Morgan Stanley Warns Ford Layoffs Could Outpace GM Cuts

Ford Motor Company F has warned of layoffs in the first half of the coming year, and one analyst speculates that Dearborn's salaried workforce reduction could surpass General Motors Company GM’s recent slashing of 8,000 salaried jobs, according to The Detroit News. 

The Analyst 

Morgan Stanley analyst Adam Jonas maintained an Equal Weight rating on Ford with a $10 price target.

The Thesis

By Jonas’ calculations, Ford’s $11-billion restructuring commitment could translate to elimination of 20 plants and 50,000 employees — with unprofitable foreign segments expected to take the brunt of the pain. (See his track record here.) 

"We estimate a large portion of Ford’s restructuring actions will be focused on Ford Europe, a business we currently value at negative $7 billion," the analyst said, according to The News. "But we also expect a significant restructuring effort in North America, involving significant numbers of both salaried and hourly UAW and CAW workers."

Ford said actual numbers are “pure speculation” at this point. Nonetheless, Jonas anticipates high earnings risk on expectations for management to prioritize survival over near-term profits and cash return.

Ford won’t be the only one in the sector feeling pain. Shifting consumer demands, regulatory pressure and regional struggles are not company-specific concerns, and the tremors at GM are felt industrywide.

"This is not just a GM or a Ford thing," Jonas said. "There are bigger forces at work driving global OEMs to rethink the fundamental idea of supporting increasingly obsolete segments, propulsion systems and geographic regions."

Price Action

Ford shares were down 1.56 percent at $9.45 at the time of publication Tuesday. 

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