Layoffs at Ford – and more to come…
As stated in a prior blog, I am predicting a 2018 recession, which will be the culmination of slowing (but not negative) economic growth and the downsizing of companies, as they try to deal with higher costs and lower profits. I also expect that labor as a cost will resurface as the primary target of CEOs and CFOs, and there will be a renewed effort to maximize “non-touch” processes, automation, and artificial intelligence to cut expenses. We are now witnessing that downsizing.
In mid-May, the Wall Street Journal reported that Ford planned layoffs of about 10% of their workforce – or about 20,000 employees. Most of these employees would be salaried workers, as opposed to union labor. Per that report, Ford CEO Mark Fields’s intent was to increase profit and the stock price. Another domestic automaker, GM, is also under fire from activist investors to boost its stock price. GM has laid off about 5,000 employees since last November, the latest of which were about 300 workers from its Warren, Michigan plant at the end of May.
Automakers are not the only companies facing layoff conditions – tech companies are also squeezing labor to maintain profits (and stock price). In mid-May, Cisco Systems announced plans to cut 1,100 jobs. This is in addition to the 5,500 positions lost in August of last year. Expect more of the same. Executives are under constant pressure to meet or beat analyst's expectations, and the quickest and easiest way to do that is to reduce costs through cutting labor (typically the single largest cost factor in production).