Ford to cut 1,400 white-collar jobs, shares tumble
New York – Ford Motor Co said on Wednesday it plans to cut 1,400 salaried jobs in North America and Asia through voluntary early retirement and other financial incentives as the No. 2 U.S. automaker looks to boost its sagging stock price.
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.
The buyout offers were a fraction of the 20,000 job cuts that some news outlets had reported Ford could announce this week.
Ford said the cuts would amount to about 10 percent of a group of 15,000 managers and other non-production workers and would reduce labor costs for that segment by 10 percent.
The company said a large group of salaried workers would not be covered by the planned cuts, including those in product development and in the Ford Credit unit. The cuts will not apply to Ford’s Europe or South America units.
About two-thirds of the buyout offers are in North America and the rest in Asia. Ford does not plan to cut hourly workers or production.
The automaker will offer financial incentives, including generous early retirement offers, to encourage salaried employees to depart voluntarily by the end of September. Ford said it expects it will hit the targets through voluntary offers, spokesman Mike Moran said.
“Reducing costs and becoming as lean and efficient as possible also remain part of that work,” Moran said.
The voluntary incentives offers will go to about 9,600 of 30,000 U.S. salaried workers, the company said.
In 2016, Ford cut hundreds of white-collar jobs in Europe, reducing costs by $200 million annually.
Ford continues to churn out strong profits, reporting a record $10.4 billion in pretax earnings in 2016, and expects to earn around $9 billion this year.
But investors are worried about slowing sales and an industry that could be dominated by autonomous vehicles and car sharing in the future.
The Detroit automakers have been under pressure from U.S. President Donald Trump to add jobs in the United States, but declining U.S. sales and stalled share values are exerting a stronger force.
Ford said in January it was cancelling a planned Mexico plant and adding 700 jobs in Michigan.
Last month it announced plans to cut costs by $3 billion in 2017. Automakers are trimming expenditures as they brace for slowing auto sales.
General Motors Co has cut more than 4,000 U.S. jobs since November, and moved to conserve capital by shedding its European operations and closing unprofitable operations in Asia.
Ford’s market capitalization has been surpassed by Tesla Inc, which has sold just a fraction of Ford vehicles.
Ford announced in 2015 it is investing $4.5 billion to add 13 new electric and hybrid vehicles by 2020 as it sought to position itself as a mobility company.
“You have to have one foot in today… but also one foot in the future,” Chief Executive Officer Mark Fields told reporters last month. “I think investors understand our strategy.”
Ford shares are down nearly 40 percent since Fields took the helm in July 2014. – AFP