WILLIAM CLAY FORD, JR. EXPLAINS THE 21-PERCENT PRODUCTION CUT

FoMoCo head honcho Bill Ford sent an e-mail to FoMoCo Employees on August 18, 2006, explaining the "Way Forward" decision for drastic production cuts:

"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."

[Speedzzter: In other words, FoMoCo lacks the current flexiblity to produce products in 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.

[Speedzzter: We didn't think we needed a contingency plan for high fuel prices, notwithstanding that we've known the risks of the international supply sources and increasing world demand for decades. But now, when it's almost too late, we realize that we should have planned enough product flexibility and invested in enough advanced technology to react to market demand. Because we didn't, we're cutting production and giving up more of the field to the Japanese]

"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."

[Speedzzter: Look out American workers! Look out racing program! Look out performance customers! Look out customers who need traditional large sedans that combine performance and efficiency! There's "pain" a-comin'. . . .]

"Only then can we properly evaluate our business and make decisions in the best interests of our company.

[Speedzzter: . . . and make decisions in the best interests of . . . the Ford Family and my pals at the Sierra Club . . . . ]

"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.

[Speedzzter: It's still a 21% cut no matter how Bill spins it. Not enough good cars in the pipeline to compete even when the overall market has shrunk much less than 21%]

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.

[Speedzzter: Of course back in Don Petersen's day, the "cuts" predicated a product renaissance that brought us the 5.0 Mustang GT, the aerodynamic 1983 Thunderbird,the Lincoln Mark VII LSC, the SVO Mustang and ultimately the then-groundbreaking 1986 Taurus . . . Now we have little to look forward to other than some packaged Mazda and Volvo hand-me-downs and increased oursourcing]

"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."

[Speedzzter: This paragraph admits that the "customer focus" of the "Way Forward is really just a "profit maximization" focus. Of course, the "customers" he's writing about are the dealers who buy in bulk from FoMoCo, not those pesky individuals who are the "ultimate customers" and who actually benefit from lower prices, more choices and more competition. Anti-competitive strategies, such as closing dealerships, cheapening out on specifications (e.g. no forged internals in the Mustang GT) and artificially restricting supplies to keep profit margins high speak much louder than all this "customer-focused" clap-trap FoMoCo regularly generates]

"We know this decision will have a dramatic impact on our employees, as well as our suppliers."

[Speedzzter: In other words, you chumps are on your own . . . .]

"This is, however, the right call for our customers, our dealers and our long-term future."

[Speedzzter: You mean it's not a "give up" call focused on protecting vested interests and ill-positioning FoMoCo for any growth or market turnaround. Don't pay any attention to all that factory construction that Toyota and others are doing . . . we know that shrinking the company is "the right call." Wouldn't a better "Way Forward" be to vigorously invest in competitive product, aggressive promotion, and tough, realistic negotiations with the UAW to bring FoMoCo's costs in line with the invading "transplant" factories that the UAW FAILED TO UNIONIZE? Or maybe use this down time to build enough inventory so that FoMoCo could weather a protracted strike when the UAW fails to realistically negotiate?]

" 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."

[Speedzzter: We'll tell you what we want, when we want to . . . and by the way, When you get that federally-mandated WARN notice about your plant closing, that's just us "comunicating developments . . . as soon as possible." Don't bother blogging or e-mailing because we'll still be screening out all the stuff we don't want to hear. Na, Na, Na, Na, Na! See www.fordboldmoves.com]

"Thank you for your continuing efforts to build a better Ford."

[Speedzzter: Too bad those same efforts weren't put into contingency planning, product investment, and preparation for bad times years ago.]