Progress

Employees

Over the last three years, Ford has significantly reduced employment levels in our North America business unit, decreasing overall salaried and hourly payroll from 135,700 individuals at the end of 2005 to about 75,200 individuals at the end of 2008. (These figures do not include dealership personnel.) We cut U.S. salaried personnel costs by another 10 percent in early 2009, and we have cut contract personnel by 50 percent over the last three years. We have focused on communicating effectively about these changes and minimizing the emotional toll of the layoffs for the employees who remain in the organization.

Among our salaried employees, overall employee satisfaction in 2008 improved slightly over 2007 levels. Our comprehensive Pulse survey showed improvement in about 61 percent of the 62 items evaluated.

This past year, a major safety indicator – global lost-time case rates – continued its trend of steady and marked improvement, dropping 17 percent from 2007 to 2008.

Our serious injury and fatality rates, however, did not meet our goals of zero in 2008. Tragically, we experienced four fatalities, including two direct Ford Motor Company employees in North America and two contractors – one in South Africa and one in India. We also experienced 173 serious injuries. In most of the cases, the causes were in higher-risk special focus areas for us, including issues relating to pedestrian safety in plants, energy control and power lockout, and lifting and rigging.

We deeply regret the deaths that occurred and offer our sincerest condolences to the family members, friends and co-workers of the four individuals. Ford has fully cooperated with the appropriate investigating and reporting agencies, and has taken actions intended to prevent similar accidents from happening in the future.

We have refocused the attention of our top executives and managers, and are using quality improvement processes to address safety issues. In North America, for example, management compensation has been more heavily weighted to safety results, including serious injury performance.

Suppliers

We are working closely with our suppliers to improve quality, find cost efficiencies and align our social and environmental practices. In 2006, we began a new supplier partner program called the Aligned Business Framework. Through this process, we are reducing the number of suppliers of different components but increasing our level of collaboration and commitment with these preferred suppliers. This system is improving costs and quality, as well as increasing innovation and teamwork with our strategic suppliers. See the Human Rights section for information on our Aligned Business Framework.

One hundred percent of our preferred, or "Q1," production supply facilities have attained ISO 14001 environmental management certification.

Dealers

Our dealers present our face to customers and communities and provide the Company with important feedback. The economic environment of the last year has demonstrated that we have too many dealers to sustain a healthy and profitable dealer network. To address this overcapacity, we have been downsizing and restructuring the Ford, Lincoln and Mercury network in our largest 130 metropolitan market areas.

Customers

In recent years, our markets have continued to change. Consumers are showing an increasing interest in more fuel-efficient vehicles, though they do not want to compromise on performance, style or affordability. Demand for vehicles in developing countries has continued to grow. We are working hard to understand and anticipate the products and services that customers want, including more sustainable vehicles.

Communities

In 2008, Ford continued its longstanding tradition of investing in local communities, although challenging business conditions affected the amount of money Ford Motor Company Fund was able to provide in grants. During the year, the Fund and other corporate giving programs supported hundreds of organizations with charitable grants totaling $49 million. Our programs and initiatives focus on education, American heritage and auto-related safety.

In 2008, the Ford Volunteer Corps continued to build stronger communities around the world. During Ford's Global Week of Caring in September, about 9,000 employees on six continents donated 24,000 hours of work on community service projects – the equivalent of $480,000 of in-kind corporate contributions.