FORD MOTORS:

The Ford Motor Company (NYSE: F) is an American multinational

corporation and the world's fourth largest automaker based on worldwide
vehicle sales, following Toyota, General Motors, and Volkswagen. Based
in Dearborn, Michigan, a suburb of Detroit, the automaker was founded
by Henry Ford and incorporated on June 16, 1903. In addition to the
Ford, Lincoln, and Mercury brands, Ford also owns Volvo Cars of
Sweden, and a small stake in Mazda of Japan and Aston Martin of
England. Ford's former UK subsidiaries Jaguar and Land Rover were
sold to Tata Motors of India in March 2008.

In 2007, Ford fell from the second-ranked automaker to the third-ranked

automaker in US sales for the first time in 56 years, behind General
Motors and Toyota. Based on 2007 global sales, Ford fell to the fourth-
ranked spot behind Volkswagen. Ford is the seventh-ranked overall
American-based company in the 2007 Fortune 500 list, based on global
revenues in 2007 of $172.5 billion. In 2007, Ford produced 6.553 million
automobiles and employed about 245,000 employees at around 100
plants and facilities worldwide. Also in 2007, Ford received more initial
quality survey awards from J. D. Power and Associates than any other
automaker. Five of Ford's vehicles ranked at the top of their categories
and fourteen vehicles ranked in the top three.

Ford introduced methods for large-scale manufacturing of cars and

large-scale management of an industrial workforce using elaborately
engineered manufacturing sequences typified by moving assembly lines.
Henry Ford's methods came to be known around the world as Fordism
by 1914.

History of Ford Motor Company:

Ford was launched in a converted factory in
1903 with $28,000 in cash from twelve investors, most notably John and
Horace Dodge (who would later found their own car company). During its
early years, the company produced just a few cars a day at its factory on
Mack Avenue in Detroit, Michigan. Groups of two or three men worked
on each car from components made to order by other companies. Henry
Ford was 40 years old when he founded the Ford Motor Company, which
would go on to become one of the world's largest and most profitable
companies, as well as being one to survive the reat Depression. As one of
the largest family-controlled companies in the world, the Ford Motor
Company has been in continuous family control for over 100 years.

MISSION, GOAL AND STRATEGY:

Goal:
Our vision is to become the worlds leading consumer company for
automotive products and services.

Mission:
We are a global family with a proud heritage, passionately committed to
providing personal mobility for people around the world. We anticipate
consumer needs and deliver outstanding products and services that
improve peoples lives.

Strategy:
The customer is Job #1. We do the right thing for our customers, our
people, our environment and our society. By improving everything we do,
we provide superior returns to our shareholders.

THREE KEY SUCCESS FACTORS:

 Technology – Improving the driving experience: doing things

such as equipping cars with televisions, terrain response
technology for smoother driving, and voice recognition to control
many functions, including navigation, phone, entertainment,
climate control, the retractable roof, and personalization
preferences.
 Safety –Protecting you and your family: Rollover protection and
innovative restraint systems keep you safer in the event of an
accident.
 Design Ford believes that cars should not only be safe and
technologically sound, but also nice to look at, for this reason Ford
is constantly make new and innovative car models such as the new
Focus ST, and Land Rovers new Range Stormer.

THREE KEY WEAKNESSES:

 Outsourcing -Because of outsourcing while Ford is increasing

productivity and cutting cost, they are also firing a lot of their
 employees some of which have been there for years. So because of
this Fords employee loyalty is decreasing.
 Quality - Though they have safe and innovative designs Ford has a
reputation of making cars with poor quality. Since Ford makes
their cars with the intentions of cutting costs they don’t often use
the most expensive parts, as a result their vehicles do not last as
long as their competitors overseas.
 Customer loyalty - Because of the expendable manner in which
Ford treats their employees, customers often label Ford as an
“unappreciative” company, which lessons the Brand loyalty of the
company.

BRANDS AND MARQUES:

Today, Ford Motor Company manufactures automobiles under several
names including Lincoln and Mercury in the United States. In 1958,
Ford introduced a new marque, the Edsel, but poor sales led to its
discontinuation in 1960. Later, in 1985, the Merkur brand was
introduced to market Fords from Europe in the United States; it met a
similar fate in 1989.

