Physical Risks
Extreme weather such as the severe hurricanes the United States experienced in the Gulf of Mexico in 2005 disrupts the production of natural gas, a fuel necessary for the manufacture of vehicles. Supply disruptions raise market rates and jeopardize the consistency of vehicle production. To minimize the risk of production interruptions, Ford has established firm delivery contracts with natural gas suppliers and installed propane tank farms at key manufacturing facilities as a source of backup fuel.
Although increased energy rates have a significant cost impact to the Company, they do increase awareness of energy conservation, its impact on the environment and the need for alternative energy solutions. Increased utility rates have prompted Ford Motor Company to revisit energy efficiency actions that previously did not meet our internal rate of return. These projects include the replacement or upgrade of heating, ventilating and cooling systems, lighting and vehicle painting systems.
