Auto Industry News: Ford Cutting Jobs as FCA Lands Factory Approval in Detroit, GM’s Self-Driving Plan Faces Pushback, and BIG Racing for MDW

The auto industry’s heavy hitters dominate the headlines this week. Ford announces it will cut 7,000 jobs worldwide as rival FCA lands factory approval in Detroit for a new multi-million-dollar facility. And a GM self-driving plan raises eyebrows in San Francisco as it tries to deploy a new fleet of autonomous cars. Pair that with a huge weekend in NASCAR, Formula 1, and Indycar and you have a boatload of excitement over your Memorial Day weekend. Let’s dive in.

Ford Cutting Jobs, Eliminating 10 Percent of Workforce by Summer’s End

Ford has announced it will lay off roughly 10 percent of its global salaried workforce—about 7,000 jobs by the end of August. After nearly a year of research into the matter, the American automaker decided that job cuts were the solution for a profitable future.

“To succeed in our competitive industry, and position Ford to win in a fast-changing future, we must reduce bureaucracy, empower managers, speed decision making, focus on the most valuable work and cut costs,” Ford Chief Executive Officer Jim Hackett said in a company email.

The move will primarily impact white-collar, upper level management positions and hopes to streamline product development by removing organizational layers, according to Reuters. This is in line with Ford’s recent $11 billion restructuring plan to pivot toward electric and self-driving tech.

While the job cuts will save the second largest automaker in the world about $600 million annually, it’s symptomatic of a bigger issue currently plaguing the auto industry. And according to Bloomberg, Ford cutting jobs is just the latest blow.

Across the U.S., Germany, China, and Canada, companies have eliminated at least 38,000 jobs in the past six months. Bank of America Merrill Lynch analyst John Murphy said at a Detroit forum last week that the industry is “staring down the barrel of what we think is going to be a significant downturn,” adding that China’s pace of decline “is a real surprise.”

Furthermore, as reported by Forbes, Wall Street experts like Morgan Stanley’s Adam Jonas think Ford might need to cut additional jobs to meet the company’s long-term goals. Jonas issued a report indicating, “Ford disclosed that the 7k headcount cuts will save $600 million annually, or an average of $86k per worker. Our (calculations) … require more than a further 23k salaried headcount reductions.”

FCA Lands Factory Approval in Detroit

As Ford cuts jobs and many fellow automakers face scrutiny, FCA is putting a new $1.6 billion assembly plant in Detroit, pledging to “add 6,400 jobs in the Detroit area, including just under 5,000 in the city of Detroit,” per the Associated Press.

The city’s first new assembly plant in 30 years is set to be up-and-running by 2020, giving Detroit residents first crack at those new jobs. Basic requirements apply, like being a proven resident over the age of 18, possessing a high school diploma, and valid driver’s license, as well as successfully passing a drug test. The company promises that those living in the 48- 213, 214, and 215 zip codes, a veteran, or a returning citizen (meaning you have a felony in your background) get priority in the first two weeks of job interviews via the city’s resource network, Detroit at Work.

Despite Mayor Mike Duggan’s excitement about the deal, which he called “the greatest day in my term as mayor,” some are concerned over how much land and money Detroit is giving FCA. The city council approved more than $100 million in real estate for the new facility and gifted the company an abundance of corporate tax breaks in excess of $200 million, a move that’s come under serious criticism.

Time will tell whether this is a wise cooperative decision from a forward-thinking company and city looking out for its citizens, or an act of “corporate welfare” as Economic Development Corp board member Matthew Roling stated.

GM Self-Driving Plan Receives Pushback

Rounding out the news this week is GM, who is pushing U.S. regulators to waive certain safety standards so the company can launch its own self-driving, steering-wheel free vehicles onto San Francisco roads by the end of the year.

In news out of a dystopian hellscape, GM wants a two-year waiver from the NHTSA that will allow it to make cars without mirrors, dashboard warning lights, high beams, and control pedals. The automaker filed an official petition with the government agency last January.

