How Is This Not A Recession? Ford To Slash 10% Of Global Workforce

Tyler Durden's picture

Having admitted in March that "used car prices will drop for years" and amid near-record inventories,  a so-called 'plateau' in car sales, and soaring auto-loan losses, WSJ is reporting that Ford is planning substantial cuts to its global workforce amid CEO Mark Fields’s drive to boost profits and address the auto maker’s sliding stock price, according to people briefed on the plan.

With near record high inventories of 3.9 million vehicles...


Demand tumbling...




and a flood of off-lease vehicles set to send prices tumbling, as Morgan Stanley recently pointed out, we're just getting started as they see used car prices dropping by up to 50% over the next 5 years.

It appears Ford has seen the light of survival in this non-recession, recession... (via The Wall Street Journal)

The move comes as Ford targets $3 billion in cost cuts for 2017, a plan aimed at improving profitability in 2018 even as U.S. auto sales plateau.


Ford’s share price has suffered during Mr. Fields’s three-year tenure, and the company’s market value has slipped far behind Tesla and General Motors.

The job cuts, expected to be outlined as early as this week, largely target salaried employees and aim to reduce the global head count by an equivalent of about 10%, these people said.


It is unclear if the plan includes cuts to the hourly workforce at Ford’s U.S. factories and plants that are abroad.

Ford has 200,000 employees globally, half of which work in North America...

One can only imagine what this will do to production, and thus US manufacturing output - still The Fed should hike rates anyway, right? How is this not a recession?

And finally, let's reflect a little on the government's hand in this utter debacle. As a reminder, for those who vehemently believe that Ford did not receive a government bailout...

Although Ford did not receive TARP funds, it did receive government loans. These were critical because banks were not lending during the financial crisis. It requested a $9 billion line-of-credit from the government. In return, it pledged to spend $14 billion on new technologies. (Source: "Ford to Congress: Keep $9 Billion Handy for Us," Politico, December 2, 2008.)


On June 23, 2009, Ford received a $5.9 billion loan from the Energy Department's Advanced Technology Vehicles Manufacturing program. In return, it pledged to accelerate development of both hybrid and battery-powered vehicles, close dealerships and sell Volvo. It upgraded factories in Illinois, Kentucky, Michigan, Missouri and Ohio to produce hybrid vehicles.


Ford used the funds to switch its focus to commercial electric vehicles. In 2016, CEO Mark Fields said, “"We want to become a top player in electrified solutions.” The company wants to lead, “…we can win such as with our commercial vehicles." (Source: "Trump Should Be Asking: Will Ford Pay Off Its Loan Before Moving Small Car Production to Mexico?" Forbes, September 21, 2016.)


Eighty-one percent of the funds went to create new efficiency technologies for gas-powered vehicles. For example, they helped fund Ford's aluminum bodies in the F-series pickups. The Congressional Research Service estimated the loans saved 33,000 jobs. Ford will repay this loan by 2022. (Source: "The Advanced Technology Vehicles Manufacturing Loan Program: Status and Issues," Congressional Research Service, January 15, 2015.)


Many argue that Ford needed the funds to sustain its cash flow during the recession. Ford says it was in better shape than the other two because it had mortgaged its assets in 2006 to raise $23.6 billion. It used the loans to retool its product lineup to focus on smaller, energy efficient vehicles. It got the United Automobile Workers to agree it could finance half of a new retiree health care trust with company stock. By April 2009, it retired $9.9 billion of the debt it had taken out in 2006. (Sources: "Obama Administration Awards First Three Auto Loans,", June 23, 2009. "How Ford Avoided the Meltdown that Hit GM, Chrysler," CNBC, April 9, 2009.)

So to clarify:

  • Dec 2008 - headcount 213,000
  • Dec 2008 - Ford received $9bn line of credit from the government. The Congressional Research Service estimated the loans saved 33,000 jobs. Ford will repay this loan by 2022.
  • May 2017 - headcount 180,000

Money well spent... to lock in a few more voters, eh?

