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Ford Motor to slash workforce by about 10 percent


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Like I said they're not going to hurt product development. Early retirement is usually a win/win because the pension is already funded. Longer term it frees up more senior positions for promotions and it allows them to bring in new talent down the road.

 

Adding a separation bonus is simply a nice gesture by the company and the cost is recouped within the first year. Personally I think it's just the right thing to do if the company has the cash, regardless of whether it's necessary or not.

FYI...Ford's April 2017 General Retirement Plan indicates a Funding Shortfall of $1,534,936,040 for 2016.
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That doesn't change the shortfall, plus they have $28B in cash so I don't see that as an issue.

I read that 1/3 of the salary retirees took the lump sum pension buyout a year or two ago instead of continuing on the monthly payout. They calculate your monthly pay up to 79 years old...and give you the lump check. Not sure if that was also offered to the union workers or not.

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I read that 1/3 of the salary retirees took the lump sum pension buyout a year or two ago instead of continuing on the monthly payout. They calculate your monthly pay up to 79 years old...and give you the lump check. Not sure if that was also offered to the union workers or not.

 

Only if that option was specifically allowed by the contract, which I doubt.

 

18 years ago we had a sweetheart deal. They would not only allow you to take your pension in a lump sum, they would add 20% and give you at least 2 years salary to boot. Needless to say there were lots of takers. So many they actually had to cap some organizations. Unfortunately the market took a big downturn a couple of years later and a lot of folks lost most of that lump sum and had to go back to work. But that was their fault - the ones who managed it properly got a windfall. I think the pension fund at the time was overfunded so it didn't cost the company that much and they got those folks off the books permanently.

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The number of white collar workers targeted for early retirement offer in Asia Pacific region tells me that Ford is ready to downsize or exit a bunch of markets.

 

Korea - probably exit

Japan - already on the way out

Taiwan - definitely downsize, Ford has really neglected this market and shifted all its talented local executives to growing the China operation

Australia - downsize, Ford is still operating like they have 35% of the market share

New Zealand - downsize, see Australia

Singapore - exit, it is hopeless

Malaysia - downsize, maybe exit passenger car business and just focus on Transit and Ranger

Indonesia - already in the process of exiting

Philippine - downsize, maybe exit?

Thailand - ??? Ford's market share is really low but it won't shut down the production sites so it may just limp along

India - ??? Same as Thailand

China - probably not affected, it is the only market in Asia Pac that Ford is doing reasonably well

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Ford Aus doesn't have that big of a footprint, all of its remaining assets were transferred over to Ford Aida Pacific

Engineering and development hub several years back. I suspect that several of those projects are now nearing

completion and 1,500 strong engineering work force won't all be required going forward.

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Ford Aus doesn't have that big of a footprint, all of its remaining assets were transferred over to Ford Aida Pacific

Engineering and development hub several years back. I suspect that several of those projects are now nearing

completion and 1,500 strong engineering work force won't all be required going forward.

 

I don't think engineering is on the chopping block. This is the rank and file corporate employees. The accounts payable manager, the HR director, the marketing VP, the dealer relations coordinator, the payroll clerk, the compliance department lawyers etc. When your market share shrinks from 30% to 10% on the way to single digits, the overhead needs to shrink.

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From GoAuto.com.au

 

http://www.goauto.com.au/mellor/mellor.nsf/story2/0F421D01DC69594BCA258124007E9311

 

 

 

Impacting some 1400 white-collar workers across both regions, the departments targeted by the decision taken in Detroit include corporate communications, government affairs, human resources, finance, marketing, purchasing and sales.

The cuts will not impact employees involved in product development – including the 1750 engineers, designers and other professionals at the Victorian-based Ford Asia-Pacific Product Development Centre (APPDC) – nor will they hit staff working in IT, global data and analytics, manufacturing or Ford Credit.

That leaves about 300 staff members at Ford Australia who are impacted.

GoAuto understands that voluntary redundancy packages will be issued next month, with the company aiming to have the process completed by September.