Naturally, the move has received some major pushback from groups like car dealers, insurers, advocacy groups, and San Francisco citizens.

The National Association of Mutual Insurance Companies, which represents 43 percent of U.S. auto insurers, said in a statement that the “NHTSA has no business enabling (automated vehicles) to operate on the roads, and surely has no business removing federally mandated vehicle safety standards to a vehicle that they do not know if it’s as safe as existing vehicles.”

Likewise, the Union of Concerned Scientists expressed its trepidation about the lack of data around self-driving cars, citing statistics that show GM’s self-driving cars have been involved in at least 69 traffic accidents.

The GM self-driving plan is not without its support, though.

Groups like Mothers Against Drunk Driving, the National Federation of the Blind, the Telecommunications Industry Association, and the American Trucking Association are all backers, insisting that autonomous cars can reduce the number of car crash-related deaths. Indeed, more than 37,000 people were killed and 2.7 million injured from U.S. road crashes in 2017.

However, self-driving cars are not without their own safety issues, as evidenced by UBER’s pedestrian fatality in Arizona and Tesla’s several Autopilot crashes.

While it appears clear that self-driving vehicles will play some part in our technological future, the question is how we get to that future as safely and casualty-free as possible. The NHTSA, for its part, seems undecided. The agency is seeking public comment “on the removal of unnecessary regulatory barriers to the safe introduction of automated driving systems” as part of its wider efforts to draw up a body of regulations for self-driving cars.

Around the Circuit

NASCAR Xfinity Series

Defending series champion Tyler Reddick came out on top at Charlotte Motor Speedway this weekend for his first win at the circuit, his second of the season and fifth of his career. Reddick rolled across the finish line 2.102 seconds ahead of second place Justin Allgaier and led for 110 laps of the 200-lap race, dominating his competition.

NASCAR Coca-Cola 600

Despite losing a tire and hitting the wall on lap 74 and facing an intense challenge from Joey Logano, Martin Truex Jr. took the checkered flag at Sunday’s Coca-Cola 600, the longest race on the Cup calendar. It is his third win of the season and second Coca-Cola 600 victory of his career.

“In 2016, [the last time he won this race] it was like lights out,” said Truex. “Everything went perfectly and exactly the way we needed them to. Tonight was a challenge. I never thought until the second half of the race that we had a chance again. I have never hit the fence and won a race before, so that’s pretty cool.”

2019 Indianapolis 500

Simon Pagenaud, the 2016 IndyCar Series champ, got the first win of his career this weekend by finishing ahead of American Alexander Rossi and Japanese driver Takuma Sato.

The race came down to the wire with Pagenaud crossing the finish line only two-tenths of a second ahead of Rossi after the pair battled for the lead over the final ten laps. Despite Pagenaud being the 7-to-1 favorite to win and dominating for most of the day, a late caution flag gave Rossi a fighting chance at the end of the race.

Rossi took his loss in stride afterwards.

“I want to say first that I am so happy for Simon,” he said of Simon Pagenaud. “I don’t know if people truly understand the level of disappointment. Everything you do all year is to work toward this day and this race. And you only get so many chances in your life,” he continued. “Now, you have to cross one of those chances off the list. It was right there and then it wasn’t and I won’t get over that. I don’t want to get over that.”

Formula 1 Monaco Grand Prix

Lewis Hamilton continued his domination of Formula 1 racing by overcoming tire struggles and holding off a late challenge from Max Verstappen to win his third Monaco Grand Prix and extend his 17 point lead at the top of the standings.

Hamilton’s third win puts him among elite company for wins at Monaco, trailing only Alain Prost, Michael Schumacher, Graham Hill, and Ayrton Senna for most all-time.

Next up for Formula 1 is the Pirelli Grand Prix Du Canada from June 7 -9.