Our Learning Journey Connecting with Society

Home , Edsel, Ford India, Ford Italia, Ford World Headquarters, Premier Automotive Group, The Hertz Corporation

Connecting with Society Our Learning Journey TABLE OF CONTENTS

A Message from the Chairman ...... 2 Operating Highlights ...... 5 Strategic Issues Update ...... 6 Introduction ...... 7 Climate Change ...... 8 Human Rights ...... 10 Business Principles ...... 12 Sustainable Mobility ...... 14 New Partnerships and Technologies ...... 16 Performance ...... 18 Progress in 2001 ...... 19 Stakeholder Relationships ...... 20 Employees ...... 22 Customers ...... 27 Investors ...... 30 Dealers ...... 32 Suppliers ...... 34 Communities ...... 37 Civil Society ...... 39 Product Performance ...... 40 Safety ...... 41 SUV Update ...... 44 Greenhouse Gases and Fuel Economy ...... 45 Materials ...... 48 Emissions ...... 50 Manufacturing Performance ...... 52 Energy ...... 53 Water ...... 56 Air ...... 57 Waste ...... 58 Land ...... 59 Sustainable Manufacturing: A Special Section ...... 60 Public Policy Performance ...... 62 Staying Connected ...... 64 Index to Global Reporting Initiative Indicators ...... 65

About This Report

As part of our CERES commitment, Ford Motor Company publishes an annual corporate citizenship report. In it, we discuss our evolving view of corporate citizenship (sustainability) and provide a candid assessment of our social, economic and environmental performance during the previous year. We support the Global Reporting Initiative (GRI) and used the GRI guidelines in preparing this report. More information on GRI is available at www.globalreporting.org. This is our third corporate citizenship report, covering calendar year 2001. Some events of early 2002 also are discussed. The data in this report covers all of Ford’s wholly and majority owned automotive operations and, where applicable, Ford Financial Services and the Hertz Corporation, unless otherwise noted. Data in this report is subject to internal quality controls, but none has been independently verified. An Incomplete Work of Industrial Art... Arteaga Photo

On last year’s cover, it was the Golden Gate Bridge under construction. This year, it is the St. Louis Arch. Beautiful works at a point when they were not yet complete, but when the end goal was clear, when the vision embodied in the design and the work was finally obvious. When the artistry was so bold as to provoke an endless series of questions. That is the state of corporate citizenship today —an unformed work, many years in the making, with still more years required before the form and function are visible to all. It also is the state of Ford Motor Company today— a century old, yet still a work in progress. As with great art of any kind, it leads to questions. Fundamental questions. How many more years will it take before the shape of our future is clear to all? Who are the designers? Who are the artisans? What meaning lies in such graceful works?

About Our Web Site Credits Throughout this report, you will find the symbol Design by The Quintek Group. Photographic assistance that indicates additional information can be found on provided by Studio 22 and Ford Photographic. Contributing www.ford.com. You also may wish to view our 2000 editors: Leah Haygood, Rebecca Calahan Klein and Kevin Sweeney. and 1999 reports on our Web site. Copy editor: Suzanne Fleming. Managing editor: Brad Simmons. A Message from the Chairman

Citizenship is at the Core of Our Rebuilding Efforts

In the 20th century, no company had a greater impact on the lives of people around the world than Ford Motor Company. My great-grandfather, Henry Ford, put the world on wheels by mass- producing simple, reliable automobiles that those who built could afford. He also was a pioneering environmen- talist who advocated recycling and renewable energy sources, and a social activist whose $5 a day wage changed the way companies viewed their employees. His remarkable legacy teaches and inspires us. Here at the start of the 21st century, as we approach our 100th anniversary as a company, our goal is to have an even greater impact on people’s lives in the next 100 years. We want to continue to provide the world with mobility by making it affordable in every sense of the word—economi- “ cally, environmentally and socially. The foundations of society This report outlines our progress in are the men and means to those three areas, which are the keys to making the personal mobility grow things, to make things, business sustainable. and to carry things. As long Economically, 2001 was a difficult year for us. On January 11, 2002, we as agriculture, manufacture, announced a plan to dramatically and transportation survive, improve the products, profitability and shareholder value of the Company. the world can survive any economic or social change.”

My Life and Work by Henry Ford 1924

2 VISIT OUR WEB SITE www.ford.com /go /corpcit rebuilding

This plan focuses on three key corporate citizenship. But that doesn’t And we are proceeding on schedule elements: products, cost reduction and mean we will abandon our goals or with the development of the Ford aligning our manufacturing capacity change our direction. Rouge Center, which will transform with worldwide demand. It lets us Our revitalization plan is working. our historic Rouge manufacturing get back to the basics of building great Although it includes many short-term complex in Dearborn, Michigan, into products, and doing so profitably. actions, the plan gains momentum a global model of lean and sustainable A legitimate question to ask is over the next several years as we manufacturing. whether our intense focus on the launch new products. By mid-decade, Socially, we continue to have a economic side of our business will we will generate billions of dollars of major impact as a large company distract us from our environmental improved profitability. with a worldwide presence. In 2001, for example, our total charitable giving reached an all-time high of $139 million for projects focused on Difficult business conditions make education, the environment and it harder to achieve the goals we set for community development. ourselves in many areas, including corporate Unfortunately, our efforts to strengthen our business economically citizenship. But that doesn’t mean we will will have an adverse effect on some abandon our goals or change our direction. employees and communities. We expect to reduce our workforce by 35,000 people worldwide, on a base of 350,000, when all our actions are and social efforts. As we said in last Our environmental efforts also build completed—including closing five year’s report, corporate citizenship can momentum as we introduce new prod- plants in North America by mid- only be achieved in the context of a ucts. In the United States, we are decade. We will make every effort to strong and profitable business. But it’s committed to continuous improve- make the changes as non-disruptive also true that businesses can only be ment in the fuel economy of all of our and mutually beneficial as possible. as successful as the communities, and vehicles. In Europe, we have agreed, We realize that some of the things the world, that they exist in. That along with others, to reduce the that must be done will be painful and makes ongoing corporate citizenship average CO2 emissions of the vehicles will impact people’s lives in difficult efforts essential. we sell there. ways. But I sincerely believe that Difficult business conditions make The Company also has set a global these actions will do the most good it harder to achieve the goals we set target to reduce energy use at its facili- for the most people in the long term. for ourselves in many areas, including ties on a production-normalized basis.

2001 Corporate Citizenship Report — Our Learning Journey 3 A Message from the Chairman

Citizenship at the Core... Continued

That philosophy—doing the most ment, with new revelations about good for the most people over time— corporate misconduct seeming to is what drives our efforts. Not make news almost daily, the commit- everyone will be satisfied with our ment to transparency and accounta- plans or our progress in every area. bility has never been more important. Reasonable people, who agree on what Our 100th anniversary next year the problems are, can have legitimate gives us an opportunity not only to disagreements about the most effective celebrate our heritage, but also to way to solve those problems.

That philosophy—doing the most good for the most people over time—is what drives our efforts.

Bill Ford, left, presents the keys We believe that open and candid prepare for the challenges ahead of to the first production 2002 communication is a tool for resolving us. By working to create sustainable Thunderbird to Steve Hamp, these disagreements and finding solu- personal mobility for everyone, we president of Henry Ford Museum tions. By providing a common ground will honor our past and secure and Greenfield Village, outside of information, we hope this report our future. Ford World Headquarters. will help build understanding and support dialogue that leads us toward consensus. We want all of our stakeholders to be our partners as we move forward. And in the current environ-

Left to right: Nick Scheele, Bill Ford and Carl Reichardt at the October 30, 2001, press briefing that announced new Company leadership.

