Ford could be in trouble after Trump’s tariffs

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Words: Nile Bijoux
11 Oct 2018

Trump’s trade war with China is carving heavily into Ford’s business, with a reported profit loss of $US1 billion and more than 20,000 jobs at risk.

CEO Jim Hackett said a couple of weeks ago that the company was expecting to bleed $1billion in profits as a result of metal tariffs levied on steel and aluminium imports from China, as well as retaliatory tariffs from China on American products.

In a bid to get the company making money again, a massive reorganisation plan is underway at Ford. Among other things, it involves making significant cuts to the white collar workforce to the tune of 24,000 layoffs, or about 12 per cent of Ford’s global workforce.

Ford has already tangled with Trump’s tariffs when the company was preparing to outsource Focus production to Mexico but that plan was cancelled when the President threatened tariffs there as well. Focus production was later moved to China, where Ford had planned to build and import the Focus Active.

Of course, Ford has also been in the news recently after announcing all sedan and passenger car models except the Mustang would be axed from its North American line-up. Instead, the company will only build SUVs, crossovers, and pick-up trucks. Those are all strong sellers but Ford moved half a million passenger cars in 2017, resulting in plenty of criticism for the move to ditch them.

As a result of this perfect storm, Ford stock has dropped below $US9 per share for the first time in years. And with rumours of mass layoffs, it looks like things will get worse before they get better.

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