Detroit-area competitors Ford and General Motors are enacting parallel cost cuts as industry supply issues persist and a recession appears imminent, but GM is doing so from a stronger position.
Ford, smarting from a $2 billion net profit loss last year, will adjust supply-chain management, product development and manufacturing; do some white-collar layoffs and cut executive bonuses; and trim manufacturing and warranty expenses.
The carmaker said about half its profit loss resulted from lower production and lost sales, the other half from operational expenses. The chip supply shortage was a particular drain. It plans to redesign cars’ innerworkings in order to use more readily available chips.
Meanwhile, GM, despite seeing higher profits in the fourth quarter, a record $14.5 billion operating profit for the full year, and predicting stronger-than-expected 2023 earnings, plans $2 billion in automotive operations cost cuts this year and next.
To meet that target, it plans in part to make employment reductions through attrition.
GM’s strong fourth quarter resulted from the prices of the higher-margin models it focused on, and on greater sales volume in North America, both outweighing its higher costs.
LEARN MORE: GM and Ford CEOs on Heightened Watch for Recession
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