The Phaserl


#Carmageddon Now: Ford to Slash 10% of its Workforce

by Wolf Richter, Wolf Street:

“According to people briefed on the plan.”

Ford’s shares have gotten hammered as it struggles with plunging car sales, and in April even with weak truck sales, mired as automakers are in the US “car recession.” At $10.94 at the close on Monday, shares are down 37% from their high in July 2014, when Mark Fields became CEO. Shares hit a new 52-week low on Friday, despite two consecutive years of record earnings. But Ford announced that profits would decline in 2017, and at a “strategy session” last week, Ford’s frustrated directors put the heat on Fields.

After announcing in March that Ford would create 700 jobs in Michigan, more or less an optical illusion as a nod to Trump, it is now time to throw Wall Street a bone. A huge bone.

Ford is considering cutting 10% of its global workforce of around 200,000 employees (about half of them in the US), “according to people briefed on the plan,” cited by the Wall Street Journal.

That’s about 20,000 people, globally. If these cuts, or some of these cuts, hit US workers, there’s going to be some wild tweeting from the White House. But that too shall pass. Because Wall Street should be happy.

This is part of a drive to slash $3 billion in costs for 2017. Doing what American companies do best: cost cutting. The WSJ:

The job cuts, expected to be outlined as early as this week, largely target salaried employees, these people said. It is unclear if the plan includes reductions in the hourly workforce at Ford’s factories in the U.S. and abroad.

Ford is taking a “hard look” at global costs, though no official decision about the cuts has been made, “a ranking source” told The Detroit News. The source also said that the 10% cut cited by the WSJ seemed high.

Whatever the final number, we now know that these “sources” are fanning out to spread the news for maximum effect on Wall Street. Ford however said in an emailed statement of bland corporate speak:

“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.”

“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.”

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