Ford Motor Company (F - Free Report) is set to terminate 1,400 salaried employees in the United States by the end of this year through a voluntary buyout program, according to reports. The automaker has reportedly sent out emails to eligible employees, offering an early retirement option to them. Employees who accept the option of an early retirement by Oct 23 would leave the company by the end of the year. Those who do not accept the buyout could face involuntary separation.
The decision of shrinking the workforce reflects the company’s efforts to reduce costs as part of the five-year, $11 billion global restructuring program announced by CEO Jim Hackett two years ago. This restructuring entails factory shutdowns and model eliminations with the company’s primary focus on self driving and electric vehicles.
The announcement comes right before chief operating officer Jim Farley is due to succeed Hackett as the new CEO on Oct 1. Farley plans to develop the company to compete in an all electric and autonomous auto industry and reach a 10% profit margin in North America.
Reportedly, the Dearborn-based automotive giant had a worldwide workforce of 190,000 people at the end of 2019, including about 36,000 salaried employees in the United States. Ford eliminated 7,000 salaried positions worldwide last year in the first round of the global overhaul. Those reductions were expected to save the company $600 million a year.
The auto industry bore the brunt of the coronavirus outbreak in the first half of 2020. With millions of people working from home and millions losing their jobs, there is a depressed demand for vehicles, which in turn has affected the earnings of auto companies.
Ford reported second-quarter 2020 operating loss of $1.9 billion and adjusted loss per share of 35 cents as opposed to profit of $1.7 billion and adjusted earnings of 32 cents per share in the corresponding period of 2019. The dismal results resulted from lower automotive sales across all markets served as the auto giant bore the consequences of the coronavirus-induced uncertainty.
Reportedly, the voluntary buyout program is part of the ongoing process to boost the company's effectiveness globally. The company has prioritized certain products and services and will adjust its manpower to be in sync with the new structure.
Ford Motor Company Price and Consensus
Zacks Rank and Other Key Picks
Ford currently sports a Zacks Rank #1 (Strong Buy). Shares of the company have declined 25.3% year to date against its industry’s rise of 3.4% over the same period. You can see the complete list of today’s Zacks #1 Rank stocks here.
Some other top-ranked stocks in the auto space include General Motors Company (GM - Free Report) , Polaris Inc. (PII - Free Report) , and Fox Factory Holding Corp. (FOXF - Free Report) . General Motors and Polaris both carry a Zacks Rank of 1 while Fox Factory has a Zacks Rank #2 (Buy). Shares of Fox Factory and Polaris have surged 42% and 4.9%, respectively, year to date, whereas General Motors has lost 15.5% over the same period.
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