Politics

With Costs Up $1 Billion Because of Trump’s Tariffs, Ford is Now Planning Layoffs

Published on October 8, 2018 by Athena Pallas

President Trump’s metals tariffs have cost Ford Motor Company $1 billion, a cost they cannot afford to bear and which figures into their just announced plan to reorganize, laying off workers in the process. While Ford has not stated the exact number of workers they plan to lay off, Morgan Stanley in a recent report estimated that Ford would lay off 12% of its workforce, i.e. 24,000 of its 202,000 worldwide workforce, according to NBC News. The reorganization is, as you might imagine, an effort on Ford’s part to cut costs, by reducing both the number of workers, apparently including both blue collar and white collar workers, and reducing the number of layers in their management hierarchy. According to The  Hill:

Ford Motor Company is planning to lay off an undisclosed portion of its workforce as part of a reorganization as the company deals with a number of challenges, including the fallout from President Trump‘s tariffs on steel and aluminum. NBC News reported on Monday that the layoffs are part of Ford’s $25.5 billion reorganization plan that intends to cut costs by, among other things, making its staff leaner and reducing layers…The news outlet (NBC) noted that the exact amount of employees that will be laid off is unknown. But a report from Morgan Stanley estimated a “global headcount reduction of approximately 12 percent” of its 202,000 workforce around the world, according to NBC…The automaker has lagged behind competitors in sales and has also been adversely impacted by Trump’s steel and aluminum tariffs, according to NBC.

Ford Motor Company has been at odds with Donald Trump since Trump was just a candidate for president, not actually the president, but when candidate Trump was spouting plans for punitive tariffs on cars manufactured in Mexico just as Ford was planning to import cars from factories in Mexico, a plan which Ford then shifted to China. The $1 billion hit Ford has taken from President Trump’s tariffs is joined by the fear Ford has that Trump’s trade policies might even interfere with their plan to reorganize the company to keep it afloat. According to NBC News:

Ford has already warned that President Donald Trump’s auto tariffs have impacted the company to the tune of $1 billion, and the president’s trade policies threaten to play havoc with Ford’s ongoing reorganization, Shanks told NBC News. Trump and Ford have been squaring off since well before the 2016 election, when then-presidential candidate originally threatened to impose hefty tariffs on vehicles Ford intended to start importing from a factory in Mexico. The carmaker eventually scrubbed that plan, but rather than return production to the U.S. it decided to move it to China.

President Trump keeps claiming that his tariffs have not hurt American companies, when that is not at all true. The $1 billion increase in costs Ford has had due to Trump’s tariffs is a price few companies could bear – even a company as large as Ford has had to plan to reorganize and lay off workers to try to compensate for increased costs and lagging sales. Higher costs and lower sales are a troubling situation for any company.

Consumers, meanwhile, are faced with higher car prices – the American Automotive Policy Council estimates that the cost per car will increase by $400 on average as a result of Trump’s metals tariffs alone.

Help Expand ROCK’s Computer Lab in Kenya

Featured image by Gage Skidmore via Wikimedia Commons.