Ford CEO Mark Fields is eyeing $3 billion in cost reductions for 2017, seeking to improve profitability in 2018 even as U.S. auto sales flatten. F stock has fallen 37% since Fields assumed his position in July 2014.
The report said the job cuts are expected to be outlined as early as this week and will target salaried employees. It is unclear if the plan includes reductions in the hourly workforce at Ford’s factories in the U.S. and abroad, the Journal reported. Ford has 200,000 employees globally, half of which work in North America.
“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 said.
As InvestorPlace contributor Richard Saintvilus noted earlier this month, Ford is now sitting on some $28 billion in liquid cash, which could be used to grow the business. What’s more, despite what many analysts are calling “peak auto,” Ford is still dominant with its line of trucks — particularly in North America. At the same time, however, this same argument could have been made a year ago. Or even two years ago. Yet, Ford shares have only driven lower.
“With a robust dividend of 5.37%, which is more than twice the 2% yield average from the S&P 500 index, makes Ford stock worth looking at more closely,” Saintvilus wrote. “Beyond the rock solid dividend, F stock is also cheap, trading at a just seven times fiscal 2017 consensus EPS estimates of $1.55 per share, which is a massive discount to the S&P 500’s forward P/E of 18.”
The WSJ noted that job cuts in the could spark a political backlash from the White House, as President Donald Trump has repeatedly pointed to auto makers like Ford as examples of companies adding U.S. jobs.
F stock was unchanged in pre-market trading this morning. The shares were little changed yesterday at the close in New York, having slipped 1.7% in the last five days. Tesla Inc. (NASDAQ:TSLA) gained 2.8% in the same period.