Late Monday, The Wall Street Journal reported that American automaker Ford Motors (F - Free Report) is planning on slashing about 10% of its global workforce in an effort to increase profits and boost its ailing stock.
Worldwide, Ford employs roughly 200,000 people, and the job cuts will in large part affect salaried employees, according to people familiar with the matter. Right now, it is unclear if hourly employees in Ford’s factories in the U.S. and abroad will be affected.
"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 a 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," the company continued.
The cuts are part of a previously announced plan to cut costs by $3 billion in 2017, a move that Ford hopes will improve profitability in 2018 as U.S. new auto sales level off after years of consecutive growth.
Investors should be aware of the potential backlash Ford could face from the White House, as job growth has been one of President Trump’s pillars and talking points. The automaker even committed to ditching plans to build a factory in Mexico that had been under construction after the president criticized it, and instead announced it would add 700 jobs in Michigan.
Year-to-date, shares of Ford are down almost 10%, and have struggled to regain their footing under current CEO Mark Fields. Mr. Fields has pushed new technology investments like a $4.5 billion electric-vehicle program and an autonomous car project, two things eating away at Ford’s profit margins in the short-term despite lucrative pickup and SUV sales. Since Mr. Field became CEO in mid-2014, Ford stock has fallen almost 40%, notes the WSJ.
Currently, F is a #3 (Hold) on the Zacks Rank, with a VGM score of ‘A.’
5 Trades That Could Profit "Big-League" from Trump Policies
If the stocks above spark your interest, wait until you look into companies primed to make substantial gains from Washington's changing course.
Today, Zacks reveals 5 tickers that could benefit from new trends like streamlined drug approvals, tariffs, lower taxes, higher interest rates, and spending surges in defense and infrastructure. See these buy recommendations now >>