Letter from Sue Cischke

At Ford Motor Company these days, change is a part of our DNA, and we're using it to deliver great results. From where I sit, you don’t have to look far to see the transformation of our Company. About 10 miles from my office is the Michigan Assembly Plant in Wayne, formerly known as the Michigan Truck Plant. We’ve invested $550 million there to create a modern and flexible plant capable of making five fuel-efficient vehicles, including three electrified vehicles. Among many innovative features described in this report, the plant gets power from two forms of renewable energy. It uses gas from a nearby landfill and is equipped with a 500-kilowatt solar power generation system, including a demonstration battery storage system for the plant. And, to support these new products, we plan to bring our vehicle battery development and production inside Ford, adding 1,000 new jobs in our headquarters state.

Driving Change Globally

The Michigan Assembly Plant is not a singular showpiece. Around the world, you’ll find similar signs of transformation. Our Dagenham Diesel Centre in the UK is powered by two wind turbines, with a third to be added this year. From Chennai, India, to Chihuahua City, Mexico, we’re implementing water reuse and conservation projects in line with our sharpened strategic focus on water management. On the safety front, our Fiesta small car is popular around the globe and is the first vehicle in its class to win top safety ratings in every major automotive market, including the U.S., Europe and China.

Less visible, but no less important, is our work to continuously improve the efficiency of our products and processes so we use less energy, water and other resources. As a result of these efforts, our customers get vehicles with improved fuel economy, safety and quality. Innovation at Ford is driving changes both incremental and fundamental.

Progress through Collaboration

Another important driver of progress is collaboration and partnership. The solar energy project at the Michigan Assembly Plant, for example, is being installed and managed through a joint effort among Ford, DTE Energy Co., Xtreme Power, the City of Wayne, Michigan, and the State of Michigan. To make our new plug-in electric vehicles more compelling and convenient for customers, we are collaborating with a range of organizations – from electric utilities and technology companies to local governments and regional authorities – to establish the needed infrastructure. We are also working even more closely with other automakers and our suppliers to make our entire value chain more sustainable – environmentally, socially and economically.

Results

The data in this report show many positive trends, including in our per-vehicle performance. However, because our production increased in 2010 versus 2009, the total energy we used increased. We will continue to focus on our per-vehicle reduction while monitoring our overall vehicle energy use.

There are also some areas where changes to how performance is measured may mask the real progress we are making. For example, the two major public domain vehicle safety rating systems in the U.S. and the major European system all modified their tests recently to make it harder to attain the top rating. Despite the changes, we are continuing our safety leadership, and our vehicles are safer than ever. Our safety data for the U.S. and Europe start with a new 2010 baseline, because the most recent test results are not comparable to those from prior years.

In this report, you will find many examples of how we are significantly improving the fuel economy of our new and refreshed vehicles. You will also find a very long list of vehicles that lead their class in fuel economy. In the U.S., our fleet fuel economy and carbon dioxide (CO₂) emission numbers (final and projected) may not reflect the actual progress we have been making for the 2010 and 2011 model years, in part because of changes the government made to how fleet fuel economy is calculated. For example, in the 2011 model year, certain vehicles that were formerly classified in the truck category were moved to the car category. This reduced the fuel economy averages for both categories even as the combined fleet average is projected to improve by about 3 percent.

I also want to touch on a difference between this report and those of the past few years. In this report, you’ll find a detailed explanation of our science-based climate stabilization goal. We are focusing on this goal because it serves as a compass for both the short and long term – a way for us to gauge the actions we need to take to cut emissions from our products and operations enough to make a meaningful contribution to addressing the challenge of global climate change.

In past reports, we have stated a goal for the U.S. and Europe to reduce the CO₂ emissions of our U.S. and European vehicles by 30 percent by 2020 relative to the 2006 model year. We continue to report on the CO₂ emissions of our vehicles in these regions compared to the 2006 baseline, and we are on track to exceed the goal. With high confidence that this goal will be delivered, our product planning has now moved beyond that goal toward alignment with region-specific glide paths to achieve the overall science-based stabilization goal – and that is what we will emphasize in this and future reports.

To complement our product CO₂ goal, in early 2011 we adopted a goal to reduce facility CO₂ emissions by 30 percent by 2025 on a per-vehicle basis, compared to 2010. While we were already reducing these emissions – between 2005 and 2010 we cut our facility CO₂ emissions by 37 percent in total and 21 percent on a per-vehicle basis – the new goal gives us a longer-term commitment consistent with our stabilization goal.

Integration in a Global Organization

For the past year, we focused on making our Sustainability, Environment and Safety Engineering group a more global organization to leverage our expertise and to prepare for growth in areas beyond the U.S. and Europe. This change brings together our global experts in sustainable business strategies, vehicle environmental engineering, vehicle safety, manufacturing environmental management, and safety and environmental regulatory compliance. It helps us monitor trends, risks and opportunities and develop a global perspective to properly anticipate regulations and customer expectations and make sure our product and business plans are aligned to meet them.

This restructuring is further evidence of both the integration of sustainability into our fundamental business processes and the true globalization of our Company. It will support our continued transformation and help enable the robust delivery of our products into markets around the world, achieving excellence in sustainability, environmental performance and safety.

Sue Cischke
Group Vice President, Sustainability, Environment and Safety Engineering
June 2011