4 VISIT OUR WEB SITE www.ford.com /go /corpcit Operating Highlights

Ford Motor Company (in this report, PERFORMANCE HIGHLIGHTS 2001 “Ford” or “the Company ”), headquar- PRODUCT tered in Dearborn,Michigan,istheworld’s VEHICLES 2001 Model Year 2001 Model Year Better/(Worse) second-largest automotive company. (Cars and light trucks) Fuel Economy CO2 Emissions Than 2000 Ford is publicly owned and listed on Ford U.S.1 23.1 mpg (10.2 L /100km) 238 g/km unchanged the New York, Pacific Coast and several Ford U.K. 33.4 mpg2 (7.0 L /100km) 170 g/km 3% European stock exchanges (NYSE: F). Jaguar U.K. 21.4 mpg2 (10.8 L /100km) 263 g/km 11% Significant events in 2001 1 Includes Ford Motor Company brands sold in the United States, consistent with U.S. reporting requirements. U.S. and European fuel consumption figures quoted according to respective test cycles. Per European CO2 Incurred first quarterly loss in reduction agreement, we are providing illustrative data for countries rather than the EU as a whole. See pages 10 years (2nd quarter) 45-46 for more information. Announced Tire Replacement 2 Using U.S. gallons Program for 13 million Firestone tires (2nd quarter) 2001 2001 Better/(Worse) Than MANUFACTURING Total Per Vehicle 2000 Per Vehicle Purchased remaining outstanding Energy Use1 83.1 trillion BTUs 13.6 million BTUs (2.2)% shares of The Hertz Corporation (2nd quarter) Water Use 42.2 million cubic meters 6.54 cubic meters 2.8% Reduced common stock CO2 Emissions1 8.5 million metric tonnes 1.4 metric tonnes (1.4)% dividend (3rd quarter) Completed purchase of Volvo STAKEHOLDERS 2001 Over/(Under) 2000 finance subsidiary (3rd quarter) Vehicles Sold (Thousands) 6,991 (5.8)% Named William Clay Ford, Jr. CEO; (Loss) from Continuing Operations (Billions) $(5.5) $(10.9) Nick Scheele, COO; and Carl Shareholder Return (31)% N/A2 Reichardt, Vice Chairman R&D Investment (Billions) $7.4 7.9% (4th quarter) Employment (Average Year) 354,431 1.2% Employee Satisfaction Index 64% unchanged Significant events in early 2002 Employee Lost Time Case Rate 2.65 (31)% Announced restructuring plan focus- Employee Training and Development Investment3 2.5% of payroll unchanged ing on product-led revitalization and Purchases from U.S.-Based Minority Suppliers (Billions) $3.1 unchanged affecting 35,000 employees world- Philanthropic Contributions (Millions) $139 $29 wide (including those affected in 1 Excludes Volvo, Land Rover and Aston Martin. Energy use and CO2 emissions declined 7.6% and 8.6%, 2001); reduction of North American respectively, in 2001 compared to 2000. plant manufacturing operating capa- 2 Not applicable; shareholder return in 2000 was (16%) 3 city by about one million units by North America mid-decade and discontinuation of A LOOK AT THE GLOBAL AUTO MARKET four low-margin models General Motors Group 14.2% Divested some non-core assets GM / FIAT / SUZUKI / FUJI HEAVY / ISUZU 23.0% and businesses Ford Motor Company Group 12.0% FORD / MAZDA 13.6% Reduced annual common and Class B stock dividends from 60 cents a DaimlerChrysler Group 7.7% DC / MITSUBISHI / HYUNDAI 14.4% Group market share* share to 40 cents Toyota Group 8.8% Market share including affiliates** TOYOTA / DAIHATSU 9.9% FORD MOTOR COMPANY 2001 Volkswagen Group 8.6% * Includes parent company and wholly owned Revenues $162.4 billion subsidiary brands Renault-Nissan Group 8.2% Ford Automotive Operations $131.5 billion ** Includes 100 percent of affiliate market share PSA 4.8% regardless of equity held by the parent group. Ford Financial Services* $30.9 billion Together, the “Global Big Six” along with Honda 4.6% PSA, Honda and BMW account for almost * Includes Ford Credit and The Hertz Corporation BMW 1.5% 90 percent of the world’s total vehicle market.

Source: Standard & Poor’s DRI 2001 Calendar Year Market Share

2001 Corporate Citizenship Report — Our Learning Journey 5 STRATEGIC ISSUES UPDATE Introduction

2001 was a year of great change for We’ve also found, however, that Human rights issues also are impor- the Company and the world. our best work may come in rising tant. Although they are not a “front During this challenging time, we above the day to day and singling burner” issue for the automotive remained committed to our corporate out a very small number of grand industry today, we believe they citizenship cause—making progress in ambitions. Attempting to place all or will increase in significance. some areas and moving more slowly most of our work in the context set by Our focus on developing business than we and others would have liked these higher goals does not limit our principles is key to addressing in other areas. ability to achieve a broad range of these two major issues. It recognizes that an issue-based approach is more likely to succeed if it follows a process of developing better and We focus on the fundamentals so our work stronger relationships. won’t be lost in the details. As important as Gaining a better understanding of the details are—and they are essential—we sustainable mobility ties together all of these issues and approaches. must also retain our sense of direction. And it will play an essential role if Ford is to survive its second century. We highlight each of these funda- Much of this report focuses successes; it may, in fact, increase mental issues at the outset in the on our continued work on social, our chances. For Ford, these are hopes that they not be buried in the environmental and economic fundamental issues. account of our progress on a broad issues that are the building blocks Climate change remains the most range of issues. In the midst of a of corporate citizenship —the many pressing environmental issue facing tumultuous year, we’re proud to have steps that constitute a long journey. our industry and our Company. It held to that clear sense of direction. These details are essential in reporting, represents both a very serious threat to help people outside the Company to our business—and perhaps our judge our progress or the lack of it. greatest opportunity as well.

Opposite Page

Background: Henry Ford and son, Edsel, examine the original model of the Rouge Plant in 1937. Foreground: Henry’s great-grandson, Bill Ford, and members of the Rouge Heritage Project discuss the latest plans for the Rouge.

2001 Corporate Citizenship Report — Our Learning Journey 7 Strategic Issues Update

Climate Change Remains a Challenge

In our 2000 Corporate Citizenship Ford has set a global target to reduce Report, we identified climate change facility energy use by 14 percent from as a key strategic environmental and 2000 on a production-normalized business issue for the Company. We basis by calendar year 2005, further pledged to develop a comprehensive cutting greenhouse gas emissions. strategy that would: We joined the U.S. Environmental Establish a climate change inventory Protection Agency’s Green Power and baseline Partnership Program as a founding Consider a range of possible meas- partner, pledging to secure 2 percent ures for reducing greenhouse gas of our power from renewable sources. contributions We made good progress toward all Develop a broad set of short- and of these targets; see the performance long-term strategic options section of this report for details.

We’ve taken a number of small but significant steps. We need to continue to work on a comprehensive and strategic response to climate change.

