GM moves put Ford on hot seat

It took General Motors Co. CEO Mary Barra less than a month to deliver details on how she'd save billions by restructuring the automaker.

And that has some investors waiting for specifics from Ford Motor Co., after company officials said in early October that job-cut announcements wouldn't come until next spring.

One clue emerged Wednesday: The Blue Oval said it will redeploy hourly workers to transmission and SUV plants, but that's far from the sweeping moves GM detailed on the first work day after the Thanksgiving holiday. 

Barely 25 days after the General Motors Co. chief used a Halloween letter to announce plans for restructuring that likely would include involuntary layoffs, the company acted decisively: To save $6 billion, five factories will be idled in North America, including two in its backyard. Six-thousand salaried layoffs, on top of 2,200 who accepted buyouts. Another 3,300 hourly jobs imperiled. Six car models axed, including the plug-in hybrid Volt that was supposed to show the path forward.

Moody's Investor Service on Wednesday praised the moves as a sign of the company's commitment to financial discipline. It called GM's moves "an undertaking to maintain its current strengths ... to remain at the forefront of the auto industry's movement toward electrification, autonomous driving, ride hailing, and connectivity."

More:Howes: GM restructuring tests Trump's touch in industrial Midwest

More:Editorial: Trump shares blame for GM's cutback

More:Moody's: GM's restructuring effort is 'credit-positive'

More:Trump threatens 25% tariffs on imported cars

More:Ford to shuffle hourly workers to meet SUV demand

Some experts believe that makes Ford’s restructuring look sluggish at a time when investors want assurances the company is fortifying itself for the future. Others suggest Ford might just be taking a different approach in how it explains its restructuring to employees, the public and Wall Street.

"You can't wait until the house is on fire to start making changes," said David Cole, chairman emeritus of the Ann Arbor-based Center for Automotive Research. "Ford has been a little slower-moving. There hasn't been a lot of visible activity."

The cost-cutting details GM announced Monday demonstrated Barra's plan to get out in front of imminent and vast industry changes, unstable trade conditions, plateauing vehicle sales, shifting consumer preferences and future investments in electric and autonomous vehicles that could cost billions. Ford is facing all those same headwinds, without constantly updating investors and analysts about how it will combat them.

Hackett's business redesign has been underway since at least April, when the automaker announced it would cut sedans from the lineup. But only GM has said how many positions will be cut, and how much money will be saved as a result.

Wall Street noticed: GM stock trading up more than 5 percent immediately following the news Monday, though those gains were mostly erased by the close of business Tuesday.

"GM was kind of out front on that," said David Kudla, chief investment strategist of Grand Blanc-based Mainstay Capital Management LLC. "Ford has just been more close-to-the-vest on how they're handling the salaried-headcount reduction. It wasn't made public the way that Mary Barra did. I think it's just a difference in how they want to approach it. On the other side, GM is playing a bit of catch-up on what they want to do with sedans in the lineup."

Next year, GM will idle two plants in Metro Detroit, a third in Ohio, one in Canada and another in Baltimore. All told, the idled plants, buyouts and layoffs would affect 14,300 jobs across the company, and save GM $6 billion in 2019. 

Meanwhile, Ford plans to cut $25.5 billion in costs over the next several years through changes to product development, purchasing and manufacturing. The automaker plans to spend a separate $11 billion to restructure its global business, part of which will come from global white-collar layoffs. 

Ford executives haven't offered details on the layoffs because they don't have them yet, several Ford officials have told The Detroit News. The automaker is aiming to flatten management globally based on feedback from individual department leaders.The company expects to have specifics on a headcount reduction by the second quarter of 2019.

The Dearborn-automaker in 2018 did sweeten a "phased retirement plan" it has offered to salaried employees for the last several years, by offering an additional lump-sum payment equal to nine months of pay to retirement-eligible employees in North America.

Retirement-eligible Ford employees include those who are at least age 55 with at least 10 years of company service; age 65 with at least five years of company service; or any age with 30 years of service. Ford did not publicly announce that plan, and it differs from the buyouts GM offered North American salaried employees and global executives with 12-years or more of seniority.

"Ford is not as outspoken about it," Kudla said. "They could have gone out and made a bigger deal."

Ford's relative silence could continue to hurt the automaker's stock price in the short term, analysts said, though the automaker has up to now dodged the political anger lobbed at GM since its austerity announcement Monday. On Wednesday, Ford announced it too would be further cutting car production, but any hourly workers displaced by shift changes would be relocated to other plants, and no plant would go dark.

Still, Hackett was promoted because his predecessor, Mark Fields, lacked a vision for the future, and couldn't generate buzz on Wall Street. In the year and a half since Hackett was appointed CEO, Ford stock is off more than 15 percent. GM stock is up less than 1 percent since Barra took the helm in 2014 — and Monday's announcement might have been, in part, an effort to bump that stock, analysts said.

Both automakers are making moves to trim excess white-collar jobs, cut money-losing vehicles and get the right kind of workforce in place for the future, said the Center for Automotive Research's Cole. But GM's recent clarity comes at Ford's expense on Wall Street.

Following the GM news, Evercore ISI analysts called Ford’s approach "much more drawn out, less detailed and lethargic." according to Bloomberg.

The GM news Monday prompted a "statement on business transformation" from Ford. The automaker outlined seven points it is focusing on as Hackett restructures the global business, all of which were previously announced. Ford "has the best manufacturing capacity utilization in North America based on the aggressive restructuring we completed a decade ago," the statement read.

Moody's called GM's cost-cutting moves indicative of "continued commitment to financial and operating discipline," in a Wednesday note.

Ford leadership has promised details — possibly by the end of the year — on partnerships with Mahindra Group in India, and Volkswagen in Europe and South America, as well as restructuring in Europe, South America and China. Ford officials in recent months have described a sense of urgency within as Hackett and his executives push the restructuring plan ahead.

The Dearborn-automaker could be taking a different approach to communications than its competitor. "Ford has just chosen to approach it differently," Kudla said. "It doesn't mean they're not taking the steps."

But Ford might look lost if the automaker doesn't show some specifics of its cost-cutting plan before the middle of next year.

"I wouldn't be surprised if Ford moved that timeline up a little bit," Cole said. "You want to separate yourself, but you want to be in the same territory."

ithibodeau@detroitnews.com

Twitter: @Ian_Thibodeau

Staff Writer Nora Naughton contributed