DETROIT - Ford is to announce a plan to cut 10% of its global workforce later this week, the Wall Street Journal reported late Monday.
The Dearborn automaker has been under pressure both from its board of directors and from shareholders in recent days to show that its strategic plan is working as U.S. industry sales begin to decline for the first time in seven years.
Ford's profits sank 35% during the first quarter to $1.6 billion as higher costs for warranties, recalls and materials eroded profits.
Ford could outline the job cuts as early as this week, according to the Journal. The cuts are said to largely target salaried employees. It’s unclear if hourly factory workers are included, the Journal said.
The automaker, in a statement, said it has not yet announced any job cuts but did not deny the essence of the report. In fact, the company's statement emphasized the need to, at times, reduce costs.
“We remain focused on the three strategic priorities that will create value and drive profitable growth, which include fortifying the profit pillars in our core business, transforming traditionally underperforming areas of our core business and investing aggressively, but prudently, in emerging opportunities," Ford said in its statement. "Reducing costs and becoming as lean and efficient as possible also remain part of that work. We have not announced any new people efficiency actions, nor do we comment on speculation.”
Michelle Krebs, an analyst with AutoTrader, said Ford may be taking a prudent action to prepare for declining U.S. industry sales.
"Belt tightening comes as no surprise with sales softening and profits squeezed," Krebs said. "Ford has been under particular pressure to take action to boost its stock price. The board meeting last week likely added pressure to get specific about cost cuts."
Last week, during the company's annual meeting, a number of shareholders pressed Ford's management about the company's stock price, which has dropped 17% since January to $10.94 per share.
"Look, we're as frustrated as you are by the stock price," Ford Executive Chairman Bill Ford said. "And a couple of people have said, 'Well, does the Ford family care about the stock price?' The short answer is yes, a lot. Much of our -- most of our net worth is tied up in the company. And the stock price matters a lot to us."
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