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Thursday, 04 October 2018 22:50

Ford Says Metals Tariffs Cost Company $1 Billion

Written by Graeme Roberts, Just Auto

 

 

Ford CEO Jim Hackett encouraged the Trump administration to resolve trade disputes quickly, or else it could do "more damage" to his company.

 

Ford is already suffering losses from tariffs imposed by President Donald Trump.

 

"The metals tariffs took about $1 billion in profit from us---and the irony is we source most of that in the U.S. today anyways," Hackett said in an interview on Bloomberg Television. "If it goes on longer, there will be more damage."

 

Ford and other global automakers have opposed the president's use of tariffs and the retaliation they spur. Bloomberg noted that in August, Jim Farley, Ford's head of global markets, described Trump's tariffs on steel and aluminum as a "significant headwind for us." A few weeks later, the automaker canceled plans to import the Focus Active crossover from China, citing Trump's vehicle tariffs. Build in the U.S. was quickly ruled out.

 

"What we're urging our administration to do---where we're in China and in Europe---we say, you need to come to agreement quickly," Hackett said.

 

Bloomberg noted Ford booked net income in 2017 of $7.6 billion, the most since 2013, but with analysts estimating a 29 percent drop in profit this year, it's embarked on an $11 billion restructuring effort to improve margins in the core automotive business while investing billions in electric and autonomous-vehicle technology.

 

The automaker has blamed uncertainty over Brexit for a GBP 760m drop in its European earnings in 2017, citing plummeting confidence in the UK since the Brexit referendum and raising fears of long-term damage from European Union withdrawal.

 

It's worth noting that Ford had---long before Brexit---closed or sold its UK auto-making plants and, more recently, transferred van production to Turkey. It currently operates two engine facilities, R&D and a retail dealer network. It has also long struggled to make a profit in Europe, taking such drastic action as closing a large plant in Belgium.

 

Ford attributed GBP 470m of the GBP 760m loss to the drop in the value of the pound since the Brexit referendum and said it was prepared to "take whatever action is needed" to keep its European business profitable, something likely to be seen as a warning that it could scale back UK operations.

 

We thank Just Auto for reprint permission.

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