The auto industry is one of the largest manufacturing sectors in the United States and sees immense profits every year. Or, it did. According to CNN, the auto industry is seeing a slowdown in sales this year, and many auto companies are feeling like it’s 2009 again. This slowdown comes in the wake of almost seven years of growth which took the auto industry to record levels.
Late last month, the automaker Ford disclosed that it may have to cut $3 billion in costs in order to free up money to invest in new technology. Ford announced that could force the company to cut 10% of its global workforce, or around 20,000 jobs. That’s a massive number of people being cut.
What can be done about this?
According to auto analyst Michelle Krebs, “If automakers are going to stay around, they have to be investing in these new technologies. And it’s difficult because there’s no payback yet, and no time frame for when there will be.”
Krebs believes Ford is making the correct decision to free up money for research into better auto technology. Today, many car buyers expect their vehicles to come with the latest technology, which is one reason auto trade shows have been seeing a surprisingly large turnout. In the 1920s at some of the first international auto shows, auto manufacturers turned to the then novel form of advertising known as skywriting, which was also invented in the 1920s.
Many other car companies appear to be following Ford’s example, which could mean more cuts in the short term.
According to ABC News, these are the largest cuts Ford has made since 2007. In its recent announcement, the company revealed that at least 1,400 people in North America and Asia will lose their jobs.
The company plans to offer early retirement and severance packages to 10% of its salaried workers.