Ford Aims to Cut Global Workforce Roughly 10% -- Update
Ford Motor Co. aims to cut about 10% of its global workforce amid Chief Executive Officer Mark Fields's drive to boost profits and the auto maker's sliding stock price, according to people briefed on the plan.
The move comes as Ford targets $3 billion in cost reductions for 2017, a plan intended to improve profitability in 2018 even as U.S. auto sales plateau. Ford's share price has suffered during Mr. Fields's three-year tenure, and the company's market value has slipped far behind those of Tesla Inc. and General Motors Co.
The job cuts, expected to be outlined as early as this week, largely target salaried employees, these people said. It is unclear if the plan includes reductions in the hourly workforce at Ford's factories in the U.S. and abroad. Ford has 200,000 employees globally, half of which work in North America.
"We remain focused on the three strategic priorities that will create value and drive profitable growth, which include fortifying the profit pillars in our core business, transforming traditionally underperforming areas of our core business and investing aggressively, but prudently, in emerging opportunities," Ford said in a statement.
"Reducing costs and becoming as lean and efficient as possible also remain part of that work. We have not announced any new people efficiency actions, nor do we comment on speculation," the company said.
Deep job cuts in the U.S. could trigger a political backlash at the White House, as President Donald Trump has repeatedly pointed to auto makers like Ford as examples of companies adding U.S. jobs.
Mr. Trump pressured Ford to pull back on Mexico production and invest in U.S. factories. Ford committed to scrap a Mexican factory that had been under construction until earlier this year. The company will add 700 jobs in Michigan with money saved in Mexico.
Mr. Fields last week faced heightened scrutiny from board members and investors who have long complained about Ford's sluggish stock performance in an era of record profitability.
Ford has launched into a series of new technology investments under Mr. Fields, including a $4.5 billion electric-vehicle program and an aggressive autonomous-car project. While both programs could contribute to Ford's longer-term prospects, the spending erodes profit margins at a time when sales of lucrative pickups and sport utilities remain strong.
The auto maker's stock price has fallen nearly 40% since Mr. Fields became CEO in mid-2014. Shares have fallen even as the broader U.S. auto market has grown for seven straight years. Now, as volumes stabilize, executives are turning to downsizing moves like those of a decade ago.
Ford shares were up 2 cents at $10.94 in 4 p.m. composite trading Monday on the New York Stock Exchange.
While Mr. Fields worked to ease political tensions, he hasn't been able to answer investor concerns about Ford's ability to weather a downturn or find new sources of revenue. The Dearborn, Mich., auto maker has booked substantial profits in recent years, including delivering two consecutive years of record earnings, but its market value sank below electric-car maker Tesla Inc. earlier this year.
Now, Ford has said it expects its profits to fall in 2017 and has flagged slowing sales in the U.S. and China -- two of the world's largest auto markets.
Ford has been steadily expanding both its salaried and unionized workforce since the financial crisis. While many employees have been added to support higher volumes and expansion in global markets, Mr. Fields has also been hiring to support new technology ventures that fall outside of the company's core business of building and selling cars.
These new projects include a unit called Ford Smart Mobility LLC, and an expanding presence in Silicon Valley, where several tech giants are rushing forward with car-sharing ventures, driverless cars and other future mobility experiments. Ford in February, announced it would acquire artificial-intelligence startup Argo AI with plans to invest $1 billion over the next five years to expand the firm.
General Motors, meanwhile, has been retrenching under Chief Executive Mary Barra. It began cutting thousands of U.S. jobs in the U.S. earlier this year in response to soft demand for passenger cars, and has pulled out of several underperforming markets, including a plan to sell its Opel unit to Peugeot.
Ms. Barra, like Mr. Fields, faces pressure from investors. Greenlight Capital Inc., a hedge fund run by David Einhorn, is pleading with shareholders ahead of GM's annual meeting to support his plan for a revamped capital structure and new board members.
Ford steered clear of the bankruptcies that allowed GM and Fiat Chrysler Automobiles NV's Chrysler unit to cut significant costs under chapter 11 protections. Ford did, however, implement a series of painful cuts aimed at slimming down unionized head count at manufacturing plants and shrinking the white-collar ranks.
Mr. Fields, a 28-year veteran of the company, ran Ford's core North American unit for several years and served as architect of many of those downsizing efforts. He has overseen several tense negotiations with United Auto Worker officials. He also shrank the company's European operation earlier last decade, earning a reputation as a hard-nosed leader willing to attack the cumbersome cost structure that long burdened Detroit's car companies.
As sales rebounded following the 2009 financial crisis, Ford's ranks swelled. Employment in North American, responsible for the bulk of the auto maker's profits, has grown 25% over the past five years and the auto maker has also been expanding in China.
Ford has been a big beneficiary from surging demand for SUVs and pickups, including the best-selling F-150. Like GM and Chrysler, Ford has been forced to trim production of smaller cars, such as the Focus, and the auto maker has taken action to reduce dealer inventories in the U.S.
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(END) Dow Jones Newswires
May 16, 2017 00:00 ET (04:00 GMT)