The Michigan Supreme Court ruling for Dodge v. Ford Motor Company, 1919 held that the goal of a corporation is to advance the interests of its shareholders ahead of providing charitable benefits for customers or employees. A new report offers a real-world example of how that works.
Ford will allegedly cut approximately 10 percent of its global workforce in order to bolster corporate profits and stem stock-price bleeding, The Wall Street Journal reports, citing sources close to the plan. Reuters is also claiming the same thing, according to its sources.
Ford's global headcount sits at some 200,000 employees, so 10 percent comes out to about 20,000 potentially lost jobs. WSJ's report claims that a majority of these cuts will be aimed at salaried employees, and Reuters alleges that some workers will be offered "generous" early retirement packages in order to reduce future overhead.
It's all about cost-cutting measures. Ford has targeted approximately $3 billion in cuts in 2017, ahead of what many believe will be a flat period for US auto sales. Ford's share price has fallen some 40 percent since Mark Fields became the automaker's CEO in 2014, even as sales rose. But with profits expected to decline this year, Ford likely wants to assure investors that it can weather a storm or two without hemorrhaging money.
Ford isn't confirming these plans, though. "We remain focused on the three strategic priorities that will create value and drive profitable growth," a Ford spokesperson said in an emailed statement, "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."
"Reducing costs and becoming as lean and efficient as possible also remain part of that work," the statement continued. "We have not announced any new people efficiency actions, nor do we comment on speculation."
Ford has, in fact, put a great deal of energy into investing in the future. The company has invested in mobility services, electric vehicle development and autonomous-car research, three key areas that many believe will be clutch over the next decade. Yet, despite the forward thinking, investors remained wary and Ford's market capitalization recently slid underneath Tesla's. Ford's stock price has taken hits for moves that would see stock prices go up if, say, Tesla were to do something similar. The stock market can be confusing like that.