Ford plan to cut its global workforce by 10 percent, eliminating tens of thousands of jobs in the U.S., in an effort to bolster profits and its dwindling stock price.
The automaker has recently been under the gun from its board of directors and shareholders amid sinking profits of nearly 35 percent to $1.6 billion during the first quarter and its plummeting stock price, Reuters reported Monday.
A source told the media outlet that Ford plans to offer early retirement incentives to reduce its number of salaried employees by Oct. 1, but does not plan cuts to its hourly workforce or its production.
Ford has about 200,000 employees worldwide, with 30,000 salaried workers in the U.S., says the report.
The plan aims to trim as many as 20,000 jobs, a majority of those jobs affecting the U.S. and Asia, though that remains an approximate figure.
NBC reports the automaker plans to take other measures to slash costs by $3 billion and reverse its sharp decline in earnings, which resulted in widespread scrutiny over its management by several analysts and investors.
Ford issued the following statement on the matter:
“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.”
The statement also mentioned that “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.”
Ford plans to emphasize the voluntary nature of the staff reductions. Ford said April 27 when it reported first-quarter earnings that it planned to cut $3 billion in costs.
“We are continuing our intense focus on cost and the reason for that is not only mindful of the current environment that we’re in, but also I think preparing us even more for a downturn scenario,” Chief Executive Mark Fields told analysts.
Ford has encountered a whirlwind of challenges, including declining sales, increased recall costs, as well as soaring prices for raw materials. Additionally, the company has made significant investments in retooling plants to switch from producing small passenger to more profitable light trucks.
The automaker’s management has also been criticized for its chosen method of spending on things such as connected car and autonomous vehicle technologies, with the goal of repositioning Ford as a “mobility company,” rather than just an automotive manufacturer, which has not gone over well with Ford investors or Wall Street, for that matter.
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