David Cockfield discusses Ford
Ford Motor Co. (F.N) has told its 70,000 salaried employees that they will face unspecified job cuts as part of the automaker’s US$11 billion restructuring, a bid to reverse its fading fortunes and cope with competitive pressures more nimbly.
Morgan Stanley has speculated that Ford may pare more than 20,000 jobs from its global workforce of 202,000, but the automaker wouldn’t quantify how large it expected the salaried reduction to be or it if would involve involuntary separations. Ford also couldn’t estimate the financial impact or say whether it will take any charges for the program.
“Yesterday, we told our employees that we were in the early stages of an organizational redesign of the global salaried workforce,” Karen Hampton, a company spokeswoman, said in an interview Friday. The goal is “that gradually you’re getting a wider, flatter organization that is really designed for speed. Inevitably, we expect that to result in some reductions, but at this point there’s not a target.”
In July, the second-largest U.S. automaker cut its profit forecast for 2018 after second-quarter earnings fell by more than half. Chief Executive Officer Jim Hackett announced the restructuring at that time but declined to give details beyond the US$11 billion cost. He also canceled a September investor meeting in Dearborn, Michigan, where the company is headquartered.
Ford, beset with an aging model lineup, fell behind Fiat Chrysler Automobiles NV -- as well as General Motors Co. and Toyota Motor Corp. -- in U.S. sales last month for the first time in a decade. Investors are stampeding out of its stock, which has fallen 27 percent this year, and its credit rating is now one step above junk.
Still, the automaker has remained upbeat.
“I don’t think it’s even close to a crisis -- we’re making good profitability,” Executive Chairman Bill Ford told reporters last week at a centennial celebration of the company’s Rouge manufacturing complex. “Do we still have work to do? Yes, we do. But we are investing heavily in the product. We’re investing heavily in the future. And there’s nothing that we want to do that we can’t do.”
Ford has three key new models coming next year: the return of the midsize Ranger pickup and redesigned versions of its top two selling sport-utility vehicles, the Escape and the Explorer. It also is investing $4 billion to develop self-driving cars and create mobility services as it braces for the arrival of the autonomous age that is expected to upend the transportation business.
For now, though, it’s seeking to cut more than US$25 billion in costs and has now revealed that some of that will come by shrinking its salaried workforce. The headcount reduction was reported earlier by the Detroit News.
It will take Ford until the middle of next year to determine how many salaried workers it will eliminate, Hampton said. Regions that are struggling the most may see the deepest cuts, she said. Ford is losing money in Europe, Asia and South America, with only its operations in North America turning a profit, thanks primarily to its F-Series pickup line.
“There are areas of our business that need to become more fit and certainly this process will also help them do that,” Hampton said. “So you would anticipate those areas of the company to maybe see more reductions than others.”