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(Bloomberg) – Ford Motor Co. has announced to its 70,000 employees that they will face indefinite job cuts as part of the $ 11 billion automaker restructuring to reverse the trend and to cope more rigorously with competitive pressure.
Morgan Stanley has speculated that Ford could cut more than 20,000 jobs out of its 202,000 employees worldwide, but the automaker could not quantify the magnitude of the expected wage cut, nor could it lead to separations involuntary. Ford could not either estimate the financial impact or say whether it would cost a fee for the program.
"Yesterday, we told our employees that we were at the beginning of an organizational overhaul of the global paid workforce," said Karen Hampton, a spokeswoman for the company, in an interview. Friday. The goal is "that you gradually get a larger and flatter organization, really designed for speed. Inevitably, we expect this to translate into reductions, but for now, there is no goal. "
In July, the second-largest US automaker lowered its earnings guidance for 2018 after its second-quarter profit slumped by more than half. Chief Executive Officer Jim Hackett announced the restructuring at the time, but declined to give details exceeding $ 11 billion. He also canceled an investor meeting in September in Dearborn, Michigan, where the company's headquarters are located.
Fall behind
Ford, struggling with a range of aging models, has taken over Fiat Chrysler Automobiles NV – as well as General Motors Co. and Toyota Motor Corp. – sales to the United States last month for the first time in ten years. Investors are depleting their stock, which has dropped 27% this year, and its credit rating is now a little higher than that of unwanted stock.
Yet the automaker remained optimistic.
"I do not think the crisis is near – we are achieving good profitability," executive chairman Bill Ford told the press during the company's centennial celebration of the company's Red Manufacturing Complex. "Do we still have work to do? Yes. But we invest a lot in the product. We invest heavily in the future. And we do not want to do anything we can not do. "
Ford has three new key models coming next year: the return of the mid-size Ranger pickup and redesigned versions of its two best-selling SUVs, the Escape and the Explorer. . It is also investing $ 4 billion to develop autonomous cars and create mobility services, as it prepares for the arrival of the autonomous age that should disrupt the transport sector.
Take time
For the moment, however, it is looking to reduce costs by more than $ 25 billion and has revealed that part of that would come by reducing its hired labor. Downsizing had already been reported by the Detroit News.
Ford will need it by the middle of next year to determine the number of employees it will eliminate, Hampton said. The worst-off regions are likely to experience the deepest cuts, she said. Ford loses money in Europe, Asia and South America. Only its operations in North America generate profits, mainly thanks to its range of F Series vans.
"Some areas of our business need to be in better shape and this process will also help them do that," Hampton said. "So, you would expect these sectors of society to see perhaps more cuts than others."
To contact the reporter about this story: Keith Naughton in Southfield, MI, at [email protected]
To contact the editors in charge of this story: Craig Trudell at [email protected], Jamie Butters, Nick Turner
© 2018 Bloomberg L.P.
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