We had important elements of a The challenge of building on these strategy in place and added to them pieces to develop a comprehensive during 2001. strategy rests with our Policy and In Europe, Ford was a leader in Strategy Committee (P&SC), now forging and implementing an chaired by COO Nick Scheele and in- agreement with the rest of the auto cluding Ford’s most senior management. industry to reduce the average CO2 Throughout 2001 the P&SC devoted emissions of vehicles sold there by considerable time to analyzing poten- 25 percent by 2008. Our European tial targets and scenarios for achieving operations also provide an example greenhouse gas (GHG) reductions. of a climate change strategy Assessments were performed on supported by manufacturing, different technical options for reducing product, public policy and part- vehicle greenhouse gas emissions, nership initiatives. essentially the same as improving fuel In the United States, Ford has economy, with estimates made of the pledged to improve by 25 percent related costs and benefits. We refined the average fleet fuel economy of our estimates of stationary source emis- its SUVs by 2005. The introduction sions using the protocol developed by of a hybrid electric version of our the World Resources Institute and the popular Escape SUV in late 2003 World Business Council for Sustainable will help us meet this goal and Development. gain experience with the market Ford’s products will be the major for hybrid vehicles. focus of our approach toward GHG www.ford.com/go/corpcit/climate1 8 VISIT OUR WEB SITE www.ford.com /go /corpcit reduction, but our strategy must Despite this progress, we recognize To what extent should we focus on consider a full range of options for that we have much more to do. factors that influence emissions from decreasing emissions. These include In the course of the year, we wrestled our products but are not under our reducing manufacturing emissions, with some vexing questions that under- direct control? looking for opportunities in the score the complexities of this issue— How can we account for regional supply chain, examining new public some of which may be unique to Ford. differences? For example, diesel policy mechanisms and investigating Although a “stretch” target (one passenger vehicles helped improve the role of carbon offsets. beyond what we currently know fuel economy in Europe, but concerns Through our stakeholder engage- how to achieve) may inspire break- about diesel emissions and more ment efforts, we know that acting in through innovation, can we set a stringent regulations as well as the partnership with nongovernmental challenging, voluntary target with- availability of appropriate diesel fuel organizations (NGOs) and govern- out seeing it translated into a regula- limit their use in North America. ment agencies will be an effective tory requirement with little flexi- We remain committed to developing means to help define and build the bility or room for innovation? a comprehensive, integrated strategy markets for the products we want to to address the challenges and opportunities that the climate change issue poses for us. The strategy will build Ford’s products will be the major focus of on our work in introducing new products such as the hybrid Escape, our approach toward GHG reduction, but our in developing models of sustainable strategy must consider a full range of manufacturing, and in forming partnerships with diverse organizations. options for decreasing emissions. It also will be tempered by our near-term business realities. The work and analysis of the past offer. Given that reality, our strategy The costs of reducing greenhouse year have put us in a position to inte- development also has considered gases are easier to quantify than the grate climate change considerations opportunities for partnership and benefits from sales of more fuel- into the Company’s revitalization explored ways in which we can align efficient products. Are consumers, strategy. Actually doing that— our commitment to addressing climate especially in North America, truly integrating a business strategy and change with public policy. interested in and willing to pay a climate strategy—may be our for new technology? biggest challenge in the coming years.

Learning about Greenhouse Gas Reduction through Pilot Projects Ford Britain is participating in a U.K. government greenhouse gas emissions trading program, the first of its kind in the world. Ford committed to cut the CO2 emissions from its U.K. plants through energy-efficient technologies and, perhaps, the purchase or sale of CO2 credits. Ford’s baseline inventory was audited by Lloyd’s Register Quality Assurance before our acceptance into the program. Ford Werke A.G. in Germany is offering an “Eco-Driving” course that helps most drivers cut their fuel use by an average of 25 percent through practicing a safe and efficient driving style. Ford also has joined the United Nations Environment Programme in promoting this kind of program worldwide. Ford has developed a 10-year partnership with Princeton University and BP to study a variety of scientific and policy alternatives for removing carbon to offset buildups of CO2 in the atmosphere.

www.ford.com/go/corpcit/climate2 www.ford.com/go/corpcit/greenhouse 2001 Corporate Citizenship Report — Our Learning Journey 9 Strategic Issues Update

Acting on Our Commitment to Human Rights

In August 2000, when Ford senior As we follow through on this Understanding the executives met with leaders of envi- commitment, we’ve come to under- value of dialogue ronmental and social organizations, stand more about the subtleties and Through our discussions, we’ve we committed to learn more about the complexities of the issue. learned the value of constructive issue of human rights and to develop We’ve learned that although human dialogue. a strategy that encompassed not just rights issues may not be visibly associ- Our human rights strategy devel- our Company, but also the many ated with our industry today, there are opment team, which has hosted this companies in our value chain. risks to any company as large as ours dialogue, includes a broad cross when one begins to consider activities section of Ford Motor Company Human Rights Strategy Development in the value chain two and three steps leaders from Manufacturing, Human removed from the original equipment Resources, Purchasing, Marketing manufacturer. If poor treatment of and Sales, Emerging Markets and Vice Presidents make August 2000 workers is discovered within the our Office of the General Counsel. 1 commitments to examine human rights strategy value chain, consumers may judge It also includes representatives from Stakeholder Dialogue us harshly, even though we don’t leading external organizations such own or operate the facility. as Business for Social Responsibility, Vice Presidents designate September 2000 Our human rights work is an ex- Lawyers Committee on Human Rights 2 Company managers responsible for developing strategy pression of our deep commitment to and the Interfaith Center on Corporate

Committee begins working October 2000 3 with leading outside experts Aron Cramer, Mike Posner and Sister Pat Daly While human rights are universal, we’ve learned

Policy Development November 2000 – Present that a one-size-fits-all approach may not work. 4 Elements Words and definitions The diversity of cultures around the globe Scope Emerging issues research requires that we develop effective, but flexible, approaches to monitoring human Policy Testing January 2001– Present 5 Functions rights practices. (e.g., Labor Relations) Suppliers External View people around the world. As more Responsibility. This is one of the first consumers attempt to bring their instances when the Company invited Evaluate Risks and September 2001– Present 6 Resource Constraints values to the point of purchase, this organizations outside the Ford value commitment becomes a point which chain to fully participate from the 7 Next Steps differentiates us from the competition. outset in the development of policy. Internal plant visits And that is an important advantage in Supplier plant visits Throughout 2001 we reviewed the Audit process today’s challenging marketplace. work done by other companies in this Determine third-party auditor We’ve learned more about the value area, conducted in-depth analyses of Determine third-party validator Describe socio-economic climate and of diversity and that the great diver- the risks and opportunities facing the compensation structure in emerging markets and determine countries sity of cultures may require correspon- Company and evaluated the costs of concern ding diversity in our approach. and benefits of different options. Policy approval

10 VISIT OUR WEB SITE www.ford.com /go /corpcit Understanding and Measuring Our Impacts in the Developing World—Ford India Limited Pilot Project

As part of its business planning efforts and commitment to corporate citizenship, Ford India Limited (FIL) conducted an assessment in 2001 that solicited the viewpoints of a select group of stakeholder representatives and began to measure its environmental, social and economic impacts. The assessment offered insight into the expectations of stakeholders in an emerging market context and was a first step toward measuring and reporting corporate citizenship performance at the country level. FIL reported its performance publicly in “Moving Forward,” its first-ever corporate citizenship report.

Headquartered in Maraimalai Nagar, near Chennai, Ford India manufactures the Ford IKON at its modern integrated manufacturing facility. The all-new plants set global standards in automobile manufacturing through world-leading technology, practices and processes. At Ford India, protection of the environment and health is a priority and is reflected through its products and the Company’s corporate citizenship initiatives.

