Ford says it plans to reorganize its salaried workforce globally.


Photo:

rebecca cook/Reuters

Ford Motor Co. informed employees this week of a planned reorganization that will cut salaried jobs, part of Chief Executive Jim Hackett’s broader plan to slash costs as the auto maker seeks to improve profits and revive its stock price.

Ford said in a statement Friday that it is in the “early stages of reorganizing our global salaried work force,” though it declined to disclose how many people it may let go. The No. 2 U.S. auto maker by sales has about 70,000 salaried workers, and employees were told of the plan Thursday, a spokeswoman said.

The planned cuts should be decided by the second quarter of 2019, the spokeswoman said. It reflects Mr. Hackett’s “desire to have an organization that is moving faster, and part of that comes from having a flatter” management structure, she said.

“The reorganization will result in headcount reduction over time and this will vary based on team and location,” the company’s statement said.

The restructuring comes amid mounting questions from investors and analysts, who have been pressing Mr. Hackett for more details on his plans to revitalize the company. Ford’s share price is stuck at a multiyear low and its profits have been sliding at a time when General Motors Co. and other rivals have remained strong.

Ford shares closed Friday at $9.12, down 27% for the year.

It is unclear if the reductions would be achieved by buyouts, layoffs or a combination of the both

Since he took the top job in May 2017, Mr. Hackett has emphasized improving Ford’s overall “fitness” by cutting costs and streamlining the way it engineers and builds cars. Ford is targeting $25.5 billion in cuts through 2022.

Separately, Ford has said it plans about $11 billion in restructuring costs over the next three to five years. Analysts expect many of those cuts to come in overseas businesses that have struggled in recent years, including Europe and South America.

The Ford spokeswoman said the company wanted to let workers know in advance about the plans because the reorganization is going to be fairly visible and is meant to be a participatory process. Each layer of management will be tasked with restructuring their own group, she added.

“It is important to be transparent with the workforce,” she said. “This is a whole new process. We’ve never done it like this before.”

David Whiston, an auto analyst with Morningstar Inc., said Ford could be trying to ease the shock of job losses down the road or hoping some people will leave early.

“Hackett is under a lot of scrutiny from Wall Street right now,” Mr. Whiston said. “Action needs to be taken to fulfill this restructuring plan.”

While Ford underwent a massive restructuring under former CEO Alan Mulally, costs have climbed in recent years as it has added headcount and stepped up spending on engineering and development. Ford’s global workforce, including factory workers, totaled 202,000 last year, up 18% from 2012.

In the critical area of engineering, research and development, Ford’s $8 billion budget last year outpaced GM’s by nearly 10%, even though GM sells far more cars globally and has more advanced electric cars.

Ford offered buyouts last year aiming to trim 1,400 jobs, but Mr. Hackett has pushed for deeper cuts since taking over as CEO.

Ford has said the restructuring will target areas of its business that aren’t generating a decent return so it can deploy more capital to its most profitable business lines, most notably trucks and sport-utility vehicles in North America. It has been losing money in Europe and South America, and swung to a loss in China during the second quarter.

During Ford’s second-quarter conference call with analysts, Morgan Stanley analyst Adam Jonas criticized Mr. Hackett for not spelling out to investors more specific moves he plans to make to boost Ford’s performance. Mr. Jonas even questioned whether Mr. Hackett expected to still have his job by the time the company was ready to disclose more about its plans.

“Hell yes,” the CEO responded. “I expect to be in front of everybody, declaring where we’re going and what we want to get done.”

Write to Mike Colias at Mike.Colias@wsj.com

Let’s block ads! (Why?)


Source link