Report: Ford plans to slash 1,000 jobs in North America as restructuring drags on
Detroit Free Press (MI)
Ford Motor Co. plans to cut an estimated 1,000 salaried jobs in North America, according to a report from Bloomberg.
"The job cuts are aimed at improving the automaker’s efficiency and are not related to rising costs from the coronavirus pandemic," the report posted online Monday quoted people familiar with the action "who asked not to be identified revealing internal plans." "An announcement could come as early as this week," the people said.
A Ford spokesman did not challenge the report late Monday.
The Free Press had sought confirmation from the company about unconfirmed reports from white collar employees who said a jobs reduction announcement is pending. A term cited for the effort is a "Voluntary Incentive Program" or VIP.
When asked about potential job cuts, Ford spokesman Ian Thibodeau said Tuesday in a prepared statement: "We are always looking at ways to make our business more effective. There is nothing to announce at this time."
Ford reported a dramatic loss in the first quarter, additional losses in the second quarter and forecast a grim third quarter. Prior to the coronavirus crisis, Ford CEO Jim Hackett often expressed regret for a disappointing performance, saying the company could and would do better.
Hackett is scheduled to leave the company and hand over his title to Chief Operating Officer Jim Farley on Oct. 1, after three years at the helm.
For the past two years, Hackett has lead a $11 billion global restructuring. Industry analysts have pressed him for details during earnings calls and he has assured them outcomes would be positive.
Ford reported disappointing earnings in 2019, before the pandemic.
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Hackett has overseen stock value loss and operating loss during his tenure.
Despite promises of fitness, the CEO has frustrated shareholders, who saw their dividend suspended.
Ford has shown a pattern of losing money in all markets except North America.
More cuts urged
Morgan Stanley analyst Adam Jonas predicted in May 2019 that Ford would be unable to reach its profit goals for "Smart Redesign" by laying off just 7,000 salaried workers total worldwide by August 2019, as was planned.
The company must cut "a further" 23,000 salaried jobs in the near term to fulfill its goals, Jonas wrote at the time.
"Ford disclosed that the 7k headcount cuts will save $600 million annually, or an average of $86k per worker," said an investment report dated May 21. "Our (calculations) ... require more than a further 23k salaried headcount reductions."
Things worsened since Jonas' call for massive job cuts and cost containment.
In April, Ford reported a $2 billion loss in the first three months of 2020. It was Ford's first quarterly earnings net loss since April 2009 during the Great Recession.
In July, Ford reported a $1.9 billion loss in the second three months of 2020, which reflected a one-time investment gain from its partnership with Volkswagen in Argo AI, the autonomous driving technology company, of approximately $3.5 billion.
More: Ford's plan to defer government loan payments a 'concerning sign'
Ford Chief Financial Officer Tim Stone has said at the time he remains optimistic and finances are solid even as he has indicated things will continue to worsen in the near term.
Ford recently sought and won permission from the U.S. Department of Energy to defer debt payments owed for a 2009 government loan.
Regulatory documents filed by Ford showed the company owes payments of $591 million in 2020, $591 million in 2021 and $289 million in 2022.
"The fact that Ford Motor Co., a multibillion dollar organization, finds it necessary to defer loan payments of that size would be a concerning sign to their investors," Charles Elson, director of the Weinberg Center for Corporate Governance at the University of Delaware, said last month.
In addition, Ford also is paying millions of dollars to nearly 2 million owners and former owners of the Ford Focus and Fiesta vehicles with defective transmissions in a class-action lawsuit the company settled this year.
The company disclosed in court documents in 2019 that Ford spent $47 million buying back 2,666 vehicles prior to the public settlement, while at the same time denying publicly that the consumer claims had merit.
More: Ford knew Focus, Fiesta models had flawed transmission, sold them anyway
More: 'Our constant struggle to keep the Focus operable is truly overwhelming'
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While Ford tries to trim costs, the company is facing an especially challenging fourth quarter with the building of its all-new 2021 Ford F-150, the all-electric Mustang Mach-E SUV and the Bronco Sport. The manufacturing of the Bronco follows quickly in 2021.
A lot is at stake, especially with the redesign of America's bestselling pickup.
The highly valuable Ford F-Series generated more revenue in 2019 at $42 billion than the National Football League, Major League Baseball, National Basketball Association and National Hockey League combined -- which was just $40 billion.
Cash is essential during these product launches, which are expensive.
Ford ended the second quarter with $39.3 billion in cash on hand and $39.8 billion in liquidity. A year ago, Ford had $23.2 billion in cash on hand and $37.3 billion in liquidity.
"Our journey will be a long one," Stone said during an earnings call in July. "Ford is positioned to win this race."
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Others voice concern.
Sam Fiorani, vice president of global vehicle forecasting at AutoForecast Solutions based in Chester Springs, Pennsylvania, said Ford was better prepared a decade ago when the last recession hit.
"This is not about the pandemic," Fiorani said after the most recent earnings loss. "We've been saying troubles were coming for more than a year."
The company employed an estimated 188,000 workers globally at the end of June.
More: Jim Hackett reveals why he's leaving Ford a year earlier than expected
Farley, who joined Ford shortly before the Great Recession, says it's "go time."
"We have this onslaught of product the second half of the year. We’re laser focused on bending that financial curve as a team. We’re going to have a very detailed plan to over-deliver this year," he said in February, when he was named chief operating officer.
Just after being named incoming CEO on Aug. 4, Farley told the Free Press, "We have momentum as a company. … We think that Ford is so well placed, has such a big opportunity to create value for investors."
Contact Phoebe Wall Howard at 313-222-6512 or [email protected]. Follow her on Twitter @phoebesaid. Read more on Ford and sign up for our autos newsletter.
This article originally appeared on Detroit Free Press: Report: Ford plans to slash 1,000 jobs in North America as restructuring drags on