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Ford confirms a 10% cut to workforce after calls to drive flagging share price higher

Ford's decision to cut jobs may draw criticism from US President Donald Trump who has made improving the US labour market a priority
Ford
Ford's shares have been on the decline

Ford Motor Company (NYSE:F) has confirmed it will cut about 10% of its workforce in North America and Asia following calls from investors to reinvigorate its declining share price.

The company said today about 1,400 salaried positions would be affected, using voluntary packages, including early retirement. Ford, which currently employees a little over 200,000 people across the world, said the staff will leave by the end of September.

The job cuts won’t be in areas that support production or businesses in Europe and South Africa where headcount has already been reduced.

Ford’s decision to slash jobs is part of a previously announced plan to slash costs by US$3bn in an effort to return to growth and support its lagging share price.

“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 company said in a statement.

“Reducing costs and becoming as lean and efficient as possible also remain part of that work, including plans to reduce 10% of our salaried costs and personnel levels in North America and Asia Pacific this year, using voluntary packages.

 

Ford’s falling share price…

The firm sold 215,000 vehicles in April, 7% fewer than during the same month a year earlier. In the past year, its shares have fallen 16.67% to US$10.85.

Since Mark Fields became chief executive almost three years ago, the best part of US$20bn has been wiped from the company’s market valuation.

Following several years of growth at the start of the decade, its sales and profits over the past year have dropped.

Last month, car sales in Europe dipped by 6.6%, the first fall since 2012. It was worse still in the UK, where April’s sales figures fell by almost 20% although this was partly due to a change in vehicle licensing rules.

 

Ford's decision may upset Donald Trump…

The move to axe roles could draw criticism from President Donald Trump who has vowed to help keep and create jobs in sectors like the car industry.   

During his election campaign he attacked the auto industry’s use of Mexican plants to produce vehicles for the US market.

On the back of the criticism, Ford in January threw out plans to build a US$1.6bn car factory in Mexico and instead create 700 jobs in Michigan.

In March Ford said it would inject US$1.2bn in three Michigan facilities and add 130 jobs.

 

Jobs cuts announcement expected…

Ahead of the job cuts announcement, The Wall Street Journal had already revealed its plans to cut 10% of the workforce on Monday.

The report followed on from remarks made by Union unite in March that Ford was planning to axe up to 1,160 jobs at its Bridgend plant in South Wales by 2021.

Unite boss Len McCluskey said jobs are at risk as contracts will come to an end at the Bridgend plant over the next four years. The plant currently employs 1,760 workers.

Ford’s five-year plan, a copy of which was given to the union, revealed that the firm expects a “significant drop in the number of jobs” at Bridgend.

 



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