Depending on which news source should be believed, Ford Motor Co. (NYSE: F) will cut either 4,000 or 8,000 salaried workers. The move is part of CEO Jim Farley’s attempt to improve margins. Reports say that most of these cuts will be in the parts of the company that oversee the development and manufacture of Ford’s gasoline-powered vehicles. The age of the electric vehicle (EV) seems to be a chance to revolutionize Ford’s fleet and eliminate billions of dollars in expenses as well.
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Ford’s decision may be a sign of how a drive to new technology can replace people. As it moves to its new EV fleet, the duplication between people who work in the gas-powered and EV portions of the company can be reduced sharply. Why have two companies under one roof when Ford only needs one?
The decision carries risk. Huge manufacturers assume a consumer sea change will be forced by consumer demand for EVs. So far, at least in the United States, that has not happened. EV market leader Tesla delivered just over 250,000 vehicles last quarter, and many of those were in China and parts of Europe. Companies like Ford may be walking into the trap created by their assumption that the future is closer than they have planned for.
Ford’s plan to cut thousands of people also may represent an eye toward a coming economic slowdown. Car sales often nosedive in a recession. Ford and other companies have had short supplies of new cars for months because of supply chain problems. As those shortages ease, consumer demand may ease as well. The average American car has been on the road for over 12 years. The economy will make some people hold those cars even longer.
24/7 Wall St.Farley’s vision may be accurate. His workforce may be larger than Ford needs. That future, however, is extremely hard to determine, because the consumer appetite for electric cars is hard to determine as well.
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