The big question is why?
You might have caught in the news recently that both Ford and GM are shrinking their workforces. That might not seem like much of a shock with all the tech industry layoffs, but workforce reductions haven’t hit the auto industry at large, at least not yet. Still, the nature of these shifts in both American automakers is troubling.
Check out which American manufacturer is blowing away expectations here.
GM has offered a “voluntary separation program” for employees in a bid to cut costs by $2 billion by 2024. Most of the salaried employees of the automaker in the United States are reportedly eligible for the separation program, however they must opt for it by March 24, according to a spokesman who delivered a prepared statement to the media. “By permanently bringing down structured costs, we can improve vehicle profitability and remain nimble in an increasingly competitive market,” that statement concluded.
While this development with GM can be interpreted in a number of ways, it’s not inconceivable that layoffs are in the future, despite CEO Mary Barra insisting in January that wasn’t planned, especially if not enough employees elect for the separation. While profitability is always on the forefront of any decision made by a corporation, or at least it should be, what wasn’t mentioned in that carefully prepared and overall bland statement to the media was anything about the economy. To think the auto giant isn’t preparing for rough times ahead would be rather naïve.
Keep in mind in late February GM already cut around 500 executive-level positions. Will more be on the horizon if not enough opt for voluntary separation?
On the Ford side of things, the news came out recently that the automaker is slashing about 1,100 jobs at its Valencia, Spain plant. While it’s true that layoffs at factories aren’t unusual even in the best of times, keep in mind that just the previous month Ford laid off 2,300 workers in Germany and the UK.
Like GM, Ford is spinning these layoffs as a way to keep its edge, stating to the press it’s part of a “leaner, more competitive cost structure in Europe.” However, this would also be what an automaker or any manufacturer would do ahead of serious financial market disruptions.
What makes the Ford Valencia situation even more interesting was the company has heralded the plant as one of its premier EV assembly facilities. Supposedly, they just don’t need as many people to make EVs. That’s funny, because Tesla has had the exact opposite problem.
While GM and Ford have tried explaining they’re rearranging things to prepare for the supposed electric future, the reality is it’s entirely possible they’re really battening down the hatches in preparation for the economic storm that’s just beginning.
So far, the only other automaker to recently layoff workers is Rivian, which back in February slashed 6% of its workforce after doing a similar-sized workforce reduction less than a year before. If we start seeing more automaker layoffs, then we’ll know the storm is getting worse in the industry, although it’s difficult to predict exactly what will happen with auto sales and how deep and long the recession will be.
Images via Ford, GM