Ford to slash 10% of workforce in North America and Asia

Alvin Kelly
May 20, 2017

Ford told its employees this morning that it plans to cut 10% of its salaried workforce in North America and Asia, or about 1,400 employees as the automaker wrangles with falling profits and pressure to boost its stock price amid slowing US industry sales.

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.

Worldwide, Ford employs roughly 200,000 people, and the job cuts will in large part affect salaried employees, according to people familiar with the matter. Reuters reported the cuts would eliminate 10% of Ford's salaried staff in North America and Asia.

The company, which employs a total of about 30,000 salaried workers in the USA, did not break down the number of employees in MI that could be impacted.

The company's market value is now behind Tesla and General Motors, and its stock price has fallen over 40 percent since 2014.

The company is also spending heavily on technology with an uncertain future, like self-driving vehicles.

Certain areas of the business won't be targeted, including Ford's product development and credit divisions.

In a statement, the company said it's focused on reducing costs and improving efficiency. Of those, 30,000 positions are salaried which means job cuts could amount to 3000.

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Ford shares fell as much as 2.5 percent in heavy trading and were headed to their worst close since November 2012 as the broader markets tumbled over the political turmoil in Washington.

Ford's traditional automotive business has struggled more than crosstown rival General Motors Co as the USA auto market declines following seven years of growth.

Ford Motor Co. has said that it wants to reduce costs by $7 billion in 2017 in order to increase profitability next year as USA auto sales are expected to stagnate.

Last week, during the company's annual meeting, a number of shareholders pressed Ford's management about the company's stock price, which has dropped 17% since January to $10.94 per share.

The decision would come on the heels of a quarter, identified as one of the toughest by CFO Bob Shanks - profit was down by more than a third compared to the year-ago quarter, primarily due to the launch of new F-150 back then.

Following initial reports of Ford's impending job cuts, investors hardly rallied. The company wants to boost profits and prop up its falling stock price.

It is unclear if the prospective job cuts will include hourly workers, and the job reduction plan could be complicated by pressure from President Donald Trump to increase hiring in USA manufacturing sector. UBS analyst Colin Langan said in a research note that it remains "bullish" on Ford, noting its stock is priced at seven times earnings per share, lower than the long term average of 9 times earnings.

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