Ford has major manufacturing operations in Canada, Mexico, the United

Kingdom, Germany, Turkey, Brazil, Argentina, Australia, the People's
Republic of China, and several other countries, including South Africa
where, following divestment during apartheid, it once again has a wholly
owned subsidiary. Ford also has a cooperative agreement with Russian
automaker GAZ.

Ford sold the United Kingdom-based Jaguar and Land Rover companies
and brands to Tata Motors of India in March 2008.

Also in 2008, Ford Motor is in negotiations with Shanghai Automotive

Industry Corporation to sell its Volvo cars division.
Overall the Ford Motor Company controls the following operational car marques: Ford,
Lincoln, Mercury, and Volvo Cars.

RECENT COMPANY DEVELOPMENTS:

During the mid to late 1990s, Ford sold large numbers of vehicles, in a
booming American economy with soaring stock market and low fuel
prices. With the dawn of the new century, legacy healthcare costs, higher
fuel prices, and a faltering economy led to falling market shares,
declining sales, and sliding profit margins. Most of the corporate profits
came from financing consumer automobile loans through Ford Motor
Credit Company.

By 2005, corporate bond rating agencies had downgraded the bonds of

both Ford and GM to junk status, citing high U.S. health care costs for
an aging workforce, soaring gasoline prices, eroding market share, and
dependence on declining SUV sales for revenues. Profit margins
decreased on large vehicles due to increased "incentives" (in the form of
rebates or low interest financing) to offset declining demand.

In December 2006, the company raised its borrowing capacity to about

$25 billion, placing substantially all corporate assets as collateral to
secure the line of credit. Chairman Bill Ford has stated that "bankruptcy
is not an option".In order to control its skyrocketing labor costs (the most
expensive in the world), the company and the United Auto Workers,
representing approximately 46,000 hourly workers in North America,
agreed to a historic contract settlement in November 2007 giving the
company a substantial break in terms of its ongoing retiree health care
costs and other economic issues. The agreement includes the
establishment of a company-funded, independently-run Voluntary
Employee Beneficiary Association (more commonly known as a VEBA)
trust to shift the burden of retiree health care from the company's books,
thereby improving its balance sheet. However, this arrangement will not
begin to take effect until January 1, 2010. The agreement also gives
hourly workers the job security they were seeking by having the company
commit to substantial investments in most of its factories.

The automaker reported the largest annual loss in company history in

2006 of $12.7 billion, and estimated that it would not return to
profitability until 2009. However, Ford surprised Wall Street in the
second quarter of 2007 by posting a $750 million profit. Despite the
gains, the company finished the year with a $2.7 billion loss, largely
attributed to finance restructuring at Volvo.

In June 2, 2008, Ford sold its Jaguar and Land Rover operations to Tata
Motors for $2.3 billion.

In January 2008, Ford launched a website listing the ten Built Ford
Tough rules as well as a series of webisodes that parodied the show
COPS (TV Series).

During November 2008, Ford, together with Chrysler and General

Motors, sought financial aid at Congressional hearings in Washington
D.C. in the face of worsening conditions caused by the automotive
industry crisis. The three companies presented action plans for the
sustainability of the industry. The Detroit based automakers were
unsuccessful at obtaining assistance through Congressional legislation.
GM and Chrysler later received assistance through the Executive Branch
from the T.A.R.P. funding provisions. On December 19, the cost of credit
default swaps to insure the debt of Ford was 68 percent the sum insured
for five years in addition to annual payments of 5 percent. That means it
costs $6.8 million paid upfront to insure $10 million in debt, in addition
to payments of $500,000 per year. In January 2009, Ford announced a
$14.6 billion loss in the preceding year, making 2008 its worst year in
history. Still, the company claimed to have sufficient liquidity to fund its
business plans and thus, did not ask for government aid.

"THE WAY FORWARD"

In the latter half of 2005, Chairman Bill Ford asked newly-appointed
Ford Americas Division President Mark Fields to develop a plan to return
the company to profitability. Fields previewed the Plan, dubbed The Way
Forward, at the December 7, 2005 board meeting of the company; and it
was unveiled to the public on January 23, 2006. "The Way Forward"
includes resizing the company to match current market realities,
dropping some unprofitable and inefficient models, consolidating
production lines, and shutting fourteen factories and cutting 30,000
jobs.

