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December 4, 2018

Is Ford planning 25,000 job cuts?

Ford's US$11bn restructuring could cost 25,000 employees their jobs, exceeding the cutbacks General Motors announced last week, according to Morgan Stanley, Bloomberg reported.

By Olly Wehring

Ford's US$11bn restructuring could cost 25,000 employees their jobs, exceeding the cutbacks General Motors announced last week, according to Morgan Stanley, Bloomberg reported.

Ford has yet to detail its job cuts but Morgan Stanley analyst Adam Jonas predicts they could be larger than GM's in a note to investors, according to the report.

"We estimate a large portion of Ford's restructuring actions will be focused on Ford Europe, a business we currently value at negative $7bin," Jonas wrote, according to Bloomberg.

"But we also expect a significant restructuring effort in North America, involving significant numbers of both salaried and hourly UAW and CAW workers."

A spokeswoman told Bloomberg Ford's 70,000 salaried employees had been told they face unspecified job losses by the middle of next year as the automaker works through an "organisational redesign" aimed at creating a white-collar workforce "designed for speed".

"These actions will come largely outside of North America," she said of Ford's restructuring. "All of this work is ongoing and publishing a job-reduction figure at this point would be pure speculation."

Bloomberg noted Ford also was cutting shifts at two US factories in the spring and transferring workers to plants building big SUVs and transmissions for pickups in moves that the automaker said would not result in job reductions.

Jonas said other automakers would be forced to follow GM's and Ford's actions as the industry transforms, first to abandon factories building slow selling sedans and ultimately to retool to build electric and self driving vehicles.

"We believe existential business model risk will be prioritised over near term profits and cash return," Jonas wrote, according to Bloomberg.

"We still do not believe investor expectations have fully considered the near term earnings risk."

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