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The Resurrection of Ford’s Bronco Illustrates How Capitalism Works

Ford's announcement of its resurrected Bronco for 2020 shows pictures of steep technical trails heading off into the woods while calling it a "no-compromise midsize 4x4 utility for the thrill seekers who want freedom and off-road functionality, with the space and versatility of an SUV. It's capable of conquering everything from your daily commute to gravel roads and boulders." (See Sources below)

This is how capitalism works. The Jeep Wrangler owns a huge share of the "off-road SUV" market despite the fact that 99 percent of their vehicles never venture off the pavement. Ford wants part of that market.

This resurrection is only a tiny part of the revolution that has been taking place at Ford over the last two years. When CEO Jim Hackett took over the company in May 2017, it was losing market share to its competitors: GM, Chrysler, VW, Toyota, and others. Hackett was tasked with cutting the fat (the company had added 60,000 top level employees since the end of the Great Recession), getting lean, and creating a management structure that is more nimble and able to face the changes in the automotive industry.

When CNBC reported on the announcement, it made it sound not only like doom for Ford but for the world's economy. Its correction was weak: "This article was updated [corrected] to reflect that Ford is cutting about 10% of its white-collar employees, not 10 percent of its total global workforce."

CNBC didn't complete its correction. Ford has 200,000 employees worldwide with 70,000 of them being salaried, the rest hourly. The cuts apply only to the white collar positions, and most of them are overseas. Only 2,300 of them apply to positions in the United States, and 1,500 of them accepted buyouts last year. That leaves just 800 to be laid off this year, each of them with severance packages. That's four-tenths of one percent, CNBC, not 10 percent.

To put Ford's announcement in perspective, let's remember the enormous upheaval taking place in the automotive world: buyers are switching from regular vehicles to SUVs and pickups in such large numbers that Ford, GM, VW, and other carmakers are all but eliminating standard vehicle production. The coming wave of technology is providing impetus to electric and autonomous, self-driving vehicles, which are expected to represent a much larger portion of new sales by 2025, and likely even sooner.

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