The automotive industry is a cyclical one, with boom and bust cycles happening through the 100-plus years it has existed. It’s difficult to juxtapose the booming automotive industry and its profits with layoffs and plant closures, but that’s where we are at the close of 2018. The last few years have been a boon for automakers both domestic and foreign as consumers purchase more vehicles than ever before. But it’s that inevitable end to the growth cycle that General Motors and its competitors such as Ford are fearing.
Both Michigan automakers announced massive restructuring efforts this year designed to trim the fat while repositioning resources to focus on electric vehicles and self-driving technologies. But no two companies are alike, and there’s a stark contrast between Ford and General Motors when it comes to the number of proposed layoffs.Â
Right now, GM is said to be laying off 14,800 factory workers and white-collar employees. And while the company is ruthlessly quick with trimming salaried workers, the Detroit automaker cannot unilaterally close plants without approval from the United Auto Workers union. Negotiations between the union and GM are set to take place in 2019.Â
Ford, on the other hand, is a bit of a mystery. The Dearborn automaker is mum on official numbers. However, that hasn’t stopped some from speculating, and those speculators are bearish. Morgan Stanley analyst Adam Jonas believes Ford could cut as many as 25,000 jobs. That’s nearly double the layoffs proposed by General Motors.Â
The media is treating both differently, too, thanks to some fancy PR maneuvering by Ford. When General Motors announced its proposed $6 billion restructuring, politicians leaped at the opportunity to lambast the automaker. Ford, on the other hand, was quick to announce it would shift employees from one plant to another due to production slowdowns with specific models. However, the mass media hasn’t latched onto the news Ford is also planning to lay off workers next year, too.
Ford and General Motors are crosstown rivals, but they play by the same rules and often the same market forces. Sedans and small cars are out while consumers flock to crossovers, SUVs, and trucks. That means model discontinuations and, in some cases, plant closures, affecting new vehicles like the 2019 Cadillac CT6-V. Both Ford and General Motors understand the market will slow down in the coming years, and the only way to survive such a downturn is to take drastic actions now when profits are high, and the car-buying public is hungry for vehicles with high-profit margins.Â
Comments
I can’t fully agree with this article. Steven Ratner cut GM’s industrial capacity so that the firm could survive any North American downturn.
Sure, Ratner did so before the EV/AV cyclone but his actions were also made before Mexico became the world’s premier auto export hub. Furthermore GM would pick up a lot of former Ford sedan buyers with the high quality Cruze.
I no longer care about shareholders. I care about community stakeholders.
Interesting times. Makes you wonder what GM and Ford will do to appease shareholders when the economy inevitably tanks and vehicle sale actually do nosedive.
First of all maybe GM hit the nail on the head in planning the layoffs and cutting the losses before the system got worse and more layoffs are required.
Second why are people buying cuv instead of cars? Are people to cheap to buy a car (for car things) and a truck (for truck things)? Or are people just not interested in drive better handling, braking, and faster cars?
Third will people (including the media) give as much crap to Ford as they have given to GM?
Well first GM has made cuts but they still hold more capacity than needed Ratner did not cut enough because of the unions. But it has also given the leverage to let Locals bid for models.
Ford is way begphind on cost cuts and the higher cost of Aluminum has hurt profits on the F150. They are good profits but lower than projected. Ford is behind on EV models and other technologies. They also still have to pay on their loans leveraged on plants.
Once they kill the cars they will need to cut workers too. It may not be 25k but it will be more than GM since they have not cut many to this point.
While the reality is that these CUV models today handle very well. It may not be a ZO6 but I know my Acadia is better than my past SSEI.
As for people they like them. Many like us own a SUV and a Truck. Each serves its purpose well.
Ford will have layoffs, but they also have a few things to point out that GM does not. They don’t import CUV’s from China (Buick Envision), they don’t assemble F-150’s in Mexico and they have allocated assembly of the new Ranger and Bronco to, of all places, Michigan!
The CT6-V is beyond pedestrian and boring looking. The Cruze on the other hand is a great car, especially cosmetically.