These cutbacks are consistent with Ford's roughly 25% decline in U.S.
automotive market share since the mid-late 1990s. Ford's target is to
become profitable again in 2009, a year later than projected. Ford's
realignment also includes the sale of its wholly owned subsidiary, Hertz
Rent-a-Car to a private equity group for $15 billion in cash and debt
acquisition. The sale was completed on December 22, 2005. A 50-50
joint venture with Mahindra and Mahindra Limited of India, called
Mahindra Ford India, Limited (MIFL), ended with Ford buying out
Mahindra's remaining stake in the company in 2005. Ford had
previously upped its stake to 72% in 1998.

Chairman and Chief Executive Officer Ford also became President of the
company in April 2006, with the retirement of Jim Padilla. Five months
later, in September, he stepped down as President and CEO, and naming
Alan Mulally as his successor. Bill Ford continues as Executive
Chairman, along with an executive operating committee made up of
Mulally, Mark Schulz, Lewis Booth, Don Leclair, and Mark Fields.

ENVIRONMENTAL RECORD:
FUEL EFFICIENCY:

In 2000, under the leadership of the current Ford chairman, William

Clay Ford, the Company announced a planned 25 percent improvement
in the average mileage of its light truck fleet – including its popular SUVs
– to be completed by the 2005 calendar year. This promise, however,
remains unfulfilled.

In 2003, Ford announced that competitive market conditions and

technological and cost challenges would prevent the company from
achieving this goal. The United States Environmental Protection Agency
(EPA) released its 2005 fuel economy report ranking Ford cars, trucks
and SUVs as having the lowest gas mileage of any automaker in America.

Researchers at the University of Massachusetts have, however, listed

Ford as the seventh-worst corporate producer of air pollution, primarily
because of the manganese compounds, 1,2,4-trimethylbenzene, and
glycol ethers released from its casting, truck, and assembly plants. The
United States Environmental Protection Agency has linked Ford to 54
Superfund toxic waste sites, twelve of which have been cleaned up and
deleted from the list.

RECORD OF FORD'S ENVIRONMENTAL DECISIONS:

Ford has a mixed record on environmental issues, consisting of both

positive and negative reports. In 2003, Ford discarded its goal of
improving mileage on sport-utility vehicles by 25 percent by 2005, saying
that it would boost mileage of all vehicles instead. However, this plan had
neither specific target nor goal.

For the 2007 model year, Ford had thirteen U.S. models that achieve 30
miles per gallon or better (based on the highway fuel economy estimates
of the EPA and several of Ford’s vehicles were recognized in the EPA and
Department of Energy Fuel Economy Guide for best-in-class fuel
economy. Ford claimed to have eliminated nearly three million pounds of
smog-forming emissions from their U.S. cars and light trucks over the
2004 to 2006 model years.

ALTERNATIVE FOSSIL FUELS

The alternative fossil fuel vehicles, such as some versions of the Crown
Victoria especially in fleet and taxi service, operate on compressed
natural gas—or CNG. Some CNG vehicles have dual fuel tanks - one for
gasoline, the other for CNG - the same engine can operate on either fuel
via a selector switch.

CURRENT FORD FLEXIBLE FUEL VEHICLES:

• Ford F-150
• Ford Crown Victoria
• Ford Taurus
• Ford Ranger
• Ford Explorer
• Mercury Grand Marquis
• Lincoln Town Car
• Ford Focus / Focus
C-MAX / Ford Focus FFV (Flexible-fuel vehicle).

KEY ECONOMIC FACTORS AND TRENDS AFFECTING

THE AUTOMOTIVE INDUSTRY:
EXCESS CAPACITY:

According to CSM Worldwide, an automotive research firm,

in 2007 the estimated automotive industry global production capacity for
light vehicles (about 85.4 million units) exceeded global production by
about 16.8 million units. In North America and Europe, the two regions
where the majority of revenue and profits are earned in the industry,
excess capacity was an estimated 17% and 11%, respectively. According
to production capacity data projected by CSM Worldwide, significant
global excess capacity conditions could continue for several more years
at an average of 18.4 million units per year during the 2008-2014 period.

