Markets

Ford CEO Mark Fields Attempts to Boost Profits With Job Cuts

Ford CEO Mark Fields Attempts to Boost Profits With Job Cuts

Ford Motor Co. has said that it wants to reduce costs by $7 billion in 2017 in order to increase profitability next year as US auto sales are expected to stagnate. The company plans to offer generous early retirement incentives to persuade people to leave by October 1 but has no plans to lay off any of its hourly workforce or reduce vehicle production. The auto maker said it expects 1,400 salaried positions to be affected by the end of September, as part of its plan to reduce costs and becoming as "lean as efficient as possible".

The layoffs are apparently part of a bid to save $3 billion in costs, at a time when vehicle sales are sluggish and new technologies require heftier investments. The statement added that the company has not announced new people efficiency action nor does it comment on any speculation. Ford said it will use early retirement and separation packages.

Ford's stock price has fallen almost 40 percent over the last three years as investors worry that sales in the USA, its biggest market, are peaking. The President took credit for Ford's decision to invest in the US.

Ford won praise from Trump when it announced in early January that it was scrapping plans for a plant in Mexico and would invest $700 million in a MI plant to build electric and self-driving cars.

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".

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in new technology projects General Motors has reduced its US workforce in response to lowered demand for cars, and has withdrawn from underperforming markets.

While many employees have been added to support higher volumes and expansion in global markets, Mr. Fields has also been hiring to support new technology ventures that fall outside of the company's core business of building and selling cars.

The announcement comes as the company grapples with slowing sales after several years of growth.

Ford refused to confirm or deny the story, but said in a statement that it was focused on its plans to "drive profitable growth".

But investors are anxious about slowing sales and an industry that could be dominated by autonomous vehicles and auto sharing in the future.

Hourly jobs, particularly in North America, will not be cut as the Detroit automaker works to meet demand for new cars in its home region, which remains relatively strong despite recent reports of rising inventories.

The company has also set aside $4.5 billion to develop a fleet of electrified vehicles, and intends on launching its first autonomous auto in 2021. April saw Ford sell 214,695 vehicles, approximately 7.2 percent fewer than the same period one year earlier.


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