In Ford’s proposal to the U.S. Congress, entitled “Ford Motor Company Business Plan”, Ford outlined its four-pillar plan to confront the critical issues facing the automotive industry. The plan is summarized as “One Ford – One Team – One Plan – One Goal.” The proposal also covers the current business environment and moves on to present Ford’s strategy to transform itself to better compete by developing safer, greener and even better quality vehicles. It also includes answers to specific questions posed by Speaker of the House Nancy Pelosi and Majority Leader Harry Reid.

The four key pillars addressed Aggressive Restructuring, New Product Development, Financing and Improving the Balance Sheet, and Working as a Team More Effectively. Ford notes, that while there is much work to be done, the Company did not wait until the current crisis to begin organizational change efforts, but had already begun a fundamental restructuring, from which early efforts had shown promise.

To read the complete Ford Motor Company Business Plan that was submitted to the Senate Banking Committee, download the PDF here.

Ford’s organizational restructuring plan takes place across all operations, including manufacturing, supplier relationships, dealer relationships, consumer credit operations, and salaried and hourly personnel.

• Ford addressed manufacturing concerns, noting that approximately 50 percent of future U.S. manufacturing capacity would be dedicated to producing more fuel-efficient small and medium-size vehicles. As well, nearly all U.S. assembly plants will have flexible body shops to respond quickly to consumer demands.
• Ford is also strengthening its relationship with U.S.-based suppliers, with specific attention to women and minority suppliers.
• To address an overcapacity of dealers, Ford intends to downsize and restructure in 130 metropolitan market areas. And dealers can continue to rely on the wholly- owned subsidiary, Ford Motor Credit Company for wholesale, retail and lease financing programs, together with capital and facility loan programs.
• Ford will have reduced salaried personnel costs by 40 percent over the past three years, including a 10 percent reduction effective February 2009. There have been significant changes to Compensation and Benefit packages as well, such as eliminating merit increases and bonuses due to be paid in 2009.
• When it comes to hourly personnel, Ford is working closely with the UAW to transform our total labor costs. Through these efforts, as well as capping costs on benefits, Ford will realize a total of $5.5 billion in annualized operating cost reductions from 2005 through 2008.

To read the section on restructuring, click here.

Ford plans to achieve a better vehicle segment mix by recognizing the shift to smaller, more fuel-efficient vehicles, while still maintaining leadership in our areas of traditional strength. Highlights from the section of the plan that address new product development include:

• By increasing car and crossover segment mix from 48 percent to 60 percent in the next four years, Ford will have a balanced and complete portfolio of small, medium and large vehicles in the car, utility and truck segments.
• Ford will continue to build product excellence through leadership in fuel economy, innovation, quality, safety, and leading edge “comfort and convenience” technology. For example, by 2010 half of the Ford, Lincoln and Mercury light duty nameplates will qualify as “Advanced Technology Vehicles” under the Energy Independence and Security Act– increasing to 75 percent in 2011 and over 90 percent in 2014. In fact, Ford will achieve annual fuel savings of 2.5 billion gallons by 2012 model year.
• Ford has made immediate and significant improvements on a wide scale and accelerated electrification, including next generation hybrids and all-electric vehicles.
• On the heels of improving our engineering costs and facilities and tooling costs for a new vehicle by 60 percent and 40 percent, respectively, between 2005 and 2008, Ford continues to make substantial improvements in engineering and investment efficiency facilitated by leveraging the global assets of “One Ford” and a reduction in the number of vehicle platforms, engines, transmissions, and customer offered complexity.
• To ensure profitability of small cars, Ford plans to increase volume of Ford Focus sized vehicles to over 2 million units per year globally, and boost margins by improving revenues and costs.

To read the section on new product development, click here.

Ford’s plan was not simply a reaction to the current credit crisis, but rather a long-term objective that began several years ago, and has already delivered promising results. Here is a look at our ongoing efforts:

• In December 2006, Ford raised $23.5 billion in liquidity, consisting of $18.5 billion of senior secured debt and credit facilities, and $5 billion of convertible debt. During the same year, Ford eliminated common stock dividends. In 2007 and 2008, we issued more than $5 billion in new equity.
• Aston Martin, Jaguar, Land Rover and the majority of our investment in Mazda were sold.
• In light of the frozen capital markets, Ford has embarked on aggressive plans to develop new funding products, filed an Industrial Loan Company application with the FDIC earlier this year and we are hopeful that a favorable response will soon be forthcoming.

To read the section on financing the plan and improving the balance sheet, click here.

• Openness, accountability, transparency and responsibility are driving factors behind the One Team approach. High performance teamwork is a vital performance criterion that will be monitored weekly, monthly and quarterly to ensure continuous improvement.
• Ford is reaching out and listening to customers, dealers, employees, the UAW, suppliers, investors, communities, retirees and federal, state and local governments, as all of these parties are crucial to our future business success. Ford expects to reach profitability (operating profit before taxes – excluding special items) to be at or above breakeven for both Corporate and North American Automotive in 2011.

To read the section on working together effectively as one team, click here.

As one of its key pillars, Ford’s entire lineup has been benefiting from its advancements in smart technologies. These include:

SYNC® System – Standard on many models, Ford’s exclusive voice-activated, seamlessly integrated mobile phone and digital music system allows drivers to place and answer calls as well as play individual songs or complete playlists without their hands ever leaving the wheel.

SIRIUS® Travel Link™ – The next-generation navigation system offers real-time updates on movie times, gas prices, weather, traffic and other on-the-road conveniences.

SYNC® 911 Assist™ – This helpful feature quickly connects vehicle occupants to a local 911 emergency operator to get help automatically if the air bag deploys.

