Published: Thu, May 18, 2017
Money | By Armando Alvarado

Ford announces 10 percent workforce layoff Worldwide


Last month, General Motors Co. In April, he told analysts the company would focus on cutting $3 billion in costs.

Ford's problems aren't entirely unique. Automakers are trimming expenditures as they brace for slowing auto sales. Sales in Asia are volatile and not as profitable. It also has reduced jobs in South America. Mr. Fields has pushed new technology investments like a $4.5 billion electric-vehicle program and an autonomous auto project, two things eating away at Ford's profit margins in the short-term despite lucrative pickup and SUV sales. Earlier this year, it announced an investment of $1 billion over five years in Argo AI, an artificial intelligence startup. Such investments may not pay dividends for years, but automakers can't risk being left behind by non-traditional rivals like Google and Uber.

Ford's market capitalization has been surpassed by Tesla Inc TSLA.O , which has sold just a fraction of Ford vehicles.

Ford's US sales are down in part because it doesn't have offerings in popular segments like subcompact SUVs and midsize pickups. But with profits expected to decline this year, Ford likely wants to assure investors that it can weather a storm or two without hemorrhaging money.

Ford also recently called into question the future of its investments in its United Kingdom plants ahead of Brexit negotiations and stated its desire for a transition agreement if trade agreements can't be reached within two years.

The early retirement offers won't be extended to key employees engineering new models and developing technology such as self-driving cars.

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While Shanks said the rest of the year would remain flat against the previous fiscal, changed market dynamics with the U.S. auto sales taking a turn from a record-growth phase could bring the company's North America margins further down further after a significant drop in the most recent quarter.

Certain areas of the business won't be targeted, including its product development and credit divisions. Ford has 200,000 employees globally, half of whom work in North America. Ford's stock was relatively flat in pre-market trading and has barely budged this week after reports of possible cuts first emerged in the Wall Street Journal.

Ford prepares to highlight the voluntary nature of the personnel decreases. It is unclear if the prospective job cuts will include hourly workers, and the job reduction plan could be complicated by pressure from President Donald Trump to increase hiring in USA manufacturing sector. Its U.S. shares rose 0.2 percent to $10.94 at the NY close on Monday, before the Journal's story was published.

Ford fell 0.3 percent to $10.91 as of 12:06 p.m.in NY trading.

Since Mark Fields became Ford's chief executive in 2014, company shares have fallen by almost 40 percent. Last Thursday, they grilled Fields and Ford during the annual shareholders meeting on why - despite billions in investment in the company's US facilities and new technology - the company hasn't been able to generate excitement on Wall Street.

"We're frustrated, but our business is performing well".

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