Ford Speeding Up North American Cuts

21% reduction in vehicle production during Q4 ’06

August 18, 2006 -- Ford Motor Co. will cut its North American production schedule by 168,000 units during the fourth quarter, a 21% reduction from its 2005 Q4 production total. The automaker calls the adjusted plan “an aggressive reduction of North American production,” and a way to accelerate the pace of its turnaround.

The plan will reduce the supply of several Ford, Lincoln, Mercury, and Ford Truck models, and reduce pressure on sales incentives and dealer’s carrying costs.

"We are basing our business plans on the customer, and we are determined to match production and inventories with consumer demand," stated Mark Fields, Ford’s exec. v.p. and president-The Americas. "In doing so, we'll reduce incentive spending and inventory carrying costs for our dealers -- with the intent to improve residual values for our customers and stabilize operating patterns for our plants and our suppliers."

The acceleration also results in 20,000-unit reduction in 2006 third-quarter production schedules.

These adjustments are merely a start of further changes to come. Chairman and CEO William Clay Ford Jr. stated full details will be announced in September. "We know this decision will have a dramatic impact on our employees, as well as our suppliers," Ford 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 (1.134 million cars and 1.914 million trucks) in North America, a reduction of 9% reduction from 2005.

The new production plan will result in downtime at several assembly plants, including: St. Thomas, ON (Ford Crown Victoria and Mercury Grand Marquis); Chicago (Ford Five Hundred and Freestyle and Mercury Montego); Wixom, MI (Lincoln Town Car); Louisville, KY (Ford Explorer and Mercury Mountaineer); Michigan Truck in Wayne, MI (Ford Expedition and Lincoln Navigator); Twin Cities, MN (Ford Ranger); and all F-Series truck plants (Kansas City, MO; Norfolk, VA; Dearborn and Kentucky Truck in Louisville).

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