Letter from Alan Mulally

At today’s Ford Motor Company, we are truly driving change. In the past few years, we have restructured and revitalized the Company under extremely challenging economic conditions. Throughout the global recession, we never lost sight of the environmental and social goals that are key elements of our business strategy. Indeed, our focus on those goals was an important factor in our financial recovery. By delivering cars that are greener, safer and smarter, we enhanced our competitiveness and built stronger relationships with our customers.

Now, we are better positioned than ever to deliver on our commitment to sustainability. We have integrated sustainability goals and governance throughout our organization. We have organized our regional operations into a single global team to maximize economies of scale. This also enabled us to align and fully leverage our worldwide research and development resources so that we can introduce innovative product features at a faster pace. For example:

• We have committed to being a leader in fuel economy with every new product. Globally, we have introduced dozens of new vehicles that meet or beat their competitors for fuel economy.
• The average fuel economy of Ford’s North American vehicle lineup improved by approximately 20 percent between 2005 and 2010, and we are on track to boost fuel economy by more than 35 percent by 2015. This also puts us on the path to meet or exceed our science-based global goal to do our share to stabilize atmospheric carbon dioxide (CO₂) concentrations.
• Our vehicles continue to garner top safety ratings. The 2011 Ford Fiesta, for example, is the first car in its segment to earn top crash test ratings in each of the world’s largest auto markets that perform safety testing – the U.S., China and Europe.
• We received a number of prestigious vehicle awards in 2010 and 2011: the all-new Ford Explorer was named “Truck of the Year” at the North American International Auto Show; the Ford Focus was named the official car of the Consumer Electronics Show; and the Ford Figo was awarded Indian Car of the Year 2011 by a leading jury of automobile journalists.
• In the U.S., the quality of our vehicles tied with Honda’s for the fewest number of “things gone wrong” after three months in service among all full-line automakers. Ford also reduced “things gone wrong” in Europe, Asia Pacific and Africa, and South America.

We continue to make progress in other important areas as well. Since 2000, our manufacturing facilities worldwide have reduced overall energy use by 40 percent, decreased CO₂ emissions by 49 percent and cut water use by 62 percent. During 2010 we updated our water strategy, in recognition of the importance of freshwater to our communities and to our own operations and in recognition of the interconnections between the availability and quality of water and other issues like climate change.

We also promote sustainable business practices not only in our own global operations, but throughout our entire supply chain. We are leading an industry-wide supply chain approach to ensure that all components used in our products are manufactured under conditions that demonstrate respect for the people who make them. We are also working with suppliers to promote environmentally sustainable practices and to better understand impacts in our supply chain. In 2008 we joined the United Nations Global Compact, which endorses a framework of principles in the areas of human rights, labor and the environment. We continue our commitment to these principles.

In communities around the world, our philanthropic organization, Ford Motor Company Fund and Community Services, supports nonprofit organizations in three major areas: innovation and education, community development and legacy, and driver safety education. Also, Ford employees around the world are actively engaged in making a positive difference in their communities. Our Ford Volunteer Corps, which was established in 2005, encourages salaried employees to take two work days per year to serve as volunteers. In 2010 some 27,000 Ford employees and retirees in 41 countries provided more than 112,000 hours of work on more than 1,100 community service projects.

In 2011 we were honored to be recognized as one of the world’s most ethical companies for the second year in a row by the Ethisphere Institute, a leading business ethics think tank. This award is based on an extensive review of companies’ social responsibility efforts, corporate governance and business practices. We also ranked first in the Human Rights category in Corporate Responsibility Magazine’s 100 Best Corporate Citizens list. More examples of our progress can be found throughout this report and in the “Map of Our Year.”

I am proud of the outstanding job the Ford team is doing around the world to advance our economic, social and environmental agenda, and I am confident their good work will continue in the future. After several years in which we were challenged to recover our financial footing and responsibly restructure our business, we are now challenged to grow our business and expand our global presence – and to do so responsibly. Our greatest growth will come outside of the mature markets of the U.S. and Europe. In 2010, for example, Ford sales increased by 32 percent in China and by 168 percent in India. We are making substantial investments in plants and creating jobs in all our global regions. In 2010, we announced more than $9 billion in global investments for future growth, including $4.5 billion in North and South America, $2.9 billion in Europe and $1.7 billion in our Asia Pacific and Africa region.

Our integrated approach to sustainability will help us be a trusted partner in expanding in markets around the world as we tackle global sustainability challenges. Our emphasis on resource efficiency in our products and operations also positions us well to weather a period of rapidly rising costs for energy and materials. By remaining true to our values and staying focused on our sustainability goals, we can deliver profitable growth for all associated with Ford.

Alan R. Mulally
President and Chief Executive Officer
June 2011