Ford Motor Co. CEO Bill Ford sent the following email message to employees today:
Today, we are announcing that North American production in the fourth quarter will be cut by 21 percent. This action, difficult as it is, reflects an assessment of the marketplace that is conservative and more aligned with the shift in customer demand.
As you know, an unprecedented spike in gasoline prices during the second quarter impacted our product lineup more than that of our competitors because of the long-standing success of our trucks and SUVs. While our products continue to perform relatively well within the larger vehicle segments, the size of the segments has diminished significantly and we must adjust accordingly.
As I have made clear during my discussions with the leadership of the Way Forward acceleration team, every decision we make in coming weeks must begin with a sound set of assumptions -- even when it hurts. Only then can we properly evaluate our business and make decisions in the best interests of our company. Our assumption on production going forward is that we cannot count on the relatively low gasoline prices that our customers enjoyed for decades. That is why we are reducing production of trucks at the same time that we are increasing our production of cars.
No one can be pleased by the severity of this cut, which is the most aggressive reduction of a North American production plan in more than 20 years. I am satisfied, however, that we are laying a sturdier foundation upon which to build our business structure going forward.
Reducing production is also very much in keeping with the customer focus of our Way Forward plan. We pledged in January to build vehicles based on the pull from customers rather than the push from factories. Ultimately, this strategy will reduce our supply of vehicles, which will mean lower costs of incentives for the company and lower inventory carrying costs for our dealers.
We know this decision will have a dramatic impact on our employees, as well as our suppliers. This is, however, the right call for our customers, our dealers and our long-term future.
I know that these are difficult times for all employees as they await word on other decisions associated with the acceleration of our Way Forward plan. Our promise is to continue to communicate developments to you as soon as possible.
Thank you for your continuing efforts to build a better Ford.