Ford’s tale of woe
Ford Motor Co. will offer its 75,000 hourly workers packages of incentives to leave the company, cut one-third of its white-collar jobs and sell or shut down its parts-making plants as part of a turnaround plan intended to slash annual operating costs by $5 billion.
That’s according to an article in this morning’s Washington Post. Later in the article, blame for Ford’s dire financial straits is laid at the doorstep of rising fuel prices:
Both Ford and GM, reeling from global competition and high gasoline prices, have initiated massive programs to slash costs. In recent years, the Detroit automakers relied heavily on pickup trucks and large sport-utility vehicles, but sales of those vehicles are down and profits have plunged. The companies have made deep cuts as they try to shrink their way back to profitability.
In other words, as a commentator on NPR’s Morning Edition put it (I’m paraphrasing here, as the transcript is not yet available online), “Ford got caught selling gas guzzlers during a time when gas prices went very high.”
I have to confess that I am somewhat baffled by the implication that Ford (and GM, which is already going through the same sort of problems) had no way of knowing that gas prices might be going up. Aside from pundits cloistered inside the walls of the American Enterprise Institute and the mentally insane (what’s the difference, realy), I am not aware of anyone who thinks that long-term, oil prices are going anywhere but up. Nonetheless, Ford found the short-term sugar-high of profits made from selling 6mpg Excursions and F-350′s irresistable.
At the same time, it is hard to argue that there has not been a clear demand among the car-buying public in the US for giant 4-wheel drive land-yachts, and I imagine that if Ford had not been busily churning them out, some other company would have stepped in to fill the gap.
It is unclear who is to blame in this situation—the companies that have spent the last 5 years cranking out huge SUVs and pick-ups, or the people that have lined up to buy them. As usual in cases such as this one, there seems to be plenty of blame to go around. Unfortunately for a large chunk of Ford employees and the communities that will most assuredly be deeply affected by those employees’ impending joblessness, there seems to be little analysis in the press beyond the immediate situation.