As The Wall Street Journal concludes, deep cuts in the U.S. could trigger political backlash due to the role the auto industry played during the campaign and early tenure of President Donald Trump.

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SilverRoofer's picture

And 8.5% + will be cut in America

Fizzy Head's picture

Typical CEO knee jerk, hand out pink slips to protect the investors. And they get millions in compensation while the employees get nothing.... When does the revolt begin?

Luc X. Ifer's picture

Recession is there but what Ford does is not due to it but a reaction to the changes in personal transportation patterns.

Juggernaut x2's picture

Millenials don't want/drive/buy cars.

tmosley's picture

Might be a Depression, might be the whining of buggy whip manufacturers. Time will tell.

Juggernaut x2's picture

Not too many millenials with $100K in college debt will be ponying up $40K for a Ford Explorer.

securitized-debt's picture

she was a waitress in a cocktail bar now she owns a jet...

Luc X. Ifer's picture

Correct. They understood that personal car on gas is a complete rip off and a total fuck up of our society. Mark my words in 10 years personal car will be history

FIAT CON's picture

Mellenials want to drive/buy cars but with no job living in mom's basement no car/drive... fixed it for ya.

JRobby's picture

Shhhh! No one is supposed to know. Go back to sleep.

GUS100CORRINA's picture

How Is This Not A Recession? Ford To Slash 10% Of Global Workforce

My response: According to John Willians from WWW.SHADOWSTATS.COM, America has all the signs of being in a recession for well over a year now. See information below:


No. 885: Numbers Games that Statistical Bureaus, Central Banks and Politicians Play

May 8th, 2017

Topics: April 2017 Employment and Unemployment, Money Supply M3

• Headline Employment/Unemployment Numbers Were Too Good

• Jobs Gain Boosted by Heavily-Distorted Seasonals and Unusually-Large Upside Biases

• Unadjusted Year-to-Year Payroll Growth Dropped to a 68-Month Low

• Last Time Annual Payroll Growth Declined to that Level, the Economy Had Started Its Collapse into the 2007 Recession

• Household Survey Showed Shift from Part-Time to Full-Time Employment

• April Unemployment of 4.40% Was a 1-in-1,000 Shot; Could It Have Been Targeted?

• That Said, April Unemployment: U.3 Declined to 4.4% from 4.5%, U.6 Fell to 8.6% from 8.9% and the ShadowStats-Alternate Fell to 22.1% from 22.5%

• Those Were the Lowest, Headline Unemployment Rates for U.3 since May 2007, for U.6 since November 2007 and for ShadowStats since October 2010

• Nominal Money Supply M3 Annual Growth Rebounded to 3.3% in April, Versus 3.1% February and March, Otherwise at a 39-Month Low


No. 884: March 2017 Trade Deficit, Construction Spending, Real-World Employment

May 4th, 2017

• April 2017 Real-World Employment Conditions Continued in Annual Decline at a Pace Not Seen Since the Depths of the 2009 Collapse

• First-Quarter Real Merchandise Trade Deficit Narrowed Minimally versus What Had Been on Track for a Minimal Widening

• Despite a Decline in March, First-Quarter Construction Spending Surged with Massive, Upside Monthly Revisions to January and February Activity

• Real Construction Spending Remained 21.1% (-21.1%) Shy of Recovering its Pre-Recession Peak, Still Holding in Low-Level Stagnation

HedgeJunkie's picture

We've been in the Greater Depression since 2007.  We're just witnessing minor upticks as the true numbers are masked by bogus, manipulated statistics from B(ullshit)L(ying)S(tatists) and printing by the F(uck)E(veryone)D(aily), since the day we were blessed with the Dark Prince.  The standards have been changed so much since Reagan, and all who followed, started fiddling with numbers and reporting standards that what is produced today has little in common with the thirties.

