Engagement with Key Suppliers' Corporate Management

Within our global supply base, we have long-term, strategic relationships with a select number of suppliers. Relationships with these suppliers are structured through our Aligned Business Framework (ABF), which is designed to create a sustainable business model to increase mutual profitability, improve quality and drive innovation. Since the ABF program began in 2005, Ford has approved a total of 65 ABF suppliers, 10 of which are owned by minorities or women.

The bilateral ABF agreements comprehensively and formally spell out 22 key business commitments to which Ford and the ABF suppliers must adhere. One element of the ABF agreement is the commitment by suppliers to manage and assure proper working conditions, and responsible environmental management, in their facilities and in their supply chain. (ABF suppliers must also adhere to our Global Terms and Conditions.) This commitment is important for several reasons. Beyond the simple fact that it is the right thing to do, there are specific business benefits to Ford and suppliers in reducing the risk of operational or reputational problems that could affect production. The commitment also provides an opportunity for joint action by Ford and its suppliers to ensure sound working conditions throughout the automotive supply chain.

Ford is facilitating this ABF commitment through a three-phase process, in which ABF suppliers are asked to:

1. Develop or verify that they have a code of conduct aligned with Ford's Code of Basic Working Conditions and internationally accepted principles,
2. Conduct internal awareness training and develop compliance processes supporting their code, and
3. Extend or cascade these expectations to their sub-tier suppliers.

Our work with ABF suppliers to date has focused on providing support and resources to help them align with Ford's CBWC and implement supporting processes. The majority of ABF suppliers have multiple policies and programs to manage some or all elements addressed by Ford's CBWC, however these tend to be disjointed and thus difficult to implement and manage in a cohesive manner.

Ford has committed to providing suppliers with a range of support and assistance based on our experience in this area. We have developed an in-depth resource guide to give suppliers information and background on human rights, generally, and on the development of their own codes, specifically. We are sharing the training materials we have developed, as well as information and developmental guidance on our compliance and training processes. Finally, we have committed to working with suppliers to help resolve issues and concerns.

During the fourth quarter of 2008, we held two sustainability sessions in Troy, Michigan, that were attended by senior management from Ford and our ABF suppliers. Topics covered in these meetings included internal training development guidance and discussion, and a review of key emerging environmental and sustainability topics of interest to Ford and our suppliers.

Through the ABF, Ford is making strides in improving its working relationships with suppliers on a global basis. We are particularly excited about our sustainability work with our ABF suppliers, which leverages our efforts to manage human rights and environmental responsibility issues in our supply chain in a more collaborative, in-depth, integrated and aligned manner. In our view, it will help embed ownership for social and environmental issues throughout our value chain, and lead to the development of more robust sustainable management systems across the automotive supply chain.