Ford goes Full Austerity

Today’s headline – Ford – is neither a triumph nor failure.

This time of year, economists and analysts trawl through company reports, hawkishly eyeing up the losers and winners from the past year, but today’s headline – Ford – is neither a triumph nor failure. The US car giant’s better-than-expected profits in North America, with revenues up 13 per cent, are buttressed against a 21 per cent decline in Europe.

However, the US car giant needs to be more worried about its performance across the water. Ford’s sales on the continent have plummeted to levels last seen in 1995 and what is worrying is that Ford’s executives aren’t worried. The company today released the bland comment citing that, “The business environment remains uncertain, and Ford will continue to monitor the situation in Europe and take further action as necessary”.

Such a statement, void of commitment, will do little to calm the company’s investors, let alone its European plant workers. Factory redundancies before Christmas caused riots in Genk, Belgium. In the UK job losses will also result out of plant closures in Southampton and Dagenham, East London.

So why is Ford not overly concerned of its continental money well? In October it rolled out its “European Transformation Plan”. This plan writes off afore mentioned factory closures as “cost efficiency actions”. It also forecast today’s headline European losses as the company consolidates assembly plants, introduces a new cars and focuses on increasing its brand and cutting costs.

Overall, it appears that Ford has implemented a policy akin to that of our Coalition Government. Austerity is the key word and plans to be for the next half decade for Ford’s European operations. Poor growth results will be ignored as unfortunate consequences of a larger plan as Ford, held up by US profits, will continue to cut expenditure in Europe.

While it comes as no surprise that Europe has been a stagnant market for cars since 2007, the UK has actually bucked that trend with sales hitting a four year high. And our most popular car – the Ford Focus.

In the past, Ford has often provoked strong reactions. Photograph: Getty Images

Oliver Williams is an analyst at WealthInsight and writes for VRL Financial News

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Why relations between Theresa May and Philip Hammond became tense so quickly

The political imperative of controlling immigration is clashing with the economic imperative of maintaining growth. 

There is no relationship in government more important than that between the prime minister and the chancellor. When Theresa May entered No.10, she chose Philip Hammond, a dependable technocrat and long-standing ally who she had known since Oxford University. 

But relations between the pair have proved far tenser than anticipated. On Wednesday, Hammond suggested that students could be excluded from the net migration target. "We are having conversations within government about the most appropriate way to record and address net migration," he told the Treasury select committee. The Chancellor, in common with many others, has long regarded the inclusion of students as an obstacle to growth. 

The following day Hammond was publicly rebuked by No.10. "Our position on who is included in the figures has not changed, and we are categorically not reviewing whether or not students are included," a spokesman said (as I reported in advance, May believes that the public would see this move as "a fix"). 

This is not the only clash in May's first 100 days. Hammond was aggrieved by the Prime Minister's criticisms of loose monetary policy (which forced No.10 to state that it "respects the independence of the Bank of England") and is resisting tougher controls on foreign takeovers. The Chancellor has also struck a more sceptical tone on the UK's economic prospects. "It is clear to me that the British people did not vote on June 23 to become poorer," he declared in his conference speech, a signal that national prosperity must come before control of immigration. 

May and Hammond's relationship was never going to match the remarkable bond between David Cameron and George Osborne. But should relations worsen it risks becoming closer to that beween Gordon Brown and Alistair Darling. Like Hammond, Darling entered the Treasury as a calm technocrat and an ally of the PM. But the extraordinary circumstances of the financial crisis transformed him into a far more assertive figure.

In times of turmoil, there is an inevitable clash between political and economic priorities. As prime minister, Brown resisted talk of cuts for fear of the electoral consequences. But as chancellor, Darling was more concerned with the bottom line (backing a rise in VAT). By analogy, May is focused on the political imperative of controlling immigration, while Hammond is focused on the economic imperative of maintaining growth. If their relationship is to endure far tougher times they will soon need to find a middle way. 

George Eaton is political editor of the New Statesman.