Ford Motor said Wednesday it would cut its salaried workforce in North America and Asia by nearly 10% as it seeks to boost profitability amid a falling stock price.
The No. 2 U.S. automaker said it must focus on “becoming as lean and efficient as possible” as it announced job cuts that will affect 1,400 of about 15,000 salaried workers in its North America and Asia divisions and will be completed by October. Ford’s operations in Europe and South America have already seen workforce reductions.
CFO Bob Shanks said in September that the company expects to cut about $3 billion annually in 2016, 2017 and 2018.
“Belt tightening comes as no surprise with sales softening and profits squeezed,” Michelle Krebs, an analyst with Autotrader, told the Los Angeles Times. “Ford has been under particular pressure to take action to boost its stock price. The board meeting last week likely added pressure to get specific about cost cuts.”
On Tuesday, Ford’s stock fell to $10.90 per share — its lowest point in the past year — before closing at $10.94 for the day. In trading Wednesday, it was down 1.3% at $10.79.
As USA Today reports, Ford “remains endowed with strong financials” but investors “are anxious for signs that the company is positioned to capitalize on a disruptive wave of innovation that’s expected to sweep through the auto industry, including electric vehicles, ride-sharing and self-driving cars.”
“What’s more, the U.S. auto market, where Ford makes the bulk of its profit, appears to have peaked,” USA Today added.
Ford’s profit in the first quarter of 2017 fell from $2.4 billion to $1.6 billion, with profit in its North American unit declining by more than $1 billion.
The company said the job cuts would occur through “voluntary” buyouts and early retirement packages and will be spread out among “most” salaried departments, except product development, manufacturing and the company’s internal credit division.
Earlier this week, Ford CEO Mark Fields and other executives reaffirmed their strategy to “prudently” invest in emerging businesses while strengthening existing cash cows like pickup trucks.