We explored human rights issues Child, forced and prison labor policies that affirm universal values with a dozen first-tier suppliers and but allow for cultural and national structured supplier sessions to help Health and safety differences and for a recognition our business partners learn more Compensation of different approaches used in about human rights issues and help Freedom of association different industries. Ford learn more about the complexity Harassment and discrimination In 2002 we will continue testing our of dealing with these issues given the Over the years, Ford has developed policy proposal in several Ford and size and depth of our value chain. supplier facilities. We will take the This dialogue will continue in 2002. policies and programs addressing these issues. The draft human rights next steps in developing our performance metrics, audit process and moni- Developing a policy builds on this by examining the toring procedures. By the end of the Human Rights Policy value chain context, addressing gaps year, we expect to adopt a strategy The fruit of these discussions, a and putting the existing policies into and identify a clearly defined, robust Company policy addressing important a strategic framework. policy and management systems, with human rights issues, is being devel- Although we are committed to a implementation beginning in 2003. oped. We have considered several strategy linking our entire value chain, topics that are commonly identified by the issue of how such a strategy can leading experts as the foremost areas be implemented is still a challenging of concern facing corporations world- one. It leads us in the direction of wide, including:

www.india.ford.com www.ford.com/go/corpcit/werke 2001 Corporate Citizenship Report — Our Learning Journey 11 Strategic Issues Update

Finding Our Way, with a Compass Made of Principles

In our 2000 Corporate Citizenship people throughout the Company and Report, we committed to testing a explore their implications before they draft set of business principles with are adopted. the hope of introducing them to the In mid-2000 we began testing the entire Company during 2001. draft set of business principles. It Stating our principles helps us seemed a good articulation of the more thoughtfully align our corporate Company’s values and a useful tool decisions with our corporate values. in decision making.

Listening to feedback and starting over proved that we could do more than simply describe our values—we could reaffirm them.

It allows us to develop greater consis- Then, in September 2001, we got tency of communications and actions, some important feedback from more a particularly challenging task at a than 4,000 Ford employees who company of our size. It empowers reviewed a draft and felt that further staff to develop positions and clarification was needed as to how to responses on the most difficult operationalize the principles. issues facing our Company. The Company’s senior management There were two paths we might reviewed the feedback and agreed that have taken to adopt a set of business further exploration was needed to principles. One would be to develop a make the principles credible and draft, get senior management buy-in, usable when adopted. adopt them and then work through While this decision slowed the the system to ensure that they are process, it was the right move. We followed. We consciously chose a believe that the process of reflection second approach that we believe ulti- was in itself an act of living up to our mately will be more effective, though principles. If we believe in quality slower. We developed a structured relationships, we must listen to our process for internal engagement to employees and other stakeholders and test draft business principles with embrace their feedback.

12 VISIT OUR WEB SITE www.ford.com /go /corpcit Our current draft—and it is still the cultures in the communities in And these five principles lead to just that—lists a set of principles which we operate. It is recognition the sixth. in the following areas, presented in of the immense impact we can have Quality Relationships. If we’re to no particular order. on communities around the world. have genuine balance among the Financial Health. We run a busi- Environment. While a respect for many values listed above, we’ll need ness, and if we don’t operate on the world around us always has vigorous and open debate with sound financial footing, it doesn’t been a part of Ford, this value often people inside and outside Ford. much matter what our principles are did not receive the attention it And that, of course, only can —we will no longer be viable. Our deserved. The notion that environ- happen if we have healthy relation- financial health is essential, but so mental protection must be central to ships—with employees, suppliers, are other values—it’s in the mix. dealers, customers, governments, communities and others. In the last year, we’ve seen the Our commitment to these principles will play an need for improved relationships, for a rekindling of trust, for greater important role in rebuilding Ford Motor Company. consistency in our actions. It gives us urgency as we develop these business principles. Products and Customers. The who we are as a company is a value Our principles—particularly our focus here is on quality. For decades, held at all levels of the Company. focus on quality relationships—will we’ve prided ourselves on making Accountability. Honesty and help us understand how we are doing the world’s best cars and trucks. transparency are key components and if we are making progress. Our When we stray from this position, of living by one’s principles. Giving commitment to these principles will it’s an obvious break from our our stakeholders the information play an important role in rebuilding traditions and values. and the tools to hold us accountable Ford Motor Company. Community. We must continue to should be an automatic part of how be sensitive to, and respectful of, we do business.

2001 Corporate Citizenship Report — Our Learning Journey 13 Strategic Issues Update

Focusing on Sustainable Mobility

half century? We cannot live without mobility, but how do we manage its consequences? How our societies choose to move people and freight will be an increasingly complex—and important—set of issues. At Ford, we’re engaging more directly on the issue through research, policy development and demonstration projects. For example, in partnership with auto companies, energy firms and the World Business Council for Sustainable Development (WBCSD), and in dialogue with stakeholders around the world, Ford has sponsored an extensive inquiry into sustainable mobility challenges. The first publica- Various modes of transportation in Rawalpindi, Pakistan. tion of this project, Mobility 2001, identified “grand challenges” of sustain-

As a business, we’re rooted in the practical. Theories and concepts of the future may be interesting to many, A fundamental question for our industry and our but our customers and shareholders Company is whether mobility can be made generally seek something more tangible. They want results, today. sustainable. Most discussions of sustainable Reviewing sustainable mobility mobility focus almost exclusively on technology. in this context can be a challenge. History suggests something more mundane will It requires discussion of an endless stream of technological and cultural determine the pace and direction of change. leaps if the term is to become a reality. That “something” is institutional capability. But the fact is, a dramatic shift toward sustainable mobility is the future of our business. commercial vehicles. Is that a trend able mobility for the developed and Increased mobility has yielded we can afford to let continue? Urban developing world. The project now tremendous economic and social sprawl is a consequence of such things shifts to an exploration of strategies benefits for many, but the cumulative as population pressure, growth in the to address the challenges. impact of various transportation forms economy, easy access to personal As a company, we are distinguishing on human life and the natural world transit and land use planning. What’s between those issues over which we has included major negative conse- left when the world’s population have a great deal of control (the inner quences. Cities are crowded with reaches seven, eight and nine billion ring of issues in Figure 15.1) and those people and with personal and people, as will likely happen in this over which our influence is much

www.wbcsdmobility.org 14 VISIT OUR WEB SITE www.ford.com /go /corpcit less direct (outer ring). Many issues, of course, overlap: fuel cell vehicles Figure 15.1. Sustainable Mobility Issues require innovations by Ford, but also require a societal commitment to build the infrastructure necessary ENERGY to produce, distribute and sell SUPPLY AND MOVING PEOPLE VS. MOVING FREIGHT renewable-sourced hydrogen fuel. SECURITY TY GOVE PAR RN I- AN The number and quality of the part- LT C Issues U SUSTAINABLE E M more nerships that will be required can be BUSINESS directly MODEL under staggering. But it also can be inspiring, our control and some of the work of partnerships CONGESTION/ INFRA- SAFETY CLIMATE URBAN STRUCTURE already has begun. CHANGE* SPRAWL Issues requiring In consultation with Friends of the cooperation and Earth and the U.K. government, Ford ENVIRONMENTAL partnerships developed “TH!NK@bout London,” LIFE CYCLE with government a program putting 15 TH!NK city and NGOs ACCESS, vehicles in the hands of leading busi- PUBLIC AND EQUITY, SUSTAINABLE *Auto sector MULTI-MODEL ECONOMIC contribution only nesses to demonstrate their practical TRANSPORT DEVELOPMENT Climate change application and social and environ- is a central challenge of the mental benefits in an urban setting. outer ring, as well. Companies such as British Telecom,

