BREAKING: Ford slashes production
As part of its accelerated "Way Forward" turnaround strategy, Ford Motor announced today that it will cut North American production by 21 percent (168,000 vehicles) in the fourth quarter of this year. Third quarter production will by cut by 20,000 units.The result will be a 9 percent reduction in 2006 vehicle production compared to 2005 levels.
In an announcemento employees, Chairman and CEO Bill Ford said the decision is part of the company's recently accelerated North American turnaround plan, going on to say that additional actions will be announced in September.
The resulting reduced supply of vehicles will help dealers control inventory carrying costs and reduce the need for sales incentives to move slow-selling models. 2006 production in the first two quarters of the year was already 40,000 units under 2005 levels, due to cuts in truck production levels.
The announcement will mean downtime at plants producing the slower-selling vehicles affected by the plan. Plants and vehicles targeted include: St. Thomas, Ontario (Ford Crown Victoria and Mercury Grand Marquis), Chicago (Ford Five Hundred and Freestyle and Mercury Montego), Wixom, Mich. (Lincoln Town Car), Louisville, Ky. (Ford Explorer and Mercury Mountaineer), Michigan Truck in Wayne, Mich. (Ford Expedition and Lincoln Navigator), Twin Cities, Minn. (Ford Ranger) and all F-Series truck plants (Kansas City, Mo.; Norfolk, Va., Dearborn and Kentucky Truck in Louisville).
[Source: Ford]
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Reader Comments (Page 1 of 3)
Joe Isuzu 12:38PM (8/18/2006)
Autoblog what happened?
I heard this on the radio and it was posted on Yahoo hours ago!
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Al Eisensteinium 1:03PM (8/18/2006)
Blogger wrote "In an announcemento", so the delay must have been in translating the press release into English.
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Daniel 1:19PM (8/18/2006)
Is there a list of what plants produce what cars for Ford and GM. I am particularly interested in plant listings for Michigan.
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Michael Karesh 1:34PM (8/18/2006)
Other breaking news:
One in six white collar workers to be let go by Ford next month, 6,000 people.
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Ken 1:42PM (8/18/2006)
The funny thing is I ordered an '07 Expedition 5 weeks ago and the order hasn't even been pulled to be built yet. I figured they would fill the orders that actually have a name tied to them first. Maybe things are not as slow as they claim? My dealer told me they tend to fill the orders on the east and west coasts first, because there are less people out the who get the employee discounts and they can make more money than they do with sales in Michigan, Ohio, etc.
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glacia00 1:43PM (8/18/2006)
One of the better moves I've seen from Ford since announcing demand for these vehicles had dropped. A leaner more agile company needs to emerge. Now if they can sweep out the old stale designs and bring in some fresh design ideas.
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igor 1:51PM (8/18/2006)
Daniel, the release lists all the plants - those that will be idled and those that will go one..
Also please keep in mind that for now, this is only DOWN TIME ... these are not permanent closures... those will be announced in September.
IGor
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Michael Karesh 1:56PM (8/18/2006)
Early production tends to be non-sold units, because they like to limit the number of options and colors at first. Unless you asked for the options/color they planned to start with anyway, you'll have to wait. You probably don't want one of the very first ones, anyway.
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Ken 2:03PM (8/18/2006)
Michael,
You are right. But we all know when it's time to get a new car, it's like a kid waiting for Santa to get here on Christmas.
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naggs 2:14PM (8/18/2006)
we all knew this was comming, no company can produce more than it can sell (at a profit) forever.
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Robert O 2:14PM (8/18/2006)
I keep hoping that the U.S. auto manufacturers will change their ways to improve quality, start building the type of cars that people want to own, and don't just do the easy, short-term (e.g., SUVs with lousy gas mileage. Did you really think it could last forever?). But given that they haven't meaninfully responded to the Japanese threat since it first became obvious in the late 1970's and early 1980's, I think I should just throw in the towel. Well, at least their cars are really cheap as used vehicle.
