Letter from William Clay Ford, Jr.

When it was founded in 1903, Ford Motor Company was what we would now think of as a start-up. The dawn of the 20^th century was a time of revolutionary change in how people and things got around – and how far they could go. Cutting-edge ideas such as ethanol-fueled and electric cars were generated and tried at an astonishing pace. Some succeeded; others failed. What set Ford apart and enabled it to grow and prosper was continuous improvement and innovation: the moving assembly line, the $5-a-day wage, the affordable automobile.

We are once again in a time of rapid change in our industry. The future is coming at us fast, offering many exciting possibilities as well as potential bumps in the road. How do we navigate the rapid technological changes that are reshaping our industry and the fast pace of growth that is reshaping our company? How do we move quickly enough to capture opportunities and influence the future of mobility? The answer: by staying true to our heritage of innovation, our principles and our One Ford plan while looking ahead not just five years but 20 or even 50 years from now.

Our Principles

In 2000, at the dawn of the 21^st century, I addressed the national Ceres Conference in San Francisco to announce that our company would follow the Ceres Principles, a 10-point code of corporate environmental conduct. By endorsing these principles, we pledged to go beyond the requirements of the law to preserve and protect the environment, and human health and safety.

My announcement was greeted with alarm in some quarters and skepticism in others. Some felt that our commitment to sustainability would harm our business results; others believed it was an empty gesture that would not change how we operated. But in the years that followed, sustainability became a core element of our business plan. Our company ultimately prospered as we reduced our environmental impact and implemented a global code of conduct to ensure sound and respectful working conditions for people throughout our own operations and our supply chain.

Today our commitment to sustainability is helping us achieve our vision of building great products, a strong business and a better world. In 2013 record profits in North America and Asia Pacific Africa helped us achieve one of the best years in the history of our company. In 2014 we were recognized as one of the world’s most ethical companies by the Ethisphere Institute, a leading think tank dedicated to the advancement of best practices in business ethics and sustainability. It was our fifth year in a row of positive net income, and fifth year in a row of being recognized as an ethical company by the Ethisphere Institute.

Our Plan

Our One Ford plan is the overall strategy that guides our operations. The central focus of this plan is serving customers in all markets around the world with a full family of vehicles: small, medium and large cars, utilities and trucks. In every region in which we compete, our vehicles offer the best quality, fuel efficiency, safety, smart design and value.

Our ongoing commitment to reducing the environmental impact of our vehicles is documented in our Blueprint for Sustainability, a systematic plan to improve fuel efficiency and reduce CO₂ emissions. This plan provides our road map, consistent with One Ford, for addressing the critical issues of climate change and fuel economy. It outlines our near-term, mid-term and long-term product plans, as well as the technology we will use to reach them, through 2020.

Our Progress

Our One Ford plan continues to create outstanding results. In 2013 our global sales increased by about 12 percent as customers took delivery of some 6.3 million new Ford and Lincoln vehicles. In 2014 we will launch the most new products in our history – 23 new or significantly refreshed vehicles to customers around the world. That includes 16 launches in North America, which is triple the number of products we launched in North America in the previous year. To support these product launches we will continue our largest manufacturing expansion in the last 50 years. We have increased capacity or added production in seven of our North American plants and are opening two new plants in Asia and one in South America in 2014.

As part of our commitment to leading fuel economy, our EcoBoost® engines – which use turbocharging and direct injection to deliver up to 20 percent better fuel economy without sacrificing performance –are now available on 90 percent of Ford vehicles. Expanded availability in high-volume nameplates helps make fuel economy more affordable for hundreds of thousands of drivers. We will offer fuel-efficient EcoBoost® engines in 18 North American nameplates in 2014, up from 11 in 2012 and seven in 2011.

At the turn of the 20^th century it was far from certain whether electric or gasoline-powered vehicles would claim the market for automobiles, but in the end it was gasoline that dominated for the whole of that century. Today, thanks to advances in technology, that competition has been renewed.

In the U.S., in the early part of the 21^st century, we now offer six electrified vehicles. We sold about 85,000 hybrids, plug-in hybrids and all-electric vehicles in 2013, the first full year all six vehicles were available in dealer showrooms. We began offering the all-electric Ford Focus Electric in Europe in 2013 and we will introduce a hybrid Mondeo and the C‑MAX Energi plug-in hybrid in 2014.

Henry Ford understood the importance of a stable, thriving supply chain. Beginning in the 1920s, he established a network of 25 small, rural, water-powered factories so farmers could make auto parts during part of the year and farm the rest of the year, providing more income for farmers and a more diverse supply base for Ford.

In 2000, Ford was the first automaker to take on the issue of human rights in the automotive supply chain, not because we were under public pressure to do so but because it was the right thing to do for our business and communities around the world. We continue to work with our suppliers and lead industry efforts to promote sustainability in all aspects across the entire supply base. In 2014, we will mark a milestone by completing our first report on conflict minerals in our raw materials supply chain.

In 2000, I also announced a focus on water conservation. Between 2000 and 2013, we cut our water use by 61 percent, or more than 10 billion gallons. More recently, we recognized a human right to water and developed a comprehensive water strategy based on the CEO Water Mandate that we signed in 2014. The strategy seeks to continue to cut our own use of water while addressing water issues in our supply chain and in the communities in which we operate.

Looking further ahead, we also want to be a leader in wireless automotive communication technology, in line with our Blueprint for Mobility, which maps out a step-by-step plan to achieve an integrated, sustainable transportation system by mid-century. It outlines a future of connected cars that communicate with each other and the world around them to make driving safer, ease traffic congestion and sustain the environment.

In 2013 we began testing a Ford Fusion Hybrid automated research vehicle in conjunction with the University of Michigan and State Farm to study automated driving and other advanced technologies. In 2014 we announced new projects with the Massachusetts Institute of Technology and Stanford University to research and develop solutions to some of the technical challenges surrounding automated driving. All of these projects build on a decade of automated driving research at Ford and represent a vital step toward our vision for the future of mobility.

We don’t know exactly what forms future mobility systems will take, but they will likely involve collaborative networks in which vehicles and infrastructure “talk” to each other to share the information needed for efficient, safe transportation, particularly in congested urban areas. Technology – both hardware and software – will be the enabler of this future.

Looking Ahead by Looking Back

During 2013, Ford Motor Company celebrated the 150^th anniversary of the birth of Henry Ford. We also noted the 100^th anniversary of his moving automotive assembly line. And 2014 will mark the 100^th anniversary of the $5-a-day wage, my great-grandfather’s choice to share profits with workers in a way that effectively doubled their salaries. His technological and social innovations changed the world, driving down the cost of automobiles and helping to create a middle class that could afford to buy the products they themselves made and who gained a degree of mobility unknown to earlier generations. I think Henry Ford would be very comfortable in today’s business environment, and, like the company he founded, would embrace the challenge of translating his vision of attainable mobility in a responsible and sustainable way for the future.