Blog: Dave LeggettFord's 20% 'non-product' cuts

Dave Leggett | 7 April 2003

I hope they know what they're doing at Ford. Removing 20% of 'non-product' cost in two years seems like quite a high figure to aim for, but maybe it's an indication of how serious things have become - or could become - in financial terms. Ford seemed to successfully bat the Chapter 11 talk off recently, but how far can you slice costs in non-product areas without affecting product? Companies always need to be looking for efficiencies and savings but there are worries in looking for as much as 20% I think (assuming that it is not simply for analysts' consumption and otherwise meaningless).

If it can be achieved without any adverse effects on product, then the implication is that the company has been carrying way too much cost for too long - which is an indictment of the management perhaps. To even target such a high figure is almost an implicit admission that there is plenty of fat to be trimmed. If it is achieved but with adverse effects on product, then the danger is that Ford suffers in the marketplace from delayed or inferior products. Maybe someone has concluded that Ford really has no choice but to go for a big cost saving to support the threatened bottom line.


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