Additional partnership efforts are Sustainable mobility is the one concept that described in the following section. At Ford, although the goal is a ties together all of our citizenship efforts. distant one, our emerging notions of sustainable mobility can be useful in the short term. It is useful as a moti- Sainsbury’s, the Body Shop and with government, industry, academic vating threat: We clearly see that BBC were awarded low-cost leases and other stakeholder groups in India, companies leading the way on this to use the vehicles for deliveries and initiated the Ford India Environmental issue will be the most successful. employee transportation. Power and Mobility Study. The objective It also is useful in a more positive, generated from renewable energy of the long-term study is to identify visionary sense. We move fastest and sources is used to charge the vehicles, promising strategies and policies for best when we move in a straight which also will benefit from free reducing transportation-related air line—and doing that requires a parking and exemption from the pollution and congestion in emerging goal understood by all. Sustainable London congestion charge. Hertz is mega-cities such as New Delhi. mobility is the one concept that ties supporting the leasing and use of Researchers are developing the together all of our citizenship efforts— the vehicles during the three-year computer models to support a systems on climate change, human rights, pilot project. approach to integrating information safety and other priorities. It is the one Ford, the University of California on traffic flows, air quality, social concept, identifiable today, that can (Riverside) and Harvard, together issues, urban planning, energy use unite all of our customers worldwide. and mobility. It is indeed the goal.

www.ford.com/go/corpcit/think 2001 Corporate Citizenship Report — Our Learning Journey 15 Strategic Issues Update

Seeking New Solutions through Partnerships

The second, the U.S. government’s choose the cheapest and most efficient “Freedom Car” project, focuses on means of making a specific trip. long-term alternatives to imported oil. A significant portion of the research Exploring mega-cities will focus on fuel cell vehicles and mobility issues development of the necessary Chongqing, China, is the world’s hydrogen refueling infrastructure. largest city with 32 million inhabitants. For more information go to In partnership with several Chinese www.cartech.doe.gov. ministries, institutes and universities, Ford has conducted “triple e” (eco- For emerging markets in the Asia- nomic, energy and environmental) life Pacific region, we are working on an cycle modeling studies on how the With the support of Ford Motor affordable, fuel-efficient, low-emission Chongqing region can best utilize its Company, Commercial Lending Services vehicle. We also have initiated a joint energy resources for transportation. (CLS)—a subsidiary of Ford Credit— project between the U.S. National designed GreenLease,™ a commercial lease Academy of Engineering and its The study analyzed five fuels to to suit the needs of alternative fuel Chinese counterpart focused on identify scenarios that provide the vehicle (AFV) customers. CLS is com- developing recommendations for lowest cost fuel while minimizing mitted to protecting the environment and personal use vehicles for emerging environmental impact and optimizing serving the needs of fleet, commercial, and markets in the 21st century. energy efficiency. We found that using municipal customers. With GreenLease™, the region’s abundant natural gas Ford, the Thailand government and customers enjoy potential tax incentives, resources such as CNG -derived diesel several other partners are collaborating customized and flexible terms, and more. fuel (compressed natural gas) or diesel on a major project currently testing fuel could reduce emissions compared renewable fuels. Life cycle analysis has to fuels currently in use. Ford now is Addressing climate change and sustain- shown that “diesohol” (a 10-15 percent working with an oil industry partner able mobility issues requires excellent mixture of bio-ethanol and diesel fuels) to coordinate development of the fuel technology, smartly deployed. It also could reduce emissions of greenhouse and vehicles that will use it. requires innovative partnerships with a gases, diesel particulates and carbon range of governmental and civil society monoxide. Volvo Cars also is working Involving stakeholders in institutions to address complex issues. with partners to promote use of locally air quality and safety issues produced biogas in Gothenburg, In early 2001, Ford and the World Bank Developing new Sweden. vehicles and new fuels established a partnership that brought Ford has been working on a range of Easing congestion together leaders of 50 organizations in new vehicle technologies with reduced with new technology the public and private sectors, NGOs, research and academic institutions, environmental impacts (see page 17). Ford’s Aachen Research Lab, near government agencies and international Cologne, Germany, is participating We are part of two projects exploring agencies. The project focused on in “stadtinfokoln,”which aims to use of hydrogen fuels. One, the improving air quality in East Asian improve the efficiency of transporta- California Fuel Cell Partnership, was cities by developing technologies, poli- tion, reduce its environmental impact formed to demonstrate fuel cell vehi- cies and support infrastructure. Ford and enhance the regional economy. cles under real day-to-day driving also is participating in the Global Road Using a variety of interactive media, it conditions. For more information go Safety Partnership, a World Bank will give consumers access to all traffic- to www.fuelcellpartnership.org. The project engaging similar stakeholders relevant information—travel time project will place more than 70 fuel to improve road safety through educa- and conditions, parking availability, cell passenger cars (including fuel cell tion and training. versions of the Ford Focus) and fuel weather, costs, etc., and the ability to cell buses on the road by 2003.

www.ford.com/go/corpcit/hydrogen www.ford.com/go/corpcit/renewfuel www.ford.com/go/corpcit/grsp 16 VISIT OUR WEB SITE www.ford.com /go /corpcit . . . and Technology

New Technologies for Cleaner Transportation

Environmental Attributes of Potential Powertrain Systems1 These charts provide a snapshot of the potential environmental benefits and TLEV / Tier 1 PRESENT development challenges associated with advanced technologies that use various combinations of powertrains and fuels. The first chart compares the technologies according to their potential to reduce CO2 and tailpipe emissions; the second chart summarizes development issues for those technologies.

LEV / Stage III PRESENT 1 Charts based on engineering judgment and analysis by Ford Research Laboratory of life cycle emissions and energy use associated ULEV / Stage IV with fuel production, vehicle manufacturing and use.

TAILPIPE EMISSIONS TAILPIPE Potential Powertrain Systems of the Future Key CI ADVANCED ADVANCED Tier 2 / Stage V ENGINE CI SI HYBRID ENGINE ENGINE Gasoline

HYDROGEN SI SI HYDROGEN ETHANOL 85 ENGINE ENGINE SI ENGINE SI SI Diesel PZEV HYBRID ENGINE HYDROGEN ENGINE HYDROGEN ZEV FUEL CELL BATTERY BATTERY (CA Grid) FUEL CELL (Grid Avg) ELECTRIC ELECTRIC Electric 0 50 100 150 200 250 300

WELL TO WHEELS CO2 (g/km) Renewable

Natural Gas Current Challenges Facing Powertrain Systems of the Future1 CI=COMPRESSION IGNITION RENEWABLE RENEWABLE NATURAL GAS ELECTRIC DIESEL GASOLINE SI=SPARK IGNITION NATURAL GAS Ethanol SI Hydrogen Hydrogen SI CI Engine Advanced CI SI Engine Advanced SI Legend Engine Fuel Cell Engine SI Engine Battery Hybrid Engine Hybrid Engine

Technical Moderate Significant Extensive

Development Fuel Exists Available, Not Available Infrastructure Not Deployed on Large Scale

Additional $0-500 $500-2500 >$2500 Cost

Top No Loss 15% Loss 20+% Loss Speed 350+ Performance Range 150-300 <100 miles/tank miles/tank miles/charge

