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.

Since 2005, we have reduced employment levels in our Ford North America business unit by about 65,700. As of December 31, 2009, our Ford North America business unit had approximately 70,000 salaried and hourly employees, including employees at Automotive Components Holdings facilities, compared with approximately 135,700 salaried and hourly employees on December 31, 2005. (These employee numbers do not include dealer personnel. Also, 2009 employee numbers have been adjusted to reflect the new accounting standard on the deconsolidation of many of our variable interest entities.) The majority of our U.S. hourly workforce reductions were the result of early retirement offers and voluntary separation packages, including Ford hourly employees at our ACH facilities.

Separation Packages Offered to Ford Hourly Employees

In 2009 and 2010, we offered buyouts to our U.S. hourly UAW-represented employees as part of our continuing efforts to align capacity with demand and improve our competitiveness. The Company has continued to work with the UAW to design and offer attrition packages that help our employees and their families' transition to new opportunities. In 2009, we offered an additional round of special programs to our 42,000 hourly employees. The first round, which expired in June 2009, was accepted by approximately 1,000 workers. Ford determined that to improve competitiveness and further align capacity with demand it needed to offer a second round of hourly buyouts. In December 2009, therefore, Ford offered "1st Quarter 2010 Special Programs." This offer expired on January 22, 2010, and was accepted by approximately 300 people.

The buyouts were completely voluntary. These special programs gave employee two options (amounts are pre-tax):

• Option 1: Under an early termination program, all active employees with at least one year of seniority would receive a lump sum payment of $50,000, as well as the choice between a $25,000 voucher towards a new vehicle or $20,000 cash and six months' basic health care coverage.
• Option 2: Under a special retirement incentive program, all skilled trades employees who are eligible to retire would receive a $40,000 lump sum payment, while non-skilled employees would receive a $20,000 lump sum payment. This offer also included either a $25,000 vehicle voucher or a $20,000 additional lump sum payment.

In addition, in 2009 the UAW and Ford Motor Company began offering special programs and incentives to surplus employees prior to being placed onto "indefinite layoff" status. At present, these special programs and incentives include the following:

• 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.
• Special Retirement Incentive: This program is 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 trades employees.

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 environmentally 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 smooth and successful transitions to new uses.

Our first step with any closed facility 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, the property is 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.

In 2009, Ford reached an agreement in principle to sell the closed Wixom Assembly facility in Wixom, Michigan, to Clairvoyant Energy and Xtreme Power for use as a renewable energy manufacturing park. Xtreme Power will use the site to manufacture large-scale power systems that store renewable energy such as solar and wind power and redeliver that power when needed. Clairvoyant Energy will redevelop a portion of the site to build state-of-the-art, high-efficiency solar panels. These companies plan an initial investment of more than $725 million to redevelop the 320-acre plant site and its 4.7 million square feet of building space to manufacture solar power and energy storage systems, respectively. Manufacturing activities are expected to begin in 2011. Ford has worked hard to come to a redevelopment plan that will benefit the local community. This plan is expected to create more than 4,000 direct jobs, including at local suppliers, as well as support thousands of indirect jobs.

In January 2009, Ford sold its former Maumee Stamping plant in Ohio to a local manufacturer. And, the ACH plant in Ypsilanti, Michigan has been purchased by Angstrom USA, a global manufacturer of tubular parts supplied primarily to the auto industry. This purchase paves the way for the facility to resume a productive use in the community.