Ford plans job cuts to boost profits

Javier Howell
May 26, 2017

Ford (F) plans to reduce the size of its global workforce by about 10 percent in a bid to cut expenses and mitigate the impact that falling auto sales are having on the company's profitability, according to the Wall Street Journal.

Reuters is reporting that "Ford plans to offer generous early retirement incentives to reduce its salaried headcount by October 1, but does not plan cuts to its hourly workforce or its production".

In an email to BuzzFeed News, Democratic Congressman Brendan Boyle of Pennsylvania said job cuts will not make U.S. businesses competitive, and that "we must instead invest in quality, full-time, salaried workers if our nation is to keep manufacturing the best products in the world".

Salaried personnel will shrink by 10 percent in Ford's North American and Asia Pacific operations, the Dearborn, Michigan-based company told employees Wednesday. On July 1, 2014, when Fields assumed the Helm, Ford shares closed at $17.41; stock prices have declined roughly 40 percent since then.

As Ford has hired more people in the past three years, largely in new technology projects General Motors has reduced its USA workforce in response to lowered demand for cars, and has withdrawn from underperforming markets.

In 2016, Ford cut hundreds of white-collar jobs in Europe, reducing costs by $200 million annually.

The buyout affects about 15,000 employees in North America and the target is about 10 per cent, but that doesn't necessarily mean Ford Canada has a target of 60 employees, Mr. Moran said. "We have not revealed any new individuals efficiency actions, nor do we discuss about speculation".

The job cuts are a part of a plan announced previously to slash $3 billion in costs, said the person in the know, as new auto sales in the US have been showing signs of slowing down following seven consecutive years of growth since the Great Recession ended. About half of Ford's employees live in America. Hourly jobs, particularly in North America, will not be cut as the company works to keep up with demand for new vehicles, which remains relatively strong.

Ford shares fell 1.1 percent to $10.82 a 52-week intraday low, in early trading.

Monday's announcement is Ford's latest cost cutting measure to turn the company into a profitable enterprise, after some recently depressing sales figures.

The company agreed to scrap a factory in Mexico and add 700 jobs in MI with the money saved.

Ford's offer will be open to around 15,300 workers, including 9,600 in the US, 1,000 in Mexico, 600 in Canada and 4,141 in Asia.

Ford isn't confirming these plans, though.

Last week, Ford's directors held a "strategy session" to review the company's priorities, and stockholders were critical of the company at its annual shareholders meeting.

Other reports by Insurance News

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