Business & Tech

Ford, facing investor pressure, will cut 1,400 salaried jobs

MIAMI, FL - MAY 16: A Ford sign is seen on a dealership's lot on May 16, 2017 in Miami, Florida. Ford Motor company annouced it is planning to cut about 10 percent of its global workforce. (Photo by Joe Raedle/Getty Images)
Joe Raedle/Getty Images
Ford said the cutbacks are part of an effort aimed at “reducing costs and becoming as lean and efficient as possible.”

Ford Motor Co. said Wednesday that it would cut 10 percent of its salaried jobs in North America and Asia as part of a cost-saving move aimed at increasing sagging profits and propping up its stock price.

The news comes less than a week after its chief executive, Mark Fields, faced criticism at the automaker’s annual shareholder meeting for its lagging performance.

The cutbacks, totaling 1,400 positions, are part of an effort aimed at “reducing costs and becoming as lean and efficient as possible,” the company said in a message to employees.

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Automakers are being challenged by slowing sales in the United States after seven years of steady growth. Ford’s sales slipped 5.6 percent in the first four months of 2017.

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Ford said it expected the job reductions to be complete by the end of September, primarily through early retirement offers and other financial incentives.

It said factory jobs would be unaffected.

The company’s operations in Europe and South America are also excluded because they have already undergone cutbacks, the company said.

“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 automaker said.

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Ford had $1.6 billion in net income in the first quarter, a 35 percent drop from the year-ago period. Its stock has declined about 40 percent since Fields was named chief executive three years ago, and almost 10 percent since Jan. 1, even as the overall market has risen.

Fields has made significant spending commitments as part of a bid to shed the Rust Belt image of auto manufacturing and reposition Ford as a forward-looking “mobility company.”

Among the initiatives is a plan to create a sprawling, high-tech headquarters campus in Dearborn, Mich., of energy-efficient buildings that will be linked by self-driving vehicles. The project is expected to take 10 years to complete and is estimated to cost at least $1 billion.

Ford also pledged to invest $1 billion over the next five years in the software company Argo AI, which the automaker is counting on to develop artificial intelligence technology that will serve as the brains of future autonomous vehicles. Ford invested smaller sums in other startups working on digital maps, machine vision, and cloud computing — all technologies that may pay off in the future but add little to its current vehicles.

Those investments are intended to help Fields reach an ambitious goal. Last summer, speaking at Ford’s research center in Silicon Valley, he vowed that the company would begin mass producing a self-driving car — with no steering wheel and no pedals — by 2021.

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David Whiston, a financial analyst at Morningstar, said he thought Fields was correct in investing in autonomous technology and mobility services like ride-hailing. “I think Ford is in a tough spot,” he said. “They have to invest for the future, and the earnings they are generating are quite good.”

Last year Ford reported $4.6 billion in net income — which would have been considered an outstanding achievement a decade ago.

“But at the same time, there’s not much they can do right now,” Whiston said. “The market is at its peak. There’s no one or two silver bullets that will make the stock rally.”