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Erik 2:27PM (8/18/2006)
This really is a Bold Move, and I am not being sarcastic. In the past, Ford's (and other automakers')response to slow sales or the waning of popularity of a model has been to keep producting full steam and add incentives. This is embarising and kills resale value. A production cut, while painful, is the responsible reaction, and will be best for Ford and it's customers in the long run. Smart move.
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Aki 2:43PM (8/18/2006)
Aggressive job cutting doesn't solve the problem. Problem isn't just overhead, it's that Ford cannot produce cars that consumers want. Cost cuts alone don't turn a company around--quality products do. Nissan and Ghosn are learning this lesson now, suffering sales drops after the initial jump to profitability following cost reductions.
Ford can keep cutting production and inventory, but unless it truly turns around its products the cycle will go on--low sales, cut jobs, financial upturn, low sales, cut jobs.
Removing the "Bold Moves" marketing-speak, Ford hasn't done anything differently. It still puts all of its eggs into the truck market, pins its hopes on Mustangs and other vehicles that don't provide the volume of sales it needs to keep afloat. They should've released the new Focus here ages ago, and yet it's overseas--and enjoying good sales.
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GaryZ 2:43PM (8/18/2006)
I'm not sure if we should praise Ford too much. It's like the old Chris Rock sketch-- "don't try to get credit for something YOU'RE SUPPOSED TO DO."
I agree it's a bad plan to produce way more than you can sell; shouldn't do it in the first place.
The real question is, can Ford use this as a turning point and use its newly freed resources and money to do something to move forward?
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Chris 3:02PM (8/18/2006)
Well Ford lost me years ago as a customer when the local dealership closed down - and IMHO they build nothing more than rebadged Mazdas. They should either throw in the towel or just start badging all thier cars as Mazdas and get it over with - Bold Moves my ass!
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doglet 3:04PM (8/18/2006)
I cant help but wonder if the Twin Cities plant that produces the Ranger would be operating at capacity if ford had a model less than 25 years old. If they took the money that was used to buy out employee contracts and spent that on a new Ranger that gets 30 mpg they would be in good shape in that segment intead of a minor player.
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Ryan 3:06PM (8/18/2006)
"15. Well Ford lost me years ago as a customer when the local dealership closed down - and IMHO they build nothing more than rebadged Mazdas."
-So let me get this straight, you would prefer they would be 100% and have no MAZDA?! LOL, your funny...
"13. Aggressive job cutting doesn't solve the problem. Problem isn't just overhead, it's that Ford cannot produce cars that consumers want."
-3rd best selling brand on the EARTH, bullshit.
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&& 3:08PM (8/18/2006)
Wait, does this mean there will be less Ford vehicles on our roads? Why isn't everybody celebrating?
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DJ 3:13PM (8/18/2006)
Deeper down, this again asks the question "Why is Mercury still alive?" The only Mercury vehicles not apparently impacted by these moves are the Milan and Mariner, and neither sell or are profitable enough to warrant their existence. All other Mercury vehicles, granted there aren't a lot, will have production cut.
It's time to introduce Mercury to the ghosts of Plymouth, Oldsmobile and others....
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Ryan 3:14PM (8/18/2006)
"13. Aggressive job cutting doesn't solve the problem. Problem isn't just overhead, it's that Ford cannot produce cars that consumers want."
-The Ford Escape became the best selling small SUV virtually the second it was introduced.
Fact:
More Americans purchase a Ford Escape than a:
1.) Santa Fe
2.) CR-V
3.) Forester
4.) Outlander
5.) Grand Vitara
6.) Jeep Liberty
7.)RAV-4
8.)Equinox
9.)Torrent
10.)Element
11.)Tucson
12.)Compass
13.)Patriot
14.)Sorento
15.)Sportage
16.)Vue
17.)Xterra
Wheeew! So out of SEVENTEEN (17) other competing SUV's Americans choose the WHAT? The Ford Escape friends.
-Ya know, from that company that does not build anything anybody wants...
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