Cost cutting directive a mistake?

A general cost-cutting directive from upper management without clear communication on the purpose and end game of the cost-cutting in many cases results in higher costs for the company. Without direction on the cost-cutting initiative, employees will be ruthlessly efficient at what gets cut without regard for the side effects of said cuts, especially if bonuses are handed out for the number and size of cuts. Predictably the outcome is a loss of valuable suppliers, lower quality parts, poor customer service, and ineffective staffing.