Ford Work Solutions™ – Ford’s suite of industry-exclusive options for F-Series trucks and commercial E-Series vans enables business owners to be more productive and successful. The onboard computer, which runs Microsoft Windows for automotive, lets business owners create spreadsheets, invoices and estimates right from the cab. Developed in conjunction with DeWalt, Tool Link™ uses Radio Frequency ID to track tools and equipment in the bed so nothing gets left behind. Crew Chief™, through Ford’s partnership with Garmin, lets a foreman track crews wherever they are, ensuring the right team gets to the right job efficiently.

Blind Spot Mirror – An industry-first innovation, the Blind Spot Mirror replaces traditional side view mirrors and features an integrated convex spotter mirror that provides an optimized view of the driver’s blind spot. The mirror is standard equipment on the 2009 Ford Edge.

What’s on the horizon for Ford? Here’s a glimpse at some fuel efficient, new product developments scheduled for 2010.

With up to 10 percent higher mileage, the new Ford Fusion and Mercury Milan are available in efficient six-speed automatic transmission. The hybrid models get up to 47 mph in electric mode with a range of 700 miles on a tank of gas.

Drivers can look forward to an American version of the award winning and highly fuel efficient European Fiesta hitting the streets of the U.S. in 2010. Features such as front, side, curtain and even driver knee airbags, electric power steering and a front strut/twist beam rear suspension have earned it kudos from AutoWeek magazine, which said: “Clearly, Ford has learned how to make cars that are among the best available – and it’s coming to play on American roads.”

Ford has made vehicle safety a priority, and our efforts have earned numerous awards and acknowledgements. The 2008 Taurus was rated the safest full-size car in America. And, Ford has produced more NHTSA 5-star-rated vehicles than any other automaker. With a total of 16 IIHS Top Safety Picks so far, our 2009 lineup has received more than any other brand.

Besting the Toyota RAV-4 and Honda CR-V, the 2009 Ford Escape and Escape Hybrid achieved a “Top Safety Pick” rating from the Insurance Institute for Highway Safety (IIHS), which also named Mercury Mariner and Mariner Hybrid to the top of the small sport utility vehicle segment.

New vehicle safety technologies include:

Collision Warning with Brake Support – Being introduced in 2009, this “active” safety radar system helps drivers avoid rear-end accidents by detecting moving vehicles ahead and alerting the driver by means of an alarm and warning light.

Ford’s MyKey™ – Ford’s programmable feature that allows parents to limit top speed and audio volume of vehicles, and set speed alert chimes to encourage teens to drive more safely and more fuel efficiently. This feature will be standard on the 2010 Focus as well as many other Ford, Lincoln and Mercury models.

Personal Safety System® – Using the weight and size of the front-passenger seat occupant, the system, which is currently being legislated into all vehicles driven in the U.S., instantly deploys the appropriate airbags exactly at the correct velocity in the event of an impact or rollover.

AdvanceTrac® with Roll Stability Control™ – The only electronic stability control system with two gyroscopic sensors to actively measure and help control both yaw and roll movements. More than one million vehicles feature Ford’s industry exclusive AdvanceTrac with RSC.

Dedicated to best-in-segment fuel economy for every new or significantly new vehicle launched, Ford’s 2008 Ford Escape, Escape Hybrid, Focus, Flex and Expedition, Mercury Mariner, Mariner Hybrid and Lincoln Navigator all deliver unrivaled fuel efficiency. The 2010 Ford Fusion, Fusion Hybrid, Mercury Milan and Milan Hybrid are now joining that growing list. From biodegradable soy foam seats to our highly advanced Ecoboost™ technology that is designed to deliver better fuel economy and V8-like power, Ford is leading the way in green technologies.

Here are just a few ways that demonstrate Ford’s commitment to more eco-friendly vehicles:

• Escape Hybrid and Focus get more than 34 mpg. Six of our models offer a maximum cruising range of over 500 miles.
• In 2009, Ford will double the number and volume of hybrids, with the new Ford Escape Hybrid rated by the EPA as the most fuel-efficient SUV in the world. Also on the horizon are the Ford Fusion and Mercury Milan hybrids, which are expected to get at least 39 mpg, which is at least 6 mpg better than Toyota Camry hybrid.
• Available in 2009 and 2010 models, Ford will put 50,000 Ecoboost vehicles on the road over the next five years.
• Our SmartGauge™ with EcoGuide, available on the 2010 Ford Fusion and Mercury Milan hybrids, uses LCD screens on either side of the speedometer to show fuel and battery power levels, average and instant miles-per-gallon, helping to coach drivers on how to optimize fuel efficiency.
• With its sedum-covering, our Rouge factory has the largest green manufacturing roof in the United States. In the UK, wind turbines power our Dagenham facility.

Innovation is the driving force behind Ford’s soaring quality performance. Virtual tools help improve ergonomics and ensure every part fits properly in a vehicle long before it is ever built. And, by improving our assembly process and taking durability testing to the extreme, Ford ensures its vehicles are built to last. In fact, Ford has more trucks on the road with 250,000 miles than any other brand.(1)

Some quality highlights include:

• Ford has more Insurance Institute for Highway Safety’s “Top Safety Pick” awards and government five-star safety-rated vehicles than any other automaker.
• In June, the Ford Focus was recognized as the most improved vehicle in the industry’s top study measuring customer-pleasing design, driving experience and vehicle performance. (J.D. Power and Associates’ 2008 Automotive Performance, Execution and Layout (APEAL) Study)
• Ford Motor Company’s surging domestic quality is now equal to the best in the industry for the 2008 model year, according to the latest U.S. Global Quality Research System (GQRS) study.

1. Based on vehicle registration data and latest odometer readings available to R. L. Polk & co. for 1192 and newer model year full-size pickups still on the road in the U.S. as of 4/1/08.