no matter how many dividends they give. Meanwhile, Tesla is bleeding money and their stock is worth more than both of them. Even FCA seems to be a greater darling or Wall St.
Shedding jobs is one way to get Wall Sts attention.
With all due respect to not high-jack this thread, Michigan, with the worst roads in the nation, have a lot to do with shortening the life of a vehicles suspension, unless you're driving a truck. Running over potholes, sunken manhole covers, etc.. will ruin your cars suspension, earlier than the norm. My wife's 09 G-6 needs 2 control arms [[upper and lower) and ball joints, with just 80,000 miles.Quote:
Originally Posted by Zacha341
Well put. The companies are selling at near record levels in a generally saturated market. It can roll along around this level, they would make plenty of money and employ lots of people. GM and Ford pay great dividends. Who wouldn't be happy?Quote:
Originally Posted by mikehamm45
Not Wall Street. The juice is with the Tesla that seems anointed to be the Amazon of auto makers in their eyes. When you get 400,000 getting in line to buy your car that gets Wall Street's attention.
Yeah, it's always someone else's fault. Blame Wall Street.
1,400 salaried positions lost isn't unsubstantial. I REALLY hope my neighbors who have been getting fat bonuses these past few years are socking away some of their record gains, but I see a lot of new boats, luxury cars and ridiculous home improvements in the area.
They are buying them. If they weren't, Ford wouldn't be profitable. But, they are still very profitable.Quote:
Originally Posted by 313WX
Do you enjoy always making stuff up? Where's your proof that we're at start of a downturn? That's just your opinion and it's not even a good one.Quote:
Originally Posted by 313WX
What trend in subprime auto loans??
"We should note that they don't appear to be rising yet, at least not at the two automakers' financial units. GM Financial's [[worldwide) net credit losses were 1.9% of retail receivables in the first quarter, roughly flat year over year. Ford Credit's were even lower, at least in the U.S.: just 0.44%." https://www.fool.com/investing/2016/...an-auto-l.aspx
Interest rates and oil prices are still at an all time low. A barrel of oil is $48, so what are you talking about??
As for bonuses, they are an expense. It's relevant. Why can't you factor that in? It makes no sense. Why should it be excluded? Are you suggesting a union couldn't make a company unprofitable by making outrageous demands?
Just an anecdote, it was a while ago, and I won't reveal my source, but I know it to be true: someone who sold machine tools to the automakers and who represented some of the finer manufacturers did most of his business at Ford. He thought that said something about their commitment to quality. There was another company to whom he could never sell because they always bought whatever cost the least. He thought that said something about their commitment to quality too. Things could have changed since then.Quote:
Originally Posted by Zacha341
A very good point.Quote:
Originally Posted by Cincinnati_Kid
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).Quote:
Originally Posted by davewindsor
You're not doing a bad job of that yourself.Quote:
Do you enjoy always making stuff up?
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.Quote:
Where's your proof that we're at start of a downturn?
Quote:
What trend in subprime auto loans??
A year old article from the Motley Fool? :rolleyes:Quote:
"We should note that they don't appear to be rising yet, at least not at the two automakers' financial units. GM Financial's [[worldwide) net credit losses were 1.9% of retail receivables in the first quarter, roughly flat year over year. Ford Credit's were even lower, at least in the U.S.: just 0.44%." https://www.fool.com/investing/2016/...an-auto-l.aspx
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
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.Quote:
Interest rates...are still at an all time low.
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 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.Quote:
A barrel of oil is $48, so what are you talking about??
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).Quote:
As for bonuses, they are an expense. It's relevant. Why can't you factor that in? It makes no sense. Why should it be excluded? Are you suggesting a union couldn't make a company unprofitable by making outrageous demands?
Back in the mid-70s after the first oil shortage/shock when prices jumped from 25 cents to 52 cents a gallon, I was flying up to Detroit to attend a meeting at the Tank-Automotive Command on the XM-1 Tank [[Abrams). My seatmate was a guy from the US Dept of Transportation. He told me that once gas hit a dollar a gallon, people would abandon their cars in droves and use only public transportation. I told him that people would never abandon the convenience of personal transport.Quote:
Originally Posted by 313WX
While gas returning to the $4 range might push people to smaller and more economical cars, it will never push people out of cars.