Luggage 100% ˜˜75% <50% Space of Present ˜of Present of Present Ford Development Status Advanced Spark Injection Vehicles: Agency to study hydraulic energy storage Battery Electric Vehicles: Hydrogen—prototype developed 2001 and propulsion TH!NK city commercially available in Denmark, Natural Gas—Ford is the leading producer of natu- Fuel Cell Electric Vehicles: Norway, California; next generation available late ral gas and bi-fuel vehicles—90 percent of market Hydrogen—Demonstration units in testing in 2002 in U.S. and early 2003 in U.K.; demonstration projects in London, U.K.; San Francisco, CA; Hybrid Electric Vehicles: California New York, NY; Atlanta, GA Gasoline—Hybrid Ford Escape/Maverick to be New design of Focus FCV incorporating hybrid introduced late 2003 (see www.hybridford.com) and fuel cell technology introduced in early 2002; TH!NK neighbor low speed vehicle introduced 2001 Diesel—in R&D limited numbers will be produced for fleet testing 2004 Hydraulic hybrid—Research and development partnership with U.S. Environmental Protection

2001 Corporate Citizenship Report — Our Learning Journey 17 PERFORMANCE

Background: Assembly workers mounting a car body on a chassis at the Ford-Werke Plant in Cologne, Germany, 1931.

Foreground: Employees at the Cologne Plant inspect a Ford Fiesta as it comes off the assembly line in 2001. Making Steady Progress in 2001

We make decisions every day that The product, manufacturing and Despite difficult financial times, have an impact on our business, our sustainable manufacturing sections however, we continued to make stakeholders and the environment. explore our progress in reducing progress in key areas of social and And our commitment to corporate or eliminating our environmental environmental performance such as citizenship requires that we assess impacts and enhancing vehicle safety. workplace safety, diversity and work- whether those decisions create The policy section describes our key life balance and energy efficiency. greater economic and social value public policy efforts in 2001. (Note: In the Performance sections that for our stakeholders with a smaller A table showing some of the follow, the numbers for data points in environmental footprint. significant economic, social and the charts may be viewed in the Web version of this report.) In the pages that follow, we environmental impacts associated with the use of our products can provide a snapshot of our corporate Moving forward in 2002 be found on the Web. citizenship performance in 2001. As we look toward 2002, we are com- The stakeholder section looks at Reviewing performance in 2001 mitted to further refine our business our responsibilities toward each Our poor financial performance in principles, continue our stakeholder of our stakeholders, key issues of 2001 diminished the direct economic engagement efforts, take our climate concern and steps we are taking benefits we provide to our employees, change and human rights strategies to enhance the quality of our stake- investors, suppliers, communities to the next level and continue holder relationships. and governments. building our capacity to measure and manage our economic, social and environmental impacts.

Our Learning Journey PROGRESS TO DATE FUTURE COMMITMENTS 1999 2000 2001 2002 GOVERNANCE Recognize Corporate Endorse CERES Principles Issue second corporate Further develop draft Citizenship in Ford business citizenship report business principles and Issue first GRI-based corporate strategy Trust index citizenship report Draft and test business Establish Corporate principles Hold GRI-based Strategic Issues Dialogue Governance group Bill Ford speaks on corporate citizenship Commit to test GRI Guidelines at Greenpeace International Conference Commit to Global Sullivan Withdraw from Global Climate Coalition Principles

ENVIRONMENT Begin implementation of Announce goal to improve SUV fuel Begin climate strategy Announce development of voluntary CO2 reduction in economy by 25% development the hybrid fuel cell Focus Europe (ACEA Agreement) Recognize climate change as a Commit to use WRI-WBCSD Continue climate strategy Upgrade voluntarily to Low strategic business issue and commit climate protocol development Emission Vehicle standards to develop strategy Continue sustainable Participate in U.K. emissions for majority of U.S. light Join WBCSD Sustainable Mobility Project mobility pilots including trading program truck fleet TH!NK@bout London Announce ISO 14001 certification Renew the Ford-MIT alliance Announce development for all suppliers for climate change research of Escape hybrid electric vehicle Begin redevelopment of the Rouge Complex as sustainable manufacturing site Announce BP-Princeton University Climate Partnership

SOCIAL/ Commitment to examine Begin human rights review Test human rights policy within Ford operations ECONOMIC human rights strategy Commit to India assessment and with suppliers

www.ford.com/go/corpcit/perf 2001 Corporate Citizenship Report — Our Learning Journey 19 Stakeholder Relationships

Building and Repairing Key Relationships

John Donne once wrote, “No man is To help us with both of these impor- an island, entire of itself, every man tant efforts—rebuilding our existing Cash Flows to Stakeholders 2001 is a piece of the continent, part of the relationships and building new Providers of Capital (Interest) main.” The same could be said of a connections—we need to know where global business. we stand with each stakeholder group. Local Communities We exist in a complex system of In the following pages, you will Shareholders (Dividends) relationships with our stakeholders. find our assessment of our relation- Governments (Taxes) When the connections between us are ship with key stakeholder groups in strong, communications are clear and 2001 including: high levels of trust and respect are Basic information about each group present in our relationships, we are An articulation of our more likely to achieve sustained responsibilities business success. How we engage with stakeholder And when any part of the system representatives breaks down, we are more likely to fail. Whether and how we measure satisfaction with the relationship In 2001, it became increasingly clear that our relationships with Discussion of key issues of concern. many of our traditional stakeholders—

Suppliers “We need to mend our relationships with Employees our employees, dealers and suppliers to enable

This figure shows how Ford Motor us to be successful in the future.” Company revenues were distributed Bill Ford addressing dealers in Kansas City to stakeholders in 2001. Contribu- tions to its various stakeholders include the purchase of goods and employees, customers, investors In 2002 we will continue to expand services from suppliers, wages paid dealers and suppliers—were strained our stakeholder engagement efforts to employees which are then and in need of repair. and develop new metrics that help reinvested in the economy, dividends In addition, we recognized the us measure the quality of our to investors, interest to lenders, need to build relationships with relationships with key stakeholders. amounts paid to governments in new stakeholders, including civil the form of taxes and charitable society organizations, which have contributions to communities. the ability to influence our current and future markets.

20 VISIT OUR WEB SITE www.ford.com /go /corpcit Our Business and Stakeholders

Many people have asked us to describe our business in relationship to our key stakeholders, the marketplace and the natural environment. Here is how we see it:

THE ENVIRONMENT MARKET INFLUENCES: Government – Competitors – Media – Nongovernmental Organizations FORD MOTOR COMPANY VALUE CHAIN

INVESTORS

EMPLOYEES

FORD AUTOMOTIVE RETAIL CUSTOMERS

DEALERS SUPPLIERS SALES and SERVICE

FLEET COMMUNITIES FORD FINANCIAL CUSTOMERS

MONEY

GOODS AND SERVICES

VEHICLES *Partially owned

Close connections with our customers creativity, resources and capital and governments at all levels help help us understand their needs— needed to design and deliver the us better understand the social and now and in the future. products and services that meet environmental forces that will Highly motivated employees, our customers’ needs. shape future markets. And a healthy suppliers and dealers, together with Strong relationships with social environment allows business and confident investors, provide the and environmental organizations communities to thrive.

