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CNH Industrial farm equipment for sale in Kentucky.
Luke Sharrett/Bloomberg
Ford Motor
is cutting its engineering staff as it tries to manage costs during the expensive transition to electric vehicles—a painful step that is turning into a benefit for another industry in need of engineering talent.
The car manufacturer is laying off about 1,000 workers, including engineers, in an effort to reduce costs, The Wall Street Journal reported. The company confirmed that it is seeking to cut costs but didn’t specify how many jobs will be lost.
The market is taking the news in stride. Shares were up 1.3% in midday trading while the
S&P 500
and
Dow Jones Industrial Average
had risen 0.9% and 0.4%, respectively.
Ford has announced other cost-reduction efforts and layoffs in recent years. The company wants to be as lean as possible as it tries to transition from a big seller of gasoline-powered vehicles to a large, and profitable, maker of traditional and battery-powered vehicles.
Transitions are never easy, but some of the engineers being laid off are showing up in other industries.
CNH Industrial
(CNHI), a rival of
Deere
(DE) in making tractor combines and heavy-duty machinery, tells Barron’s it has hired 500 engineers lately from
Rivian Automotive
(RIVN),
Tesla
(TSLA),
Ferrari
(RACE), and Ford.
CNH employs about 40,000 workers. Ford ended 2022 with about 173,000 employees.
CNH needs more engineers because the trends toward electrification and autonomous driving transforming personal transportation are affecting it too. Not every tractor or backhoe can be electrified, but some heavy-duty machinery working on batteries is quiet, expanding the hours a day machines can do useful work in a city.
What is more, tractors are starting to drive themselves, saving farmers time and money. CNH is buying Hemisphere a “global leader in high-performance satellite positioning technology,” said CEO Scott Wine on the company’s first-quarter earnings conference call in May. “Hemisphere’s capabilities will allow us to rapidly develop automated and autonomous solutions for both agriculture and construction.”
Deere has similar capabilities. Smarter equipment is leading to better profit margins. Wall Street projects CNH’s operating profit margins will hit almost 13% in 2025, up from about 10% in 2022. Analysts project Deere’s margins will go to about 22% from 20% over a similar span.
The ag-equipment makers, and their investors, can thank the engineers for that.
Write to Al Root at [email protected]
Source: https://www.barrons.com/articles/ford-layoffs-engineers-hiring-deere-cnh-e4e6cd57?siteid=yhoof2&yptr=yahoo