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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 Images

Ford Motor CEO Jim Hackett warned workers Thursday that “tougher actions” similar to job cuts may very well be wanted relying on the severity and size of the coronavirus pandemic and its impression on operations.

In a letter to workers, Hackett mentioned the automaker’s purpose is “to manage through the crisis without eliminating Ford jobs,” however famous that there are circumstances that would drive the corporate’s hand. He mentioned if the “effects of the coronavirus on the global economy and Ford go on for longer — or are more severe — than we currently anticipate, we may have to take tougher actions. But not today.”

“Our people are dealing with enough challenges without being out of work, too,” he mentioned. “Plus, on the other side of the crisis, we will need our talented team to quickly ramp up to our full potential.”

Hackett additionally mentioned Ford will defer merit-based wage will increase, partially defer govt salaries, droop extra time for salaried staff and freeze hiring for noncritical ability positions. He mentioned work schedules and compensation could also be “temporarily reduced” for staff whose jobs cannot be completed from dwelling and that others could also be supplied voluntary sabbaticals. 

Hackett mentioned the corporate would proceed to supply medical health insurance and paid time without work for any impacted staff, together with protecting a 14-day quarantine if staff are uncovered to the virus. 

The message comes a day after Moody’s Investors Service downgraded Ford’s credit rating to junk status and shortly after the corporate introduced plans to restart its North American manufacturing operations starting in early April. The plants shuttered last week amid strain from the United Auto Workers union to scale back the unfold of COVID-19.

Ford shares have been buying and selling up practically 2% to $5.46 as of mid-morning Thursday. The inventory is down 41% to date this yr and 37.4% over the previous 12 months.  

Hackett, within the letter, mentioned Ford’s prime 300 executives will defer 20% to 50% of their salaries for at the least 5 months because it makes an attempt to handle via the COVID-19 pandemic. The deferments will start May 1, he mentioned.

The accrued deferred wage quantities will likely be paid after the automaker has repaid at the least $7 billion of its automotive debt, the corporate mentioned in a public submitting. It tapped $15.4 billion in credit lines and suspended its highly-coveted dividend final week.

In addition to the chief salaries, Ford Executive Chairman Bill Ford Jr., great-grandson of firm founder Henry Ford, will defer 100% of his money wage. He earned a $1.7 million base wage in 2018, based on the company’s latest proxy filing.

Hackett, whose base wage was $1.eight million in 2018, will defer 50% of his wage, based on the corporate. Ford Chief Operating Officer Jim Farley and Ford Chief Financial Officer Tim Stone additionally will defer 50% of their salaries, the corporate mentioned.

“The actions we’re taking now are wide-ranging and substantial,” he mentioned. “We hope they will be enough to give Ford the financial flexibility to ride out the economic and business effects of the coronavirus – so we can emerge as a stronger company.”

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