Ford Motor said Friday it will reduce North American fourth-quarter production by 21 percent - or 168,000 units - compared with the fourth quarter a year ago as part of its broader efforts to accelerate the pace of its Way Forward turnaround.The revised plan also reduces the company's previously announced third-quarter estimate by 20,000 units.
Bill Ford, Ford's chairman and CEO, outlined the decision to cut production in a note to employees, explaining the decision is part of ongoing efforts to accelerate the company's North American turnaround.
Full details of additional actions will be announced in September.
The revised production plan is expected to sharply reduce the supply of several models and reduce pressure on sales incentives and dealer inventory carrying costs. The plan also reflects expectations for lower industry sales of light trucks and truck-based sport utility vehicles, as high gasoline prices are expected to continue to encourage demand for more fuel-efficient passenger cars and crossovers, the company said.
The new production plan will result in downtime at several assembly plants between now and the end of the year, including: 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).
The following plants are expected to operate on straight time or overtime based on consumer demand: Hermosillo, Mexico (Ford Fusion, Mercury Milan and Lincoln MKZ); AutoAlliance International in Flat Rock, Mich. (Ford Mustang); Oakville, Ontario (Ford Edge, Lincoln MKX and Ford Freestar); Wayne, Mich. (Ford Focus); Kansas City, Mo. (Ford Escape and Mercury Mariner); Ohio Assembly in Avon Lake, Ohio (Ford Econoline); and Atlanta (Ford Taurus).
"We know this decision will have a dramatic impact on our employees, as well as our suppliers," the CEO said. "This is, however, the right call for our customers, our dealers and our long-term future."
For full-year 2006, Ford now plans to produce 3.048 million vehicles at its North American assembly plants - 1.134 million cars and 1.914 million trucks - a 9 percent reduction from 2005.
The revised 2006 production plan:
2006 Production Over/(Under) 2005
Cars Trucks Total Cars Trucks Total
(000) (000) (000) (000) (000) (000)
Second Quarter 328 569 897 34 (42) (8)
Third Quarter 255 395 650* 45 (123) (78)
Fourth Quarter 235 390 625 (13) (155) (168)
Full Year 1,134 1,914 3,048 118 (404) (286)
* The previously announced third-quarter plan was 670,000 vehicles (255,000 cars and 415,000 trucks).