Ford Authority

Ford Will Stay Away From Cutting Jobs Or Closing Plants As It Lowers Operating Costs

Ford Motor Company won’t have to shutter manufacturing plants or invoke mass layoffs as it goes about cutting operating costs to improve its financial fitness, Automotive News reports. Such moves were necessary a decade ago when the automaker underwent its “Way Forward” restructuring to weather the Great Recession, closing fourteen manufacturing sites in the process.

But this time around, “[Ford doesn’t] expect restructuring costs tied to any specific initiatives,” said Ford President of Global Operations Joe Hinrichs at a Goldman Sachs conference recently. “We don’t have that kind of footprint redo that has to be done.”

Ford is fighting toward a global operating margin of around 8 percent on its core (i.e. non-Smart Mobility) business, and to help get there, CEO Jim Hackett has targeted $14 billion in cost cuts over the next five years: $4 billion in engineering costs, and $10 billion in material costs. Engineering costs will be slashed through reducing the development time for new products, says Hinrichs, while the automaker will save money on material costs by reducing the number of new models, reducing manufacturing complexity, and saving money through the supply chain.

“None of those require restructuring charges,” Hinrichs says. “They do require redesigning how we do our business together.”

Aaron Brzozowski is a writer and motoring enthusiast from Detroit with an affinity for '80s German steel. He is not active on the Twitter these days, but you may send him a courier pigeon.

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