Economy

Ford Motor Company has a broad range of economic impacts. Our success as a company directly affects millions of employees, dealers, investors and suppliers. We also have indirect economic impacts on the hundreds of communities in which we operate worldwide.

To sustain our Company, meet our responsibilities and contribute to tackling global sustainability issues, we are continuing to implement our restructuring plan, aligning all of our global operations to focus on four key priorities:

• Aggressively restructure to operate profitably at the current demand and changing model mix
• Accelerate the development of new products our customers want and value
• Finance our plan and improve our balance sheet
• Work together effectively as one team

This section first briefly discusses the current business environment, highlights of our recent progress and our materiality analysis. The bulk of the section then addresses our financial recovery plan, including our progress in implementing the above four priorities. (Note that the risks and competitive factors discussed in our Annual Report on Form 10-K may affect the implementation of these plans). The section also includes information on investor feedback and ratings and Ford Motor Credit Company, as well as two case studies: one on the automotive industry's impact on the U.S. economy and one on the new Ford Fusion Hybrid.

Assessing Materiality

The materiality analysis used to shape this report confirmed that the Company and stakeholders alike have a high level of concern about Ford's financial condition.

Within this broad topic, the issue of managing downsizing is of concern to a range of stakeholders, particularly in terms of its impact on employees and communities. There is also interest in the impact of Ford's legacy costs and current health care costs on the Company's profitability, and related interest in Ford's participation in public policy concerning health care reform. How Ford has managed downsizing and the Company's new approach to post-retirement health care costs are discussed in detail in this section.

Several new issues rose to the highest level of interest among Ford stakeholders since last year's report. Ford's realignment of its products and capacity to meet changing consumer demand emerged as a key issue this year, as did labor costs and the parity of hourly labor costs compared to other automakers. In light of the ongoing financial recession, access to capital and the viability of suppliers and dealers also emerged as key issues. Vehicle quality and Ford's manufacturing, marketing and product competitiveness were also of significant concern to internal and external stakeholders. This section reports on all of these key material issues.