According to a Wall Street Journal report from Monday, Ford is going to announce their plan to cut 10 per cent of their entire global force, later this week. In recent days, the automaker has been reportedly facing a huge pressure from both its board of directors and shareholders. They want to see that the company’s strategy is indeed working, especially now that the United States sales are declining. What is worse, this is the first time in seven year a decline is taking place.
Cutting global workforce
During this first quarter, Ford’s profits declined with 35 per cent to $1,6 billion. This happened mainly because warranties, recalls and all the materials left a huge hole in the company’s budget. The report is saying that Ford might begin the cuts as early as this week. They will mainly affect the employees with a salary. As for hourly factory workers, nobody knows for now if they will be included into the cut.
In an official statement, the automaker said that it has not yet officially announced any job cuts. However, it did not deny what the report was saying. Moreover, this statement underlines the need of sometimes cutting the costs. Also, Ford said that it will keep its focus on those priorities which will prove profitable. Also, the company is planning to invest in emerging opportunities, but in a prudent way. So, reducing the costs is part of taking a business forward in order to grow.
Meanwhile, analysts are saying that what Ford does is actually a very prudent action. The United States industry sales are declining, so the company is preparing for the worst. If the automaker will survive this period of time, it will most probably come out of it not as damaged as other companies which did not take such measures. Ford has been especially under pressure to boost its stock price. So, in a way, their action is completely normal.
During the Company’s annual meeting last week, some shareholders put pressure on the automaker’s management to make the situation clear about its stock price. Since January, it has reportedly dropped 17 per cent, to just to $10.94 per share. Future will tell how Ford will handle this situation and what will happen next.
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