Ford has 25% more engineers doing same work as rivals, CEO says

BOHICA, from the Detroit News:

Ford Motor Co.’s engineering ranks may bear the brunt of additional job cuts the automaker has alluded to in the wake of disappointing earnings, judging from Chief Executive Officer Jim Farley’s latest interview.

“It takes us 25% more engineers to do the same work statements as our competitors,” Farley said on “Cars & Culture with Jason Stein,” a SiriusXM radio show that will air the interview on Feb. 10. “I can’t afford to be 25% less efficient.”

Farley said last week that Ford missed out on about $2 billion in profits last year as a result of avoidable expenses and supply-chain issues. He pledged to cut $2.5 billion in costs this year and said job cuts are on the table.

Ford posted a net loss for 2022 of $2 billion, due in part to a $7.4 billion mark-to-market loss from selling off stock in the electric-vehicle startup. And the Dearborn automaker was hit with a $2.7 billion impairment from its investment in autonomous-vehicle company Argo AI, which was dissolved into Ford and partner Volkswagen AG.

The company's stock was trading down 2% to $12.96 at 1:25 p.m. in New York.

In August, Ford eliminated about 3,000 positions, most of which were in the U.S. The German union IG Metall warned last month that it’s expecting about 3,200 reductions across Europe. Bloomberg reported in July of last year that Ford was preparing to cut as many as 8,000 jobs.

Last week, Ford announced it would reduce bonuses for hundreds of top executives, including Farley, who’s been CEO since October 2020. The automaker’s shares have almost doubled during his tenure.

Ford posted $10.4 billion in earnings before interest and taxes last year, a key profitability metric, and factors such as service warranty improvements and strong operating cash flow drove the company to hit the targets used to determine employee incentives. But overall, executives — as well as investors and analysts — weren't pleased with Ford's 2022 financial performance.

Ford missed its guidance on earnings before interest and taxes: EBIT came in $1.1 billion below the automaker's guidance of $11.5 billion.

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23 replies (most recent on top)

@iyq+1l3ThkuU
“ Neither GM or Toyota are transforming their business to the extent that Ford is under the Ford+ Plan. That is one reason for requiring top leadership talent from the outside, and retaining most of the existing leadership. The company has not done such a fundamental change, well, ever in its history. You cannot complete this with just GSR levels doing whatever they want, guidance is needed.

While it is regrettable jobs must be reduced, we just have too much manpower in legacy ICE areas that are no longer needed for Model e initiatives.”

Complete non-sense. First off, how many EVs have the traditional automakers sold and what’s paying for the future EVs? Ever heard the saying that you don’t ki-l the goose that lays your golden eggs? Getting rid out your ICE staff while still reliant on those products would be one such case.

Secondly the other OEMs are coming on fast with EVs in spite of what you think and don’t require 2-3 times the management to do it.

Sounds to me like the top floor of Ford is run by bean counters that spend too much time in excel rather than understanding the business.

Over at Facebook they are getting it right, eliminating layers of management. Ford needs to copycat FB.

“Meta Platforms Inc. is asking many of its managers and directors to transition to individual contributor jobs or leave the company as it tries to become more efficient, according to people familiar with the matter.”

Well, it's not true that Ford's 25% more engineers are doing "the same work as rivals", since Ford has many more recalls than rivals.

It's well established business practice to cut your way to prosperity...NOT!

I don't know if Farley said those words or not (you know, don't believe everything you see in the news), but if he did, he is lying through his teeth. There is a BIG difference between having 25% more engineers or having 25% more engineering costs.

I don't believe the former, but I believe the latter. We have many inefficient processes at Ford, coupled with the product complexity driven by management. Wasn't in the last TH where we decided (again) to reduce complexity? More complexity means more engineering costs, duh.

I don't know if many of the costs associated with all those teams that don't produce anything valuable in Mobility, Data and Subscription are charged against R&D or engineering, but I am sure that if we sell BEVs (at a loss), we have engineering costs as well in Model E. Also include there all those bloated management positions in engineering, with more bloated salaries and bonuses.

So all the issues we face are caused by our awful management, but engineers are the ones that are about to pay for that. BTW, I still don't see how a company can cut costs and increase quality at the same time, by reducing the engineering workforce. It will be interesting to see what would be Farley's excuse next time for missed earnings.

Talking about the last point, I'd really like to know what engineer recommended investing in Rivian or Argo. Even better, I'd like to know how those poor investment decisions can be included in "execution and supply chain management issues", which were "largely" the cause of missing the mark last quarter, according to Lawler.

So we made 10.4 billion last quarter if you exclude Rivian and ArgoAI write offs? Interesting how all I hear from management is how bad the last quarter was and the talk of losing 2 billion. It's almost like they want an excuse to cut more...

Of course Ford has 25% more people doing the same job. That's what happens when you fire one competent pensioner and replace him with an incompetent but cheaper LCC employee. They may be cheaper, but it will take more of them to get the same result.

POS Farley and his bloated executive team can F right off!

I’m glad I left. Ford is a s-show. Wait till ur cult leader has a breakdown and it’s captured on camera. Ford family my as-. Management should be embarrassed.

Farley--just an awful awful leader.

From Phoebe at The Ford Times, Farley says “We need to measure technical expertise. We need to measure if someone is a change agent like they are solving problems. They lean into action. Their first intuition is to do something, not talk about doing something. …

So here Farley is, talking about doing something 🤣

When you consider that we will only make trucks and sport utes and no cars or cuv's it doesn't take a rocket scientist to see why they are about to gut Koln and Dunton in Europe.
They will preserve the DDC at Dagenham, but Dunton ....
Sarlouis is being sold to China.
Engineering will be taken up by NA.
Pretty simple.
Until the next screwup and they need more cuts.
The Doug Fields show hasn't really started.
It is possible people do not truly understand how badly they are about to sc--w things up.
And if they think quarterly PR's and PEP will make us work harder - F*ck right off!

Neither GM or Toyota are transforming their business to the extent that Ford is under the Ford+ Plan. That is one reason for requiring top leadership talent from the outside, and retaining most of the existing leadership. The company has not done such a fundamental change, well, ever in its history. You cannot complete this with just GSR levels doing whatever they want, guidance is needed.

While it is regrettable jobs must be reduced, we just have too much manpower in legacy ICE areas that are no longer needed for Model e initiatives.

Why are will still hiring?

Doo doo doo doo doo, crack that whip!

Face the facts. Jim Farley is an incompetent leader.
What shocks me is that Bill Ford and the board of directors can’t see Jim’s incompetence.

That says a lot about them.

so does JF put hiring freeze on the 9k Mexicans?

With the facts available, my calculation is that Ford has 206% too many executives.

Ford has 50% more greedy pigs at the top as its competitors

@muu

We have 98 BOD and Executives listed on our website (including two Ford children).
General Motors has a total of 32, none family.

GM and Toyota combined had profits of over $30 Billion in 2022, while Ford lost $2 Billion and blamed issues all three faced. I see a correlation of too many executives making us so top heavy we are sinking.

What Jimmy fails to realize is that executives produce nothing tangible. You can not sell anything an executive produces, so what is their worth? Leadership? yeah, right. Strategic thinking? Yup, thats gotten us to where we are at. You could lop off 50% of the LL's and not lose a beat.

The fact that we have hundreds of top executives says a lot.

Ford probably has 25% more managers, directors and executives than it competitors also, but who is counting. He likes to blame everything wrong at Ford on everything but him and his team. Keep hiring those executives outside of Ford so morale drops even lower than its stock price.

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Ford has 25% more engineers doing same work as rivals, CEO says

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