Rather than take the hit, everything was greased and postponed.  But that big greasy bolus is now knocking at our economic asshole.  CRE is starting to take it's predicted, though constipated shit  The auto majors will all soon be in another swoon as demand for their over-priced, over-optioned, piles of waste drops to nothing due to the simple fact that no one has money to spend on anything other than taxes and groceries.  The expected market from the flood of millinials getting jobs and creating demand is already proving to be a pipe dream.

We've loaded on fixed rate debt that averages to about 4% to fund acquisitions and equipment--most of it in a five year term, but now the contracts specify that there can be no early payoff until the fourth year.  Believe it or not, GE Capital, just before Wells Fargo took over, funded $500k at 0% for five years...with the same repayment restriction (might have been a final fuck you to Wells Fargo that we benefited from).

It's a private company and the family has a deep well of cash behind them but I have that same itchy feeling I did in November-December 2006 that things are not going the way we are expecting.  When the drop happened in 2008 we lost just under 50% of revenue in one year.  I'm starting to expect to see something similar lurking out there soon.

AC_Doctor's picture

Did Ford just unzip its pants and signal that everything is NOT ALRIGHT and that their VIAGRA no longer works?

AtATrESICI's picture

Surely everything is fantastic...Please stick to the narrative???

AtATrESICI's picture

I just love the line "for those who vehemently believe that Ford did not receive a government bailout..." Who in the fuck thinks that this is true???? Ford and many other companies receive more welfare than all of the ghetto dwellers and trailer trash in the entire US.

Whats next? Cash for Clunkers 2? Crush those fucking vehicles as they come off the assembly line. So we can save jobs? WTF??? and keep the dream alive. RIGHT IT IS FOR THE JOBS...NOT...Let these companies die. The .gov needs to stay out of the propping up The Failing 500 business...

Folks need to get their minds right and have real discussions based in fact rather than residing in a fantasy world while chasing ghosts of a 400 lb russian hacker around the Security Services basements.

All of the daydreaming is net gain 0.

HedgeJunkie's picture

Cash for Clunkers took a $2,000 piece of shit 1998 Toyota, in 2009, to a $5,000 piece of shit 1988 Toyota, in 2010.  The ultimate pain was felt by the lower income folks, and a few of us who are personally debt averse, who relied on used cars because they could afford the payments.

Beneficiaries were the over-paid, incompetent union workers at the auto plants and the manufacturers themselves.  Meantime, unsold new cars flooded fields worldwide.


Yen Cross's picture

 Up is down, in this crazy thing we call financial engineering. aka -central banking-

Osmium's picture

It IS a recession, what's your point?  OH, you think that the "markets" should react to that and drop?  LOL, now that's some funny shit right there.

lester1's picture

The Fed will hike rates only to fuck Trump so the economy crashes, liberal media will blame Trump, and Democrats can make a comeback in 2018.


You heard it here first.

. . . _ _ _ . . .'s picture

"You heard it here first."

Sorry, but no.

Juggernaut x2's picture

Trump is the moneychangers' bitch- his whole business depends on the. Fed and Wall St Ponzi Scheme.

AtATrESICI's picture

Don't forget the MIC without them those rectangles of paper and 0's- 1's would not amount to shit.

AtATrESICI's picture

Only to fuck Trump really means fuck the people.

Juggernaut x2's picture

I'm "the people" and Trump hasn't done shit for me- he's too busy fighting Twitter wars like a bitch.

AtATrESICI's picture

When has any political hack done anything for any person? Unless the person happens to be a corporation that is funneling funds into said politicians accounts.

I love your wife's picture

Dems don't give a fuck about the people or the country; neither do a lot of Reps.  All of them are clammering for $ from big lobby money men.  No one is looking out for you or me or our kids.  Trump is fucking their world.  Best chance we've had in a while.

Deplorable's picture

Don't worry, Tesla can take up the slack in sales for the next few years since their inventory level is miniscule compared to Ford.

