Ford (NYSE:F) stock is up nearly 2% today despite confirmation that the automaker will conduct another round of layoffs. Indeed, the automaker is reportedly in the process of laying off more than 1,000 full-time and contracted North American employees and workers, according to the Wall Street Journal.
Ford managers told employees Monday that layoffs were on the way and that affected teams should telework through the rest of the week, an anonymous company spokesman told the WSJ.
Today’s layoffs news comes as just the latest round of job cuts for the Michigan-based company. If you recall, Ford has made two 3,000-plus-person staff reductions across both its U.S. and European operations in the past year.
According to Ford spokesman T.R. Reid, most of this week’s cuts were in engineering, but company sections across the board will experience layoffs in some capacity.
Clearly, investors weren’t shocked by today’s news — perhaps for good reason. Ford has warned its transition toward being more electric-vehicle-centric will require at least $3 billion in yearly cost cuts by 2025. It has also stated plans to conduct spending cuts by reducing warranty costs, and simplifying its company structure, which, to some ears, sounds like staffing cuts.
Ford itself has stated it spends “about $7 billion to $8 billion more each year than rival car companies on its business.” Investors may be hopeful that today’s job cuts will contribute to the long-term rebalancing of the company’s revenue flows.
F Stock Climbs on Layoff Confirmation
If you recall, the Wall Street Journal first reported on potential Ford layoffs last week. At the time, Ford stated it had “nothing to announce.”
“As we have said, part of the ongoing management of our business includes aligning our global staffing to meet future business plans, as well as staying cost competitive as our industry evolves,” a Ford Spokesman told the WSJ.
Reasonably so, as last year Ford reported a $2 billion net loss, missing even the conservative end of its annual projections. For this year, Ford has stated it expects to lose $3 billion in operating profit on its EV business.
Ford has committed to spend $50 billion globally through 2026 to enhance its transition toward a more electrically charged vehicle production model. Clearly, its shift has come with some necessary growing pains.
Despite this, F stock has enjoyed a relatively strong year so far. Ford stock is up more than 23% year-to-date, while the S&P 500 and Nasdaq Composite have climbed 14.5% and 30.5%, respectively.
On the date of publication, Shrey Dua did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
