Ford to cut jobs as sales level off, stock price lags

Associated Press

DETROIT

Ford is getting leaner as it faces an onslaught of challenges, from slowing U.S. sales to high-tech challengers to its own disgruntled shareholders.

The 114-year-old automaker said Wednesday it is cutting 1,400 non-factory jobs in North America and Asia Pacific. The company will offer voluntary early retirement and separation packages to around 10 percent of its salaried workers in departments such as sales, marketing and human resources. It expects the actions to be complete by the end of September.

The cuts are the biggest to Ford’s U.S. white collar staff since 2007, when 7,200 workers took voluntary buyout packages.

In an email to employees, Ford said it wants to strengthen its core business and invest aggressively in new opportunities. “Reducing costs and becoming as lean and efficient as possible also remain part of that work,” the company wrote.

Ford isn’t the only automaker looking to slim down. Last month, General Motors Co. Chief Financial Officer Chuck Stevens said GM was considering cuts to its white-collar staff in order to rein in costs.

Ford’s problems aren’t entirely unique. After seven-straight years of growth, U.S. sales are starting to slow down, which will hurt automakers’ profits. Sales in Asia are volatile and not as profitable. Turbulence in other markets, like South America, hasn’t helped.

Automakers are also investing heavily in self-driving cars and other new technology. Ford, which has promised an autonomous vehicle by 2021, bought a shuttle service and invested $1 billion in Argo AI, an artificial intelligence startup. Such investments may not pay dividends for years, but automakers can’t risk being left behind by nontraditional rivals like Google and Uber.

But some of Ford’s problems are of its own making. Morgan Stanley analyst Adam Jonas says Ford should consider exiting unprofitable vehicle lines, such as small cars, or markets, such as India.

Ford’s U.S. sales are down in part because it doesn’t have offerings in popular segments such as subcompact SUVs and midsize pickups. And Ford hasn’t kept up with rivals in the electric-car market.