“Some skills teams in Australia will be affected, however product development – APPDC – is already improving total operating efficiencies in other ways and is excluded,” Mr Gunsberg said.
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I don't think engineering is on the chopping block. This is the rank and file corporate employees. The accounts payable manager, the HR director, the marketing VP, the dealer relations coordinator, the payroll clerk, the compliance department lawyers etc. When your market share shrinks from 30% to 10% on the way to single digits, the overhead needs to shrink.

 

And middle managers.

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Ford Aus doesn't have that big of a footprint, all of its remaining assets were transferred over to Ford Aida Pacific

Engineering and development hub several years back. I suspect that several of those projects are now nearing

completion and 1,500 strong engineering work force won't all be required going forward.

I was very surprised when they assigned the NA Ranger project to FoA. This is a big gamble here in the US. The product needs to be ""priced right", pay for itself and not steal too many sales from F150. Very difficult !!

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I read that 1/3 of the salary retirees took the lump sum pension buyout a year or two ago instead of continuing on the monthly payout. They calculate your monthly pay up to 79 years old...and give you the lump check.

The percentage is very high based on the other retirees I talked to, More like 10%, maybe less.

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The management team at my plant are running scared. They keep bringing up that this is how it all started back in 2007.

 

Difference is Ford is squarely profitable now, making almost $10B/yr whereas in 2007 they were losing money and trying to avoid bankruptcy.

 

This is a surgical strike more for PR purposes or maybe to offset some future increased spending.

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It's not like Ranger is being built from scratch, it's been a good performer in ROW for six years now

and a lot of the development costs are shared across over 100 markets.

Colorado's success gave Ford validation for bringing Ranger

Not much of a gamble when Ford is basically following what GM did with Colorado

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It's not like Ranger is being built from scratch, it's been a good performer in ROW for six years now

and a lot of the development costs are shared across over 100 markets.

 

Colorado's success gave Ford validation for bringing Ranger

Not much of a gamble when Ford is basically following what GM did with Colorado

Smart move letting someone else take the gamble so you don't have to.

 

Bad move in waiting so long to follow suit.

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1400 jobs seems like a PR move. There are 1400 people who have between 30-35 years at the company that are thrilled to be getting a bonus to go home. Morale is low - we made $10.2B - 2nd best profit # ever - and got 76% of our target bonus. Ford hires a 35 year old Chief Brand officer and his signature move so far is to cut camo from our apparel offerings. The best way to get a promotion at Ford is to go work for Nissan for two years.

 

Silver lining is that as the early retirement packages are taken, those jobs will open up. There may be some jobs or positions that are eliminated, but Ford is running thinner and expanding into more categories. They are growing their analytics team and the folks in Palo Alto. The are trying to grow connected car and mobility services. They just launched Omnicraft.

 

If they can replace a guy making $150K with an FCG making $60K and without future pension obligations, it may make sense. But you are also losing a lot of talent when the people hired since 2003 have no pension and no reason to stay at Ford.

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If they can replace a guy making $150K with an FCG making $60K and without future pension obligations, it may make sense. But you are also losing a lot of talent when the people hired since 2003 have no pension and no reason to stay at Ford.

I think the "no pension" thing is basically neutral--pensions (defined benefit retirement programs) in general are on their way out, replaced by defined contribution retirement plans. Younger workers (the ones who pay attention to retirement, anyway) are already looking for defined contribution plans (401k, etc), so Ford doing that instead of a pension shouldn't have much effect one way or the other.

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IMO some of this is getting forced on the auto industry by the tech industry way of thinking and doing business...they (Tech) is trying to grow and they are focusing on established markets and shaking them up. I don't think transportation is ready for the 12-24 month refresh cycle that tech industry is used to....its going to have to be a much longer process since people don't change cars that often and I think some people are hitting "tech" fagtue to a point with everything.

 

Some years back, Ford used to spend a pretty hefty amount every year on pure research:

 

http://www.reliableplant.com/Read/5240/ford-nanotechnology

 

I look at this pie-in-the sky autonomous/connected/etc. investing as being a variation of the money they'd spend on long-lead tech a decade ago. Probably won't pay off, but they're not robbing anything essential to pay for it.

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