Amid dropping sales in the European region, Ford Motor Company (NYSE:F) has decided to stop selling models that are less popular and fail to make the profit for the company. Moreover, the company plans to cut hundreds of jobs in an attempt to keep the profitable situation intact.
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In an official statement on Wednesday, Ford announced that it is planning to offer buyouts to most of the 10,000 salaried workforce in European region. The decision is voluntary, meaning that the employees could either accept this proposal or reject it. The company expects that out of total 10,000 workforces, hundreds of workers would surely opt for this voluntary buyout, which’s supposed to save around $200 million annually for Ford.
The ongoing price war and increased competition has forced the company to take another harsh step by doing away with cars and other utility vehicles that aren’t making the profit in Europe. By doing so, Ford Motor Company (NYSE:F) expects that it will be able to focus more on the high-profit making vehicles and deal with the rising competition in a hassle-free manner.
According to Jim Farley, Chief – Europe, Ford, the company seeks to go ahead with one simple objective, and that’s to generate a sustainable profit. It’s ready to do whatever it takes to achieve the profitable state and continue with that over time.
Ford’s margin in Europe was around 1% in 2015; going forward, it targets to achieve 6%-8% margin in the long run. It’s not the first time when the auto maker has announced the job cutting. Earlier, it slashed 5700 jobs in an attempt to cut costs. Even though that decision backfired, Ford managed to save huge money over a period of last two years.
The company hasn’t given any detail about which models will be cut from the European market. Experts hope to get a clear picture in a couple of months.