Employees

Our employees are our most valuable resource. We invest in their development, and they invest their time, talent and energy in the success of Ford Motor Company.

Our employees are the stakeholders most immediately affected by our restructuring. During 2007, we took painful but necessary steps to reduce our salaried and hourly workforce as part of our efforts to return our North American operations to profitability. This reduction included the elimination of about 7,800 salaried employees by the end of the first quarter of 2007, primarily through early retirements and other voluntary separation packages.

By agreement with the UAW, we also extended early retirement or voluntary separation packages to all UAW-represented hourly employees, including Ford employees at our Automotive Component Holdings LLC (ACH) plants. Through year-end 2007, about 32,800 hourly employees represented by the UAW left the Company through these offers. The accelerated plan to sell or close most ACH facilities by the end of 2008 will result in additional personnel reductions.

In early 2008, we conducted another enterprise-wide voluntary buyout offer to UAW-represented hourly employees. Employees were given the opportunity to choose from 10 packages, with varying eligibility criteria. Though many of the packages are the same as those offered during the fourth quarter of 2006, two new packages were added and one retirement package was enhanced with additional tax-efficient options for receiving the incentive amount. We expect these separations to be primarily completed by July 1.

We have focused on handling these separations with sensitivity and assisting departing employees in preparing for new opportunities. Most of these separations have been accomplished through voluntary packages. See Sustaining Ford for more information.

We have entered into collective bargaining agreements with the UAW and the National Automobile, Aerospace, Transportation and General Workers Union (CAW) of Canada. Our agreements with the UAW and CAW provide for, among other things, guaranteed wage and benefit levels throughout the term of the respective agreements, and significant employment security, subject to certain conditions. As a practical matter, these agreements may restrict our ability to close plants and divest businesses during the terms of the agreements. Our agreement with the UAW expires on September 14, 2011. Our agreement with the CAW expires on September 16, 2008. Historically, the negotiation of new collective bargaining agreements with the UAW and CAW typically has resulted in increases in wages and benefits, including retirement benefits.

In 2007, we negotiated new Ford collective bargaining agreements with labor unions in Belgium, Brazil, France, Mexico, New Zealand, Russia, Southern Africa, Taiwan, Thailand, the United States (hourly and salaried), Venezuela and Vietnam. We also negotiated collective bargaining agreements at our Land Rover (Britain) and Volvo (Sweden) affiliates.

In 2008, we are or will be negotiating new collective bargaining agreements with labor unions in Argentina, Brazil, Britain, Canada, France, Germany, Mexico, New Zealand, Romania, Russia, Taiwan and Thailand, as well as with our Volvo (U.S.) affiliate.

We remain concerned about the rapidly rising cost of providing health care to our active and retired employees in the United States. Although we are proud of providing excellent benefits for employees, controlling health care costs is critical to our competitiveness. See "A New Mechanism for Health Care Costs" in the Economy section for more information.

In 2005, business conditions forced us to suspend contributions to U.S. employees' 401(k) retirement plans. In 2007, no merit increases were paid to salaried employees in the U.S. or Canada. However, performance awards were paid to all hourly and salaried employees in 2007 based on the Company's performance in 2006, and in June 2007 the Company's 401(k) matching contributions were reinstated.

In January 2008, we announced ONE Ford, which optimizes our collective strength by aligning our efforts toward a common definition of success, with a clear focus on the skills and behaviors we must develop to accomplish One Team, One Plan, One Goal. All members of our global team will be held accountable for incorporating ONE Ford into their daily work. ONE Ford will help every employee meet his or her fullest potential as we work together to move the business forward. Through ONE Ford, employees gain new learning opportunities that foster functional and technical excellence, encourage teamwork, promote Ford values and enhance our ability to deliver results.