2001 Corporate Citizenship Report — Our Learning Journey 21 Stakeholder Performance •Employees

Our Responsibilities to Employees

Our relationship with our employees testing our draft business principles. is mutually beneficial. The Company A process of this type already is provides meaningful employment, in place in Europe where Ford has compensation and benefits, and the well-established arrangements for efforts of our employees enable us consulting with employee represen- to provide high quality goods and tatives on a wide variety of matters services. including restructuring. Ford’s We strive to provide: European Works Council has become a valuable body for management. It A healthy, safe and diverse work- has enhanced relationships and helped place free of discrimination and to manage significant change at Ford supportive of worklife integration of Europe. We also work closely with Meaningful work and opportunities our union partners to give hourly Children celebrate the dedication of to use people’s skills and knowledge employees a greater voice in designing the Family Service Learning Center and manufacturing our products. in Sterling Heights, Michigan, in the Fair compensation spring of 2001. The Center, a joint Continued employability through … during a year of change partnership between the Company training opportunities and personal At mid-year, we announced a program and the UAW, is one of many growth to reduce headcount through volun- opening around the country that Products and services in which tary reductions. Other cost-saving offers child care, employee training, our employees can take pride. measures included eliminating bonus- retiree activities and programs es and raises for senior management, and educational opportunities. Engaging employees… increasing salaried employee and We communicate with employees retiree cost share for health care and in a variety of ways including e-mail, eliminating the Company match intranet and television broadcasts. Profile of Ford U.S. Employees — 2001 for salaried employee 401(k) plans. Our managers use a “cascading” We also stopped the expansion of the process to share and discuss key Model E program worldwide, which decisions and initiatives with all provided employees with low-cost of our employees. computers and Internet access. Every year we conduct an on-line The year’s financial losses, however, global employee satisfaction survey made it clear that more fundamental (called “the Pulse”) of our salaried restructuring would be necessary to workforce to gauge satisfaction return the Company to profitability. and identify issues that need to be More than 35,000 employees have addressed. We work closely with union been or will be affected by restruc- leaders to identify and address issues turing actions undertaken since of concern to our hourly workers. January 2001, including 21,500 in Men (White) Women (White) We also recognize the need to Hourly (42.8%) Hourly (7.1%) North America—(15,000 hourly, 5,000 Salaried (17.9%) Salaried (7.5%) go beyond communication to true salaried and 1,500 contract employees) engagement—providing means —and 13,500 in the rest of the world. Men (Minority) Women (Minority) and opportunities for employees Hourly (12.5%) Hourly (4.9%) Plans are being made to reassign as Salaried (4.0%) Salaried (3.3%) to contribute their views before we many hourly employees as possible, make important choices, as we have and to use voluntary separation Includes Ford Motor Company and Ford Credit. Excludes any wholly owned done, for example, in developing and programs where possible. subsidiaries or joint ventures.

22 VISIT OUR WEB SITE www.ford.com /go /corpcit •Employees

Maintaining Satisfaction in a Difficult Year

Have the changes and challenges Compared to global blue-chip of 2001 affected employee satisfaction companies that employ at least 10,000 at Ford? employees, our favorable ratings A record 71 percent of our salaried continue to exceed similar manufac- employees participated in last year’s turing companies, including many Pulse survey. Overall employee satis- of our competitors, by an average faction levels remained consistent with of nearly seven percentage points. 2000 levels, as did employee favorable The Pulse survey was taken before ratings of diversity (64 percent favor- the restructuring plan of January 2002 able and 75 percent favorable, was announced. While the full impact respectively). of the restructuring on employee

“We recognize that some of the things that must be done will be painful and will impact people’s lives in adverse ways, but we also know they are Ford Motor Company Chairman and CEO Bill Ford talks to workers necessary in order to maintain our competitiveness during a visit to Ford's Kansas City in the short term and do the most good for the Assembly Plant. most people in the long term.”

Bill Ford, e-mail to all employees, January 11, 2002 Fig. 23.1 Employee Satisfaction—Pulse Survey

In addition, 10 of the 12 dimensions satisfaction will not be known for 80 measured in the Pulse survey rose some time, we are beginning to get 70 compared to 2000 levels, with the some response to the Company’s 60 majority up by two or more percen- rebuilding plans. For example, an 50 tage points. Satisfaction with supervi- on-line survey of Ford employees Percent sion showed the greatest improvement taken after the restructuring 40 with a gain of over 4 percentage announcement showed that 83 percent 30 points (see Figure 23.1). gained a greater understanding of the ’98 ’99 ’00 ’01 However, two critical dimensions— Company’s current business position, Overall Stress Diversity stress and workload—remain among and 92 percent felt the same or better Workload Reward and Recognition the lowest-rated aspects of employee about the Company’s future after satisfaction (with 44 percent and hearing the plan. 55 percent favorable ratings, respectively).

www.ford.com/go/corpcit/emp1 2001 Corporate Citizenship Report — Our Learning Journey 23 Stakeholder Performance •Employees

Making Ford a Better Place to Work

Our performance review process and our commitment to diversity and work- LEADING THE WAY life integration are two key contribu- •Direction and guidance from senior tors to greater workplace satisfaction. EXTERNAL management and others PARTNERSHIPS •All employees responsible for Improving the performance Enhancing corporate driving diversity and worklife citizenship through: management process DIVERSE •Dealers and suppliers WORKFORCE Our employees tell us they want •Community-based •Reflects world developmental opportunities as and professional around us well as a performance review system organizations and ensures that encourages fair assessment of •Schools and competitive their work. universities Ford Motor Company advantage •Government We are a global, diverse A clearly defined, fair and effective regulatory family with a proud heritage performance review process provides agencies passionately committed to employees with timely feedback •Media providing outstanding products about their strengths and any need and services that improve for improvement. During 2000, we people’s lives. revised our performance review policy for management level employees to WORKLIFE RESPECTFUL strengthen this process and to improve INTEGRATION AND INCLUSIVE performance of all employees. The •Work practices and ENVIRONMENT system assigned employees to one behaviors that support flexibility •Builds commitment, of three performance categories. engagement, respect and dignity We received significant, unfavorable employee feedback on the system. In Global Diversity and Worklife Strategic Areas of Focus addition, some older employees and This model provides a vision of what the Company is striving for in five white males believed that the 2000 important workplace practice areas. It broadens our definition of diversity performance review policy was unfair and is designed to promote inclusion. It also facilitates alignment, links and filed suit in early 2001. We have various stakeholders and moves us toward building an inclusive culture that resolved this dispute. drives business results. In 2001 we made changes to our performance review system. We Creating a more inclusive, more inclusive culture. Ford of Britain preserved the most important flexible work culture assessed progress on its commitment elements of our process: setting In 2001 we developed an integrated to diversity by conducting a baseline objectives that link to the Company’s global diversity and worklife strategy equality audit on behalf of the success; holding regular discussions that broadens our definition of diver- Commission for Racial Equality. between employees and supervisors; sity and helps us promote inclusion A National Diversity Council and and having a link between pay and (see figure above). The Ford Executive local counterparts were established performance. Council on Diversity leads the stra- to develop and implement action plans tegy, and all Ford employees are to follow up on the results of the audit. responsible for implementing it. This process will be replicated at Ford Two examples highlight steps Ford locations throughout Europe in 2002. organizations are taking to create a

