Ford Motor, facing pressure to improve profitability amid a lagging stock price, confirmed Wednesday that it would cut nearly 10% of its salaried workforce in its North America and Asia Pacific divisions.
The cuts, which Ford said would occur through "voluntary" buyouts and early retirement packages, will affect 1,400 of about 15,000 salaried workers in those regions.
Despite consistent profitability amid near-record global automotive sales, the Dearborn, Mich.-based automaker said in a statement that it must focus on "becoming as lean and efficient as possible."
The reductions will be spread out among "most" salaried departments, except product development, manufacturing and the company's internal credit division. They will be completed by October.
The cuts are not expected to affect hourly workers at Ford's factories or operations in Europe and South America, which have already endured workforce reductions.
"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.
Blessed with the best-selling vehicle in the U.S., the enormously profitable F-series pickup truck, which would be a Fortune 500 company on its own, Ford remains endowed with strong financials.
But investors are anxious for signs that the company is positioned to capitalize on a disruptive wave of innovation that's expected to sweep through the auto industry, including electric vehicles, ride-sharing and self-driving cars.
What's more, the U.S. auto market, where Ford makes the bulk of its profit, appears to have peaked, yet Ford's first-quarter profit in its North American unit fell by more than $1 billion.
"We see Ford's current challenges as one-third related to industry pressure and one-third Ford specific," Morgan Stanley analyst Adam Jonas said Wednesday in a research note. "In particular, we see the company's bet on higher-for-longer fuel prices and smaller vehicles as adding an unusually large amount of pressure on the company's ability to sell their products."
But if investors are encouraged, they haven't shown it yet. Ford's stock was relatively flat in pre-market trading and has barely budged this week after reports of possible cuts first emerged in the Wall Street Journal.
"While the stock market may not appreciate the move, we are impressed with the decisive action to address excess capacity," Jonas said.
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