Human Rights Challenges and Opportunities

Ford is committed to respecting human rights everywhere we operate. The case for protecting human rights in our own facilities and throughout our value chain is compelling. People are most likely to excel in an environment that aims for excellence. A safe workplace in which people are treated with respect promotes increased quality, productivity, employee retention and morale. It can also decrease quality problems and health care costs. We have also found that a supplier company's efforts to address working conditions, environmental challenges and other sustainability issues are good indicators of its management's leadership capabilities.

Like other automakers, we are expanding our presence in emerging markets, where most of the growth in automobile sales is expected to occur. We view respect for human rights as not only a core operational issue, but also a key to maintaining the trust and respect of local communities around our facilities. That trust is critical to our ability to operate and sell our products in an intensely competitive global marketplace.

To serve global markets efficiently and affordably, we must build local and regional supply bases. The result is an increasingly complex and dispersed supply chain. Many of our suppliers routinely provide outstanding working conditions. And we believe that, ultimately, this is the suppliers' responsibility. We would also like governments to play the lead role in enforcing compliance with laws. In reality, however, the legal structures governing working conditions, and the level of enforcement, vary widely across the countries in which we operate. Thus in some places we need to help suppliers build capability and assess compliance in order to have confidence that the suppliers meet our standards. As others in the industry begin to take similar steps, we believe that automakers and suppliers alike will be best served by a cooperative approach to working conditions in the automotive supply chain.

For example, 2006 saw the discovery of the use of slave labor in Brazil to produce charcoal used in making pig iron, which is ultimately used in steel production for automobiles. When we learned of the situation, Ford immediately stopped all direct sourcing from the supplier that was identified in the investigation and, subsequently, found an ongoing supply source in the United States. We then identified all potential points of entry for pig iron in the Ford value chain. Finally, we sought to engage all suppliers identified as purchasing pig iron and asked for assurances from them that forced labor is not employed anywhere in their value chain. We also requested detail regarding their systems for safeguarding human rights throughout their operations. We have continued to provide information to those investigating the situation. We will also continue dialogue with supplier management globally to ensure that local labor laws are observed within supplier facilities and addressed in sub-tier supplier contracts.

Ford's existing working conditions training and assessment program provided additional opportunity to engage suppliers in Brazil. Ford's direct suppliers in Brazil were required to take training on working conditions in 2007, and, after learning of the situation in Brazil, Ford extended an invitation to direct suppliers to bring representatives from their suppliers to the training sessions.

Our human rights efforts described in this section are designed to help us address these and other challenges.