Ford warns of potential job cuts, to defer some salaries

Jim Hackett, president and chief govt officer of Ford Motor Co.

Andrew Harrer | Bloomberg | Getty Photographs

Ford Motor CEO Jim Hackett warned employees Thursday that “tougher steps” this kind of as occupation cuts could be needed depending on the severity and duration of the coronavirus pandemic and its affect on operations.

In a letter to staff, Hackett reported the automaker’s target is “to manage as a result of the disaster without the need of doing away with Ford work opportunities,” but noted that there are conditions that could pressure the firm’s hand. He stated if the “outcomes of the coronavirus on the world-wide financial state and Ford go on for for a longer time — or are more serious — than we presently anticipate, we may well have to take more durable steps. But not these days.”

The information arrives a day right after Moody’s Traders Service downgraded Ford’s credit rating to junk position and shortly right after the firm announced strategies to restart its North American production operations beginning in early April. The plants shuttered previous week amid pressure from the United Vehicle Staff union to lower the unfold of COVID-19.

Ford shares had been investing up virtually 2% to $5.46 as of mid-early morning Thursday. The inventory is down 41% so considerably this yr and 37.4% over the earlier 12 months.  

Hackett, in the letter, also explained Ford’s top rated 300 executives will defer 20% to 50% of their salaries for at least five months as it makes an attempt to take care of through the COVID-19 pandemic. The deferments will start out Could 1, he stated.

The accumulated deferred salary quantities will be paid right after the automaker has repaid at minimum $7 billion of its automotive financial debt, the firm mentioned in a general public filing. It tapped $15.4 billion in credit rating lines and suspended its remarkably-coveted dividend final week.

In addition to the govt salaries, Ford Govt Chairman Bill Ford Jr., excellent-grandson of organization founder Henry Ford, will defer 100% of his cash wage. He acquired a $1.7 million foundation wage in 2018, in accordance to the company’s latest proxy submitting.

Hackett, whose base income was $1.8 million in 2018, will defer 50% of his income, according to the corporation. Ford Chief Running Officer Jim Farley and Ford Main Monetary Officer Tim Stone also will defer 50% of their salaries, the business said.

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