#restructuring

In November, Daimler announced a restructuring plan that called for the elimination of 10,000 jobs, claiming the effort would result in an estimated 1.4 billion euros ($1.5 billion) in savings by the end of 2022. Chairman Ola Källenius may just be getting warmed up.

According to German outlet Handelsblatt, sources within the company claim austerity measures will be expanded at Tuesday’s investor conference. Källenius is said to raise the job cut figure to 15,000 while scaling back (or dropping) several side businesses that aren’t turning a profit. As well, the automaker will likely axe a few models that don’t fit in with the core brand’s luxury image, starting with the Nissan Navara Mercedes-Benz X-Class.

In an effort to reduce expenses and lower its headcount, an embattled Nissan is offering buyouts to its U.S. employees.

It’s rumored that Nissan plans to eliminate thousands of white-collar jobs and shutter several global factories as part of its effort to improve the company balance sheet. Going into 2020 weak and not expecting to make any money, the automaker is turning its focus to restructuring for at least the next 24 months.

“To adapt to current business needs and improve efficiencies, Nissan will offer voluntary separation packages to eligible U.S.-based employees,” the company said in a statement.

On Thursday, Daimler made an announcement confirming earlier reports that it plans to cut roughly ten percent of its management staff as part of a broader restructuring plan. Financial hardship has become a sign of the times for the auto industry. Most sizable manufacturers are coming off an investment spree aimed at developing new-energy vehicles, autonomous driving systems, and connected services. Unfortunately, those commitments came at roughly the same time the world’s largest auto markets started to collectively plateau.

A broad approach no longer seems feasible for all but the absolute largest automakers on the planet. We’ve seen many attempt to downsize through restructuring or by entering inte partnerships with other firms to share costs — sometimes both. Knowing this as well as anyone, Daimler issued two profit warnings this year as Mercedes-Benz was fined $960 million in an emissions-cheating settlement while hemorrhaging cash through EV investments.

Reports have come in from Germany that Mercedes-Benz has decided to reduce its management staff by around 10 percent globally. On Friday, German newspaper Suddeutsche Zeitung wrote that Daimler CEO Ola Källenius wishes to delete around 1,100 management posts while freezing wages for all 300,000 German employees — citing internal documents from the automaker’s works council.

Handelsblatt also said it intercepted a copy of the letter, with both outlets claiming Daimler would elaborate further on the plan this Thursday. While Mercedes said it couldn’t comment on the matter, its restructuring push was no secret, even before Källenius took over as chairman in May.

With another global recession looming on the horizon, executives at General Motors and Ford are busy touting the merits of being prepared. On Tuesday, the financial heads of both automakers were present at a J.P. Morgan Conference in New York to explain the steps being taking to mitigate economic disaster.

While financial hardship is not yet a guarantee for the United States, the ongoing trade war with China has impacted the cost of doing global business. Likewise, most sizable automotive markets are either underperforming or have surpassed peak growth levels. Depending upon the severity of the anticipated recession, GM claims its “downturn planning” could include postponing non-essential capital expenditures and shifting toward lower-priced automobiles.

On Wednesday, we reported Nissan was preparing a financial report that was presumed to involve quarterly profit falling by around 90 percent — necessitating roughly 10,000 job cuts. At the time, Nissan gave some vague confirmation that the estimates were accurate while halfheartedly attempting to refute them.

However, when the official numbers came out on Thursday, the reality was worse than initially assumed. Nissan reported an almost 99-percent drop in operating profit in the latest quarter, citing falling sales in every major market except China. Rather than 10,000 job cuts, it’ll require 12,500.

Volvo is planning on reducing fixed costs by 2 billion Swedish kronor. That sounds like a lot, but it’s only about $214 million. While not the largest restructuring plan currently being conducted within the automotive industry, it’s a significant chunk of change for a company the size of Volvo Cars.

The manufacturer is claiming that market pressures are trimming down profits. As a subsidiary of China’s Zhejiang Geely Holding Group, much of Volvo’s business is being impacted by the trade war between the Land of Liberty and People’s Republic. While giving a listen to the automaker’s latest financial report earlier in the day, we learned Volvo operating profit dropped by about 30 percent over the first half of 2019. At least some of that can be attributed directly to its Chinese ties.

Back in January, Ford provided the preliminary details for its European restructuring plan. The company had been losing money there for years and didn’t want it to be remain a liability as it dumped cash into autonomous research and electric vehicle development. With aims to achieve a 6-percent operating margin within the region, the automaker’s plan to tidy up the business was put into motion.

