Ford Cuts 30,000 Jobs. Good Idea, Just Bad Timing

Posted on 23. Jan, 2006 by in News

You might hate me for saying this but I truly believe that Fords recent action to cut 30,000 jobs in North America and close 14 plants is a good idea. However, I also think that this change in operations strategy should have been made a long time ago – when it didn’t involve so many jobs.

The reason behind the layoffs and closures is simple: Ford isn’t making money anymore. The North American auto operations lost $1.6 Billion on a pre-tax basis – that’s huge! And the reason behind the loss? Not responding to customer demands in time. More and more people are realizing that SUVs may not be the best solution given the state of world politics, environmentalism, or rising gas prices. But Ford just kept pumping those Explorers out of the plants. Ford CEO Bill Ford said it best:

“If we build it, they’ll buy it. That’s business as usual and it’s wrong,” Ford said. “Our product plans for too long have been defined by our capacity. That’s why we must reduce capacity in North America.”

I recognize that the job cuts and plant closures will be difficult, even though much of the downsizing will be done through retirement over the next several years; however, if Ford did not make such a move soon, everyone was going to be looking for new work. The move just reinforces the important principal of staying current with customer demands. If Ford had made this decision even 5 years ago, realizing that competition from Japan and Korea was drawing away buyers, then the impact would not have been as large. But they didn’t. And many companies are in the same boat. They continue to operate on the same ideas upon which the company was founded – and eventually it will be too late to adapt and change. I still think that Ford has a chance, but the decision to trim the fat came just in time.


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