The Friday Report: May 24th, 2019

Auto Manufacturer Ford to Eliminate 7,000 White Collar Jobs by August

American auto maker Ford recently revealed plans to decrease approximately 10 percent of its global workforce by cutting 7,000 white collar jobs by August.  The savings of $600 million annually would also eliminate bureaucracy within the organization.  The reduction of the white-collar workforce would mean that a larger number of workers would report to each manager.

Already 1,500 of the 2,300 jobs to be eliminated in the United States have occurred due to buyouts and layoffs.  Since the initiation of the restructuring effort, some 1,500 white collar employees left Ford voluntarily, some taking buyouts.  Most of the restructuring will be accomplished by May 24th.  Most workers affected are in the Dearborn, Michigan area, the site of Ford headquarters.

Laid-off workers have been permitted to work for a few days to wrap up work and take their leave of colleagues, a change from previous business practices of having to pack and leave immediately.

U.S. Chokehold on Huawei Technologies May Impact 5G Roll Out

Following allegations that Huawei aided Beijing in espionage, the United States government blacklisted the company, effectively cutting if off from the American software and semiconductors the company needs to manufacture its products.  Huawei is the world’s largest provider of networking gear and the second largest smartphone vendor.

The effect of the ban may be significant, disrupting the rollout of critical 5G wireless networks worldwide.  This impacts China and could also hurt American companies that are dependent on that country for continued growth.

Chip manufacturers Qualcomm Inc., Intel Corp. and Broadcom will not supply Huawei until further notice and will lose the revenue from those sales as a result.  American technology components are woven into Huawei’s 5g equipment.  As Huawei’s 5g products are unmatched by competitors in terms of reliability and cost, the impediment to the manufacture of Huawei’s 5g products may slow down the rollout and adoption of 5g technologies, impacting the demand for networking equipment and smartphones.  Other new technologies including self-driving cars may also be impacted.

In mid-2018, Huawei began to plan for stockpiled chips and vital components to keep its business running for a minimum of three months.  It is likely that as American companies heed the blacklisting notice, tensions will rise between China and the United States.  Chinese fears that these new actions undertaken by the Trump administration are actually an attempt to contain China. 

China Announces 25% Tariffs on U.S. Agricultural Goods

In response to the recent imposition of U.S. tariffs on China, the Chinese government responded in kind, with a 25% tariff on 2,493 American products and duties of 5-20% on other products as of June 1st.  The tariffs impact $60 billion in U.S. goods in retaliation for the recent increase in duties on $200 billion of Chinese products

China selected agricultural goods as they are among America’s most valuable exports to China.  In addition, states with the largest production of agricultural commodities have been notable in their support of President Trump.