Thus far, Ford has ceased production at three plants in Russia, cut shifts in Germany and Span (rest in peace, C-Max), and has earmarked additional facilities in France and the United Kingdom for closure. By the end of next year, the automaker expects to have cut 12,000 jobs related to its European operations.

With pickups and crossover vehicles serving as the lifeblood of domestic manufacturers, General Motors is setting aside $24 million for its Fort Wayne truck assembly plant. While the investment isn’t expected to result in any job creation, it does aim to boost production volume of the new Chevrolet Silverado and GMC Sierra in Allen County, Indiana.

According to GM, combined sales of the Chevrolet Silverado 1500 and GMC Sierra 1500 crew cab pickups, which launched last year, were up 20 percent in the first quarter of 2019 versus the year prior. This isn’t surprising, considering new versions of popular models typically see an uptick in sales, but General Motors says it anticipates another sizable increase in demand over the second quarter and wants the facility to be ready.

Having already announced plans to cut thousands of jobs in Europe in an effort to stem the region’s ongoing cash hemorrhage, Ford has reportedly begun re-examining the United Kingdom. Initially, the automaker’s restructuring plan involved ending production at a transmission plant in France, killing the C-Max in Germany, and dissolving its Ford-Sollers joint venture in Russia.

While Ford hoped to shed as many employees as possible through voluntary retirement, it acknowledged it would have to fire at least 5,000 people in Germany and an unspecified number of U.K. citizens in March. The company hasn’t settled on a figure, though inside sources claim it should be no more than 550 jobs — all of which should be of the non-manufacturing variety.

Automakers find themselves a bit of a pickle right now. The shift towards “mobility” has resulted in high development costs for electric and autonomous vehicles in the midst of stagnating sales growth. There’s also a trade war hurting global demand and impacting supply chains. Ultimately, this resulted in a lackluster Q1 for many manufacturers.

Ford’s situation was symbolic of the industry’s general plight, per its 34-percent decline in net revenue for the first quarter of 2019, but it wasn’t without a warm ray of hope. The company posted a 12-percent increase in earnings (before before interest and taxes) over the same period due to North America’s consistent desire to own SUVs, crossovers, and pickups. Ford’s share price also improved, hitting the $10 mark for the first time since August of 2018 on Friday.

With all that good news, many probably wonder what caused net revenue to climb into the toilet like an overly curious ferret. As it turns out, saving money can be pretty expensive.

President Donald Trump weighed in on General Motors again this week. This time, the issue at hand was the fate of Lordstown Assembly — which was shuttered earlier this month as part of the automaker’s ongoing restructuring program.

“Just spoke to Mary Barra, CEO of General Motors about the Lordstown Ohio plant,” Trump tweeted on Sunday. “I am not happy that it is closed when everything else in our Country is BOOMING. I asked her to sell it or do something quickly. She blamed the UAW Union — I don’t care, I just want it open!”

Barra’s take on just how much the United Automobile Workers are to blame is questionable, but the president’s position is not.

After a fiscally damaging year that Ford CEO Jim Hackett implored employees to forget, cuts are coming to the automaker’s workforce, and America won’t be spared. But America can wait, as that region remains a major profit generator. Other regions aren’t, and the automaker’s axe has already fallen in South America.

Now it’s Germany’s turn, with Ford announcing the loss of “more than 5,000” workers in that country.

Volkswagen Group just announced a restructuring plan aimed at raising the company’s operating margin to 6 percent. Unfortunately, the strategy involves a staffing reduction of up to 7,000 individuals by 2023 — with the automaker saving an estimated 5.9 billion euros in the process.

While legitimate layoffs aren’t expected to take place for at least a few more years, VW claims the “automation of routine tasks” will make the jobs unnecessary, adding that the staffing cuts could be done by simply not replacing employees who take an early retirement package.

On Thursday, Jaguar Land Rover was reported to be in the midst of a plan that would eventually lay off roughly 10 percent of its UK workforce — roughly 4,500 employees. Considering the company has been forced to endure waning demand for sedans and just about everything with a diesel engine, a bit of restructuring was inevitable. Especially since everyone else is doing it at the moment.

However, JLR’s layoffs won’t be exclusive to Europe, as initially presumed. Despite the vast majority of its workforce residing in the United Kingdom, a small portion of its American staff will likely feel the impact, too.