Citing the impact of President Trump's tariffs, the ailing automaker is set to make cuts to its global workforce of more than 200,000.

By Daniel Herborn

Posted on October 9, 2018

A recent investment note from Morgan Stanley estimated Ford will need to reduce its workforce internationally by around 12%. “Such a magnitude of reduction is not without precedent in the auto industry,” the note continued.

The number of workers who will be axed is unclear but Morgan Stanley’s projections would involve around job losses for around one third of its salaried staff.

After the company’s stock fell to its lowest point since 2009, Chief Financial Officer Bob Shanks told NBC News the company would undergo a “redesign” into a leaner company with a more streamlined decision-making process. The changes will be part of a US$25.5 billion restructuring.

A major restructuring is on the cards at Ford

The company’s CEO Jim Hackett previously eliminated more than 12,000 jobs at furniture maker Steelcase and has been expected to lead a similar streamlining at Ford.

Ford, which is headquartered in Michigan, is one of the companies most impacted by Trump’s decision to impose a 25% tariff on imported steel and a 10% tariff on imported aluminium earlier in 2018. China responded by imposing a 25% tariff on more than 500 US products, including electric cars, whiskey, orange juice and cigars.

In the second quarter of 2018, Ford’s net income was almost cut in half, falling to US$1.1 billion. The company has recently been active in seeking commercial partnerships, with some analysts naming Volkswagen as a company with strengths that would complement Ford.

Ford CEO says tariffs have cost the company US$1 billion

In September 2018, Hackett called for a quick resolution to the tit-for-tat tariffs which he said had led to higher prices for Ford’s Lincoln sports utility vehicle in China.

“From Ford’s perspective, the metals tariffs took about $1 billion profit from us,” he said. “The irony is, we source most of that in the US today anyways. So we are in a good place right now, but if (the trade war) goes on longer there will be more damage.”

The tariffs have also put the brakes on the company’s plans to produce some of its vehicles in China. It had previously anticipated building sedans and some of its smaller car range there.

Chinese automakers were also looking to set up production lines in Mexico and or countries in Southeast Asia. While this was a trend before the tariffs, the trade war has hastened these moves.

Header image credit: Ford Rouge factory tour. Photo by Nicole Yeary