Ford Motor Co. is preparing major cuts to its worldwide workforce amid CEO Mark Fields’ renewed efforts to hike profits and address the company’s falling share price, The Wall Street Journal reported, citing people briefed on the move.
Ford is targeting $3 billion in cost reduction this year to enhance earnings in 2018 as U.S. light-vehicle demand begins to slip after seven straight years of gains, the paper said.
Ford shares closed Monday at $10.94, up 2 cents, just above its 52-week low of $10.90 a share and well off its 52-week high of $14.04 a share.
The company's stock price has suffered during the three years Fields has been CEO, succeeding Alan Mulally, and the company’s market value has slipped behind Tesla and General Motors.
The job reductions, which are expected to be disclosed as early as this week, affect salaried employees and aim to cut Ford's global head count by about 10 percent, the Journal reported late Monday.
“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,” Ford said in a statement in response to the Journal report. “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."
The paper said it was unclear if the cutbacks include hourly job reductions at Ford’s North American plants and overseas factories.
Ford ended the first quarter with about 202,000 employees worldwide, with half of that headcount in North America.
In Germany, where the carmaker's European operations are based, Ford has made voluntary buyout offers to a limited number of staff over the past few months, according to IG Metall union official Witich Rossmann, adding that he hasn't been informed of a bigger job-cut program. Ford employs about 24,000 people in Germany.
Ford's first-quarter profit fell to $1.6 billion, down $900 million from a year earlier, as revenue rose and profit margins shrank.
Even with first-quarter revenues rising by $1.4 billion, or 4 percent, to $39.1 billion, reflecting a strong sales mix, profits were pinched by charges for recalls, continued investment in new mobility services and higher parts costs for some 2016 product launches.
Ford says the first quarter will be the toughest in what’s expected to be a down year overall for the automaker. The remainder of 2017 will be about even to, or even better than, its financial performance last year, where it earned $10.4 billion in pretax profits, the second-best in the company’s history.