PRICING PRESSURE:
 Excess capacity, coupled with a proliferation of new
products being introduced in key segments by the industry, will keep
pressure on manufacturers' ability to increase prices on their products.
In addition, the incremental new U.S. manufacturing capacity of
Japanese and Korean manufacturers in recent years has contributed.

CONSUMER SPENDING TRENDS:

We expect, however, that a decline in or the inability to increase

vehicle prices could be offset at least in part by the long-term trend of
consumers' propensity to purchase higher-end, more expensive vehicles
and/or vehicles with more features. In the United States, for example,
consumers in the highest income brackets are buying more often and are
more frequently buying upscale.

COMMODITY AND ENERGY PRICE INCREASE:

Commodity prices, particularly for steel and resins (which are
our two largest commodity exposures and among the most difficult to
hedge), have continued to increase during a period of strong global
demand for these materials. In addition, energy prices also continued to
increase significantly in 2007. In particular, gasoline prices in the United
States rose to levels over $3.00 per gallon during 2007. Although prices
have moderated somewhat, they are expected to remain at high levels.
This has had an adverse effect on the demand for traditional fulland
medium-sized SUVs and trucks in the United States.

OTHER ECONOMIC FACTORS:

Additional factors have recently affected the performance of the
automotive industry. In the United States, 2007 was a period of a
significant contraction in the housing market. As a result, spending on
new residential construction declined by 16.9% (after inflation). This
adjustment had two effects on automotive sales and revenue – directly,
through its adverse effect on GDP growth, and as a contributing factor to
potential softer demand for truck sales. Both of these factors may
continue to contribute to lower light vehicle sales in the United States. In
addition, during the second half of 2007, the United States experienced a
subprime mortgage contraction.
Notes: FORD MOTOR COMPANY

1. Media.Ford.com Press Release: Ford Announces 2007 Fourth Quarter and Full
Year Preliminary Results - 24 January 2008
2. Fortune 1000 list for 2008 - based on 2007 sales
3. Money.CNN.com - Ford gets 5 top quality awards - 7 June 2007
4. Edmunds AutoObserver.com - J.D Power: Ford Is a Winner - 7 June 2007
5. Ford Motor Company Information - Ford
 6. Ford fighting to keep its shine
7. Business Week - Is Ford Innovative? Part Two
8. EERE News: EERE Network News
9. Ford Motor Company - Press Release - Ford Motor Company And Southern
California Edison Join Forces To Advance A New Transportation And Energy
Vision
10. Ford CEO: Bankruptcy 'Not an Option'
11. Ford posts worse than expected quarter loss, record '06 loss - January 25, 2007
12. Ford hit by record $12.7bn loss
13. FinancialTimes.com - Ford takes $2.4bn writedown for Volvo - 24 January 2008
14. Ford Commits $75 Million For India Operations

REFERENCES AND FURTHER READING

FORD MOTOR COMPANY

• Bak, Richard. Henry and Edsel: The Creation of the Ford Empire (2003)
• Batchelor, Ray. Henry Ford: Mass Production, Modernism and Design
Manchester U. Press, 1994
• Bonin, Huber et al. Ford, 1902-2003: The European History 2 vol Paris 2003.
ISBN 2-914369-06-9 scholarly essays in English on Ford operations in Europe;
reviewed in Len Holden, Len. "Fording the Atlantic: Ford and Fordism in Europe"
in Business History Volume 47, #1 January 2005 pp 122–127
• Brinkley, Douglas G. Wheels for the World: Henry Ford, His Company, and a
Century of Progress (2003)
• Bryan, Ford R. Henry's Lieutenants, 1993; ISBN 0-8143-2428-2
• Bucci, Federico. Albert Kahn: Architect of Ford Princeton Architectural Press,
1993
• Flink, James. America Adopts the Automobile, 1895-1910 MIT Press, 1970
• Lacey, Robert "Ford: The Men and the Machine" (Heinnemann, London) 0 414
401027 (1986)
• Levinson, William A. Henry Ford's Lean Vision: Enduring Principles from the
First Ford Motor Plant, 2002; ISBN 1-56327-260-1
• Kuhn, Arthur J. GM Passes Ford, 1918-1938: Designing the General Motors
Performance-Control System. Pennsylvania State University Press, 1986
• Magee, David. Ford Tough: Bill Ford and the Battle to Rebuild America's
Automaker (2004) .