Workforce

We've had to make some difficult decisions over the last few years in order to match production capacity with demand for new vehicles. That meant significant reductions in employment levels in our North American business unit. The personnel reductions were painful for every person affected. But the results of these efforts are helping Ford to strengthen our competitive position and long-term financial viability. Since 2005, we have closed 12 manufacturing facilities in North America.

In 2009, we offered 42,000 hourly employees two opportunities to accept buyout and early retirement offers, which included payments of up to $70,000 for newer workers and up to $60,000 for those already eligible for retirement. Approximately 1,300 hourly employees accepted a buyout offer in 2009. We have attempted to handle workforce separations and plant closings with respect for the people and communities affected.

In March 2009, Ford-UAW membership ratified modifications to the existing collective bargaining agreement that significantly improved our competitiveness, saving us up to $500 million annually and bringing us near to competitive parity with the U.S. operations of foreign-owned automakers. The operational changes affected wage and benefit provisions, productivity, job security programs and capacity actions, allowing us to increase manufacturing efficiency and flexibility. In addition, modifications to an independent trust called the Voluntary Employee Beneficiary Association, or VEBA, allowed for smoothing of payment obligations and provided us the option, at our discretion, to satisfy up to approximately 50 percent of our future payment obligations to the VEBA trust in Ford Common Stock.

On November 1, 2009, the CAW announced that a majority of its members employed by Ford Canada had voted to ratify modifications to the terms of the existing collective bargaining agreement between Ford Canada and the CAW. One day later, the UAW announced that a majority of its members employed by Ford had voted against ratification of a tentative agreement that would have further modified the terms of the existing collective bargaining agreement between Ford and the UAW. The latest modifications were designed to closely match the modified collective bargaining agreements between the UAW and our domestic competitors, General Motors and Chrysler. (For more on this topic, see the Economy section of this report.)

Our improved financial performance has resulted in some tangible improvements for our workforce in 2010. We were able to pay profit sharing to 43,000 eligible United Auto Workers in 2009. We have reinstated a 401(k) matching program and we are awarding 2010 merit increases for eligible U.S. salaried employees.

In February 2009, our two top executives, Bill Ford and Alan Mulally, voluntarily agreed to accept a 30 percent reduction in salary for 2009 and 2010 and neither received a cash bonus in either of the last two years. Mr. Ford has requested that his compensation be set aside, to be paid only at a point when the Company's global automotive operations achieved full-year profitability.