They will sell every car they crank of the assemble line at $40,000+ and still lose a ton on every sale.

I love your wife's picture

Elon Musk's business model for all of his businesses envolves government subsidy of one sort or the other.  The MSM and USG all want to resurect a Steve Jobs figure to lead us to the promise land.  Steve Jobs' greatest gift was complaining about convienence, and then hiring/forcing others to develop ways to make it more convienent.

I love your wife's picture

Jesus.  The ZH web-engine is like a billboard from the 1980's internet.  Add a delete feature or fix the double-click double post bullshit.  Tyler makes money now.

I love your wife's picture

Elon Musk's business model for all of his businesses envolves government subsidy of one sort or the other.  The MSM and USG all want to resurect a Steve Jobs figure to lead us to the promise land.  Steve Jobs' greatest gift was complaining about convienence, and then hiring/forcing others to develop ways to make it more convienent.

HRH Feant2's picture

And no one went to jail after crashing the economy in 2008/9. That is the thing that still pisses me off the most. Martha Stewart sent to club fed for 6 months? Give me a break. A waste of taxpayer money. SEC could have fined her, hooked her up with an ankle bracelet, and kept her on house arrest. At least that would have been profitable.

I love your wife's picture

One guy in Ireland went to jail, I think.  One fucking guy.  How many went to jail during the SNL crisis in the 80's? 

Atam Gits's picture

Uber, Lyft, ridesharing.  More people transported by fewer cars.  Hertz, don't it?

Juggernaut x2's picture

Spent the weekend in Chicago- Uber EVERYWHERE.

WeAreScrewed's picture

A bunch of Uber-leased vehicles coming back into the market.

ebworthen's picture

What!?  The economy isn't roaring!?  Labor force participation rate?  What is that!?!?

Obummercare un-affordabe!?!?  Skittle shitting unicorn rainbows!  "Everything is Awesome!" 


bshirley1968's picture

This is a bullshit story.  Everyone knows Amazon is destroying traditional sales models.

Lmao!  Rotflmao!!! Hahahaha........Bawahahahaha!  Amazon! Frickin' killing me man!

Common_Cents22's picture

half price ford explorer sport twin turbo?  ok

Codwell's picture

I can't afford a new car and heroin. Sorry Ford.

indygo55's picture

Can't they just direct the special loans to cheap heroin so we can spend more on cars to live in and shoot up in? That way the goverment can increase the car and heroin production in Afganistan and declare success. What a fucked up world this is. When is that collapse happening again? 

Falling Down's picture

My Ford salesman buddy told me earlier they are so desperate, Ford is forcing their dealers to offer customers with barely any payments made on current loans, or even leases, deals on vehicles currently in their inventories. One customer he was forced to make a cold call on today has 10 months left on the lease on a Fusion. Ford has a shit ton of Fusions in inventory, a shit ton in used inventory, and their resale value sucks.

Shit's hittin' the fan in the auto industry.

FIAT CON's picture

Where the World's Unsold Cars Go To Die | Zero Hedge looks like there gonna need a lot more room. Soon there may be some new airports to store cars hence airline also may go broke and close airports.

besnook's picture

millenials don't care about cars or driving. the shift in the demand curve portends a tough future for usa cars sales as boomers buy their last cars and genxers are too broke to buy anything.

gregga777's picture

That is putting the cart before the horse.  Millennials would own cars and houses, too, if they could afford them.  The problem is that they are both burdened with massive student loans and cannot find good-paying full-time jobs.  Most millennial debt serfs will never be able to pay off their student loans.  

besnook's picture

no, millenials don't care about cars like all of the previous generations.

Falling Down's picture

You know as well as I do there's one big thing they're not doing, and that is reproducing. My gen (X) was really bad at it, too, but millenials will not reproduce, period.


They can't afford it, and quite frankly the smarter and harder working ones know that if they have kids, those kids will be fucked.