Ford to Cut 10% of Salaried Workforce in Asia, North America -- 3rd Update
Ford Motor Co. said Wednesday it aims to reduce its salaried workforce in North America and Asia by 10%, a cost-cutting move aimed at shoring up profits as the once-booming U.S. and Chinese auto markets start to cool.
Ford will offer about 1,400 white-collar workers early retirement and separation packages as part of the job-cutting plan with people expected to leave by September, the company said. Ford said cuts are under way or completed in other regions.
In a statement, Ford said that it remains focused on "becoming as lean and efficient as possible" but didn't provide any specifics on what would be included in the separation offers.
The move comes as Chief Executive Mark Fields is facing pressure from shareholders and board directors to sharpen the company's focus and reverse a nearly three-year slid in the stock price.
Write to Christina Rogers at christina.rogers@wsj.com
Ford Motor Co. outlined new steps in its global cost-cutting efforts, saying it will reduce salaried workforce in key regions by 10% amid "an accelerated attack on costs."
The newly announced moves, expected to result in 1,400 job cuts in North America and Asia by September, come as Chief Executive Mark Fields strives to provide more clarity to investors about the company's strategy. Ford's share price has slumped during Mr. Fields' three-year tenure at the helm and profit growth has ground to a halt as U.S. sales volumes plateau.
The reductions are part of a broader $3 billion cost-reduction target for 2017. Ford also said Wednesday other head count-reduction schemes in Europe and South America are either under way or completed.
Mr. Fields was recently granted a $2.5 million stock incentive by the board, which included the task of "developing a lean mind-set."
Ford has 200.000 employees world-wide and steadily increased its workforce since the financial crisis as the U.S. market rebounded and a plan to expand in China was launched. The Dearborn, Mich., auto maker has profited as demand for lucrative pickups and sport utilities surged amid lower gasoline prices.
The company's share price has hovered at $11 recently however, more than one-third lower than where the stock traded when Mr. Fields succeeded Alan Mulally in the summer of 2014. Ford's stock touched as low as $10.75 on Wednesday, the lowest point since August 2015. Shares traded 1.1% lower at $10.82 in Wednesday afternoon trading.
Ford will offer buyouts in the U.S., China and other affected countries. Employees in several of the company's departments -- including factory personnel, analytics, information technology and product development -- aren't eligible to be bought out.
The Wall Street Journal on Monday was first to report Ford's plans to slim down its salaried workforce, targeting a 10% reduction in head count.
In a statement, Ford said it remains focused on "becoming as lean and efficient as possible" but didn't provide specifics on anticipated cost savings. Those figures will be outlined later this year, along with related personnel costs, which will be booked as special items in the third quarter, a company spokesman said.
Ford's $3 billion cost-cutting target is aimed at restoring profit growth in 2018 and helping offset growing investment in new technologies, such as electric vehicles and self-driving cars. The auto maker's market capitalization earlier this year sunk below that of electric-car startup Tesla Inc. amid slower earnings growth.
Mr. Fields has pledged to take more decisive action, telling Wall Street analysts last week the company will improve communications to demonstrate resilience in its core automotive business.
Ford, like many of its rivals, faces mounting concern about its ability to weather a potential downturn in the global auto market. Mr. Fields has worked to convince investors that a series of investments and experiments are preparing his company to battle a wave of tech companies -- including Tesla, Apple Inc. and Alphabet Inc. -- that threaten to unseat Detroit as an auto industry powerhouse.
Alphabet's Waymo unit, for instance, has been testing autonomous-vehicle technology for several years and garnered attention that other companies, including conventional car companies, have scrambled to also attract. Tesla, while much smaller than Ford, has a sizable lead in electric vehicles and has routinely been quicker to launch new technology advances, such as comprehensive over-the-air updates for vehicle systems and semiautonomous driving features.
Ford is sinking $4.5 billion into electric-vehicle research, but has been vague about its specific plans for a long-range electric vehicle it plans to launch in coming years. The auto maker recently committed to invest $1 billion in a startup specializing in artificial intelligence.
Write to Christina Rogers at christina.rogers@wsj.com
(END) Dow Jones Newswires
May 17, 2017 13:51 ET (17:51 GMT)