As the U.S. economy slipped into a technical recession, U.S. car companies are laying off staff.
Jim Farley, Ford's chief executive, said on Wednesday that he was looking to reduce the number of employees in the company's legacy engine business in order to fund the transformation to electric vehicles.
The Ford boss told analysts that the company has too many people in certain places.
Skills that don't work anymore and jobs that need to be changed are what we have.
It was reported last week that Ford is preparing to cut as many as 8,000 workers, mostly at his Ford Blue legacy car business.
The U.S. met the definition of a technical recession of two consecutive quarters.
Tech companies have recently made headlines with news of staff cuts and hiring freezes, but workforce reductions in the auto industry are more harmful to the economy.
About 8% of all private-sector employment in the US is supported by carmakers, according to the Alliance for automotive innovation.
Rivian, which counts Ford as one of its largest shareholders along with Amazon, told employees on Wednesday that it would need to let go of six employees.
The manufacturer of the critically well-received R1T electric pickup has been struggling to balance growth with profitability now that risk aversion among investors is growing
R.J. Scaringe wrote in an internal email that the world has changed in the last six months with inflation reaching record highs, interest rates rapidly rising and commodity prices continuing to climb.
The warnings come after the company trimmed its staff by 3%. According to reports, Musk had a bad feeling about the economy.
Musk acknowledged that the company grew too fast, either taking on excess weight or expanding in areas of the business that didn't generate enough economic return.
The seeds of their current problems were planted by the car makers.
The Federal Reserve underestimated a rise in consumer prices as a temporary phenomenon. It had to raise interest rates much quicker because it didn't act in time.
The global chip crunch is one of the reasons why the U.S. central bank is taking drastic measures.
According to figures from the AAM, 1.5 million vehicles were prevented from being produced in the U.S. last year due to the lack of Semiconductors.
The average inventory of vehicles nationwide was enough to cover 69 days of demand, according to the AAM. This had dwindled to just 28 days by June 2022.
John Bozella, president and CEO of the AAM, said in a statement on Wednesday that the industry supports the CHIPS Act.
Consumers scrambled to get their hands on whatever they could still find, as prices for used and new cars went up by as much as 42% and 12%, respectively.
What used to be a buyer's market has become a seller's market because of the renewed pricing power of the manufacturers.
Their captive financing arms were earning a king's ransom re-selling used cars that just came off lease because they could dial back the bulk of their margin-eroding incentives.
The shortage of vehicles lifted transaction prices while buoying margins through the entire industry.
Jeep and Chrysler's parent company warned on Thursday that profit margins could be squeezed once chips are in plentiful supply.
The pricing power of the industry will be reduced if production increases, according to the CEO of the company.
In a situation where transaction prices are under pressure, we don't want to be squeezed.
It sounds like more layoffs are on the way.
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