Ford Motor, facing pressure to improve profitability amid a lagging stock price, confirmed Wednesday that it would cut almost 10% of its salaried workforce in its North America and Asia Pacific divisions.
Ford also recently called into question the future of its investments in its United Kingdom plants ahead of Brexit negotiations and stated its desire for a transition agreement if trade agreements can't be reached within two years. Additionally, Ford shares have dropped 40 percent since Mark Fields ascended to the CEO position in 2014. But the initial response by investors is proving lackluster.
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 US automaker looks to boost its sagging stock price.
The Journal says, "Deep job cuts in the USA could trigger a political backlash at the White House, as President Donald Trump has repeatedly pointed to auto makers like Ford as examples of companies adding U.S.jobs".
The focus of the cost-cutting effort is on North America and Asia, people familiar with the plans said.
The remaining cuts will focus on Ford's Asian operations.
First-quarter adjusted earnings at Ford fell 42 percent, while GM has said it remains on track for another record annual profit.More news: Macron emphasizes European Union by naming Le Drian to French foreign ministry
As Ford has hired more people in the past three years, largely in new technology projects General Motors has reduced its US workforce in response to lowered demand for cars, and has withdrawn from underperforming markets. Analysts say Ford has failed to respond effectively to dramatic shifts, notably the boom in light truck sales; utility vehicles and pickups now account for almost two-thirds of the American new vehicle market. Ford canceled its Mexico plant in January, opting instead to add 700 workers to a suburban Detroit plant in 2018 to make electric and self-driving vehicles.
To make room for those vehicles, Ford is transferring production of several slow-selling passenger auto models, including the Focus, to Mexico. As a candidate for president past year he repeatedly hammered Ford for its investment in plants in Mexico.
In January, Ford also added 700 MI jobs, following criticism from Trump over plans to increase production in Mexico. In reality, the maker said it changed plans due to declining passenger auto demand.
The 114-year-old automaker said Wednesday it is cutting 1,400 non-factory jobs in North America and Asia Pacific.
The president, who has been quick to comment on Ford and other automaker's jobs announcement, was silent Wednesday morning on Twitter. The good news - for now - is that it won't impact hourly employees.
With auto sales dropping for four consecutive months, Ford Motor Co.is believed considering personnel cuts to reduce the costs, local media reported on Tuesday.
Ford also isn't likely to cut jobs in its emerging businesses, such as its research center in Palo Alto, California. It expects to rake in 9 billion dollars this year, down 1.4 billion dollars from 2016. Right now, it is unclear if hourly employees in Ford's factories in the US and overseas will be affected. Ford shares are down almost 10 percent so far this year.