Handling Downsizing Responsibly

We are keenly aware of the interconnections between our Company and our employees, our business partners and the communities in which we operate. Our investment in manufacturing facilities and our employment of hundreds of thousands of people has helped to build and sustain vibrant, stable communities. We value this contribution, so it is painful to restructure our North American operations. Because of our commitment to our employees and communities, it is critical that we handle the downsizing in a responsible way. Some of the steps we have taken to do this are detailed in this section.

Separation Packages Offered to Ford Hourly Employees

During 2008, we continued to offer UAW-represented hourly employees the opportunity to leave the Company. As an incentive, we offered these employees 10 different voluntary packages to select from, including traditional offers (such as early retirement) and innovative programs designed to help employees transition to new jobs requiring new skills. The following is a summary of the 10 separation packages offered.

1. Enhanced Retirement Plan Incentive – For employees who have 30 or more years of credited service under the Ford-UAW Retirement Plan, or are at least age 55 and have 10 or more years of credited service under the Plan, or are at least age 65 and have one or more years of credited service under the Plan. Participants receive a retirement incentive having a pre-tax value of $50,000 for production (non-skilled) employees or $70,000 for skilled-trade employees. Participants can elect to roll over this incentive to a Tax-Efficient Savings Plan for Hourly Employees or an annuity, or take it as a cash payment.
2. Special Early Retirement – For employees who have reached age 50, but not normal retirement age, and who have 10 or more years of credited service under the Ford-UAW Retirement Plan. Provides unreduced life income benefits for the life of the retiree, and temporary benefits payable until age 62 and one month.
3. Special Early Retirement Plus – For employees who are age 50, but not normal retirement age, have 10 or more but less than 30 years of service, and have a break in service of more than one day. Provides additional credited years of service for computing benefits based upon the length of break in service of one additional year for those who have a break in service of less than or equal to one year, two additional years for those who have a break in service of greater than one year but less than or equal to two years, or three additional years for those who have a break in service of greater than two years. Additional credited years of service may not bring total years of service above 30 years. Employees with 30 years of credited service after the additional service credits described above will be processed as a "30 & out" retirement and will receive their life income benefit and supplements accordingly.
4. Pre-Retirement Leave Program – For employees with at least 28 but less than 30 years of credited service. Ends with retirement when the employee reaches 30 years of service. Employees will receive 85 percent of straight-time pay and all fringe benefits available to an employee in protected status. After they reach 30 years of service, they will receive their regular retirement.
5. Special Termination of Employment Program – Employees with at least one year of service receive a pre-tax payment of $100,000 and six months of basic health care. Retirement-eligible employees must wait 23 months before retiring.
6. Enhanced Special Termination of Employment Program – Employees with at least 30 years of credited service under the Ford-UAW Retirement Plan or who are at least 55 years old with at least 10 years of credited service will receive a lump sum pre-tax payment of $140,000. Retirement may take place immediately, and workers electing this option will receive any pension benefits for which they are eligible at that time, based on length of service. They also will be provided with basic health care coverage for a period of six months, but will be ineligible for post-retirement health care and any ancillary retirement benefits.
7. Educational Opportunity Program – For employees with at least one year of service, includes tuition reimbursement for up to $15,000 per year for up to four years paid directly to the approved college or vocational school, and an annual stipend worth 50 percent of the employee's annualized straight-time wage rate. Health insurance and certain other benefits continue during this four-year period, but participants must enroll in school full time (at least 12 credit hours per semester) and maintain a "C" average to remain eligible. Benefits and the living expense stipend end after four years, or if the employee chooses to opt out of the program, or when the employee receives their degree/certification/license.
8. Focused Education Opportunity Program – Similar to the Educational Opportunity Program described above, except that employees selecting this option will receive two years of tuition payment of up to $15,000 per year and 70 percent of wages.
9. Entrepreneur Special Program 1 – For employees who have at least one but less than 25 years of seniority. Participants receive a $50,000 (pre-tax) lump-sum payment and a five-year continuation of their present health care coverage or a seven-year continuation of basic/catastrophic health care coverage.
10. Family Scholarship Program – Employees electing this program agree to terminate their employment at Ford and will receive a Scholarship Fund totaling $100,000, which can be used for approved educational expenses for their children, spouses and grandchildren. Funds will be taxed upon withdrawal. Funds will be available for a 10-year period from the employee's date of termination, and if the funds are not used within the time period, they will be forfeited.

We invited employees, educational institutions and prospective employers to an "Opportunity Fair," as a way to provide employees with multiple resources and available options while making decisions about leaving the Company. We also offered training to employees in searching for jobs, relocating and weighing their options, such as further education.

Facility Closures

When the decision is made to close a facility, we take an active role in returning the property to a productive use that will be environmental responsible, return shareholder value and benefit the community. Ford wants to leave a positive legacy in the communities in which we have operated, and we are therefore committed to handling our environmental responsibilities and working with municipal leaders to ensure a smooth and successful transition to a new use.

Our first step is to assess and address any possible environmental issues on the property. The goal of our environmental assessment is to understand the environmental condition of the site and the actions needed to ensure that future use of the site will not pose any risk to human health or the environment. If any environmental issues are discovered, properties are cleaned up to the standard appropriate for its future use, whether industrial, commercial or residential.

We also undertake extensive communications with community leaders, citizens and real estate partners to understand the potential future uses for the property and the community's goals for the property. In some cases, Ford redevelops the property itself, but more often it seeks a well-qualified developer to buy and convert it. Some properties remain in industrial use. In other cases, the surrounding communities have changed since the plant opened, and new uses, such as retail, commercial or residential, are possible and desirable.

Ford also has a corporate responsibility to maximize returns to our shareholders in the disposition of our properties. However, we always work with the community to see the property redeveloped into a productive and beneficial use.

The redevelopment of our Atlanta Assembly Plant in Hapeville, Georgia, which we closed in 2006, provides an excellent example of our approach to facility closures. This site is adjacent to the Hartsfield-Jackson Atlanta International Airport, an important economic driver in the region. We worked with the city of Hapeville, the airport and the Federal Aviation Administration to ensure the best use of the 122-acre site. In June 2008, we announced the sale of the site to Jacoby Development, Inc., which will redevelop it into an "aerotropolis" – an aviation-intensive business district that is expected to include offices, retail, restaurants, hotels and airport parking. With these uses, the site should continue to contribute jobs and be an economic driver for the community.