24 VISIT OUR WEB SITE www.ford.com /go /corpcit •Employees

In 2001 Ford completed anti-harassment training for more than 100,000 Adding New Employee Resource Groups employees in U.S. manufacturing locations. The training was agreed The Ford Interfaith Network (FIN) and the Middle Eastern Community to as part of the Equal Employment (MEC) are our newest Employee Resource Groups. These groups were Opportunity Commission (EEOC)- founded by employees with common interests or backgrounds to provide Ford Conciliation Agreement of 1999 insights and different perspectives to the Company on a variety of business for certain key locations. Ford chose to issues. They are vital to Ford's diversity initiative by providing support, go well beyond the requirements and identifying barriers, providing information and contributing to the provide the training to all U.S. manu- professional development of employees. facturing employees, the largest such The FIN’s objectives are to assist the Company in becoming a worldwide training effort in the United States. corporate leader in promoting religious tolerance, corporate integrity, and Key to the success of this initiative human dignity. Following the September 11 attacks, FIN held a memorial was the cooperation and support of prayer service for the victims. the United Auto Workers and Ford. The MEC’s vision is to make Ford Motor Company the preferred Enhancing worklife integration company for automotive products and services among Middle Eastern The first two Family Service and consumers. MEC, in partnership with the other Employee Resource Learning Centers (FSLCs) opened Groups, hosted a benefit concert in September of hope, healing and unity their doors in 2001. Over time, the which raised more than $85,000 for the American Red Cross in support FSLC program is bringing services to of families affected by the September 11 attacks. more than 30 locations in 15 states in the United States. More than 300,000 UAW, Ford and Visteon active In the U.K., a workplace nursery for 51 Respecting human rights employees, retirees and their families children will be opening this spring at in our operations will benefit from child care, before- the Dunton Research and Engineering Ford has policies addressing health and after-school programs, teen Center. Also, a European dependent- and safety; the use of child, forced and programs and adult and family edu- care strategy is being developed. prison labor; freedom of association; working hours; wages, benefits and cation classes. A volunteer support Stressing stress reduction network also will allow families to other compensation; and harassment Many operational groups made signi- contribute to their communities. and discrimination. We currently ficant efforts to address job-related- are developing an integrated human Similar services are being offered stress and workload issues. For rights policy that will encompass all in Europe. An emergency child care instance, Ford Asia Pacific remained of these.Please see pages 10–11 for center has been opened in Niehl, committed to the process of feedback, more details. Cologne, referred to as Ford Paenz. action planning, communication and In 1999, Ford began a leadership In addition, German employees now management initiatives to reduce initiative to integrate health and have access to a resource and referral levels of stress throughout the year safety management into key business service providing expert family service and witnessed a 23 percent increase processes and drive improved advice and support via the telephone. in favorable ratings on the stress performance. We focus on identifying dimension of the Pulse survey. the best global practices and lessons learned to accelerate our progress.

www.ford.com/go/corpcit/emp2 www.ford.com/go/corpcit/werke 2001 Corporate Citizenship Report — Our Learning Journey 25 Stakeholder Performance •Employees

Maintaining a Safe and Healthy Workplace

developed a simple employee survey to assess our “safety culture.” The rate Fig. 26.1 of positive responses was 77 percent. Lost Time Case Rate Compensation for plant managers (Per 100 Employees) and others is tied to health and safety 8 performance. We also use a safety- specific document in performance 6 reviews of salaried manufacturing personnel. 4 Making notable progress 2 During 2001 we saw progress on the 0 full range of health and safety indica- One or More Days Cases Losing ’97 ’98 ’99 ’00 ’01 A member of the local ergonomic tors. It was the first year since 1918 Ford Motor Company committee at the Hermosillo that Ford had no traumatic fatalities U.S. Bureau of Labor Statistics average for SIC Code 371 Stamping and Assembly plant in of employees, though we lost (Motor vehicles and equipment). Mexico demonstrates a new process two employees to an outbreak of Fig. 26.2 that significantly reduces the Legionnaire’s disease at one of our Severity Rate number of shoulder, wrist and Cleveland facilities. (Per 100 Employees) lower back injuries to employees. Every business unit globally showed 100 significant improvement. Our lost time and severity rates continued to experi- 80 Establishing accountability for ence sharp declines (see Figures 26.1 60 health and safety performance and 26.2), while pedestrian accidents 40 We measure health and safety and injuries declined 18 percent. Our performance according to several 20

construction safety incident rate was Number of Days Lost standard indicators including lost time roughly one-half the national average. 0 injuries and severity rates. As part of ’98 ’99 ’00 ’01 our long-standing partnership with Building on our experience the UAW in the United States, we In 2000 with the UAW, we estab- focus on and track performance lished a partnership with the U.S. These cooperative efforts have in particular areas—for example, Occupational Safety and Health helped us improve our compliance pedestrian safety inside our plants. Administration (OSHA) to work record. In 2001, ten government We also use indicators of our closely on auto industry-specific agency inspections of our plants in capacity to manage health and safety issues. During 2001, half our U.S. the United States resulted in 11 viola- effectively to prevent accidents and plants covered by the Federal tions and a total of less than $10,000 improve continuously. Through the partnership had an “OSHA day,” in penalties, compared with $25,000 Ford Production System, we conduct hosting inspectors and working the prior year. periodic safety and health audits of together on safety issues. We now the management systems and proce- have established a similar partnership dures globally. In early 2001, we with Michigan OSHA covering our operations in that state.

www.ford.com/go/corpcit/emp3 26 VISIT OUR WEB SITE www.ford.com /go /corpcit •Customers

Our Responsibilities to Customers

Ford has many loyal customers, but our recent relationship with some customers was strained. Repairing Fig. 27.1 Fig. 27.2 Owner Loyalty First-Time Ford Buyers relationships with our customers by U.S., All Ford Motor Company Brands U.S., All Ford Motor Company Brands improving every aspect of our interac- tion with them is a key element of 100 25 our rebuilding strategy and essential 20 75 to our success. 15 Our responsibilities to our 50 10 customers include: 25 5 % of First Time Buyers % of First

Providing high quality, safe, to Company % Loyal innovative products at a fair price 0 0 ’99 ’00 ’01 ’99 ’00 ’01 Standing behind our products Providing reliable information Fig. 27.3 Fig. 27.4 on which to base decisions about Sales Satisfaction with Service Satisfaction with Dealer/Retailer—Ford Brand Dealer/Retailer—Ford Brand purchasing, leasing and financing our products 80 80 Respecting privacy. 60 60 In this section, we discuss current satisfaction levels and key issues of 40 40 concern to our customers. Environ- 20 20 mental and vehicle safety issues are % Completely Satisfied % Completely Satisfied discussed in the product performance 0 0 section. ’97 ’98 ’99 ’00 ’01 ’98 ’99 ’00 ’01 Measuring satisfaction We measure customer satisfaction Figures 27.3 and 27.4 from Ford We also track internal and third-party in many ways, including surveying “Customer Viewpoint” Surveys). measures of satisfaction with services customers about the appeal of our We also follow the ratings of several provided through Ford Credit and products, their satisfaction with the sales independent organizations, including Hertz. Ford Credit was rated highest and service experience and the quality J.D. Power and Associates rankings of by customers in the “provider contact” of the product throughout their owner- satisfaction with our North American category of J.D. Power and Associates ship. Studies are done as early as 90 products (see Figures 28.1 and 28.2). 2001 Consumer Financing Study. days and as long as four to five years Internal satisfaction metrics show that In 2001, our overall ranking as after purchase. We also track the 84 percent of customers who finance or reported in the J.D. Power and percentage of first-time and repeat lease with Ford Credit were completely Associates Initial Quality Study for customers each year (see Figures 27.1 or very satisfied, and 90 percent would our North American performance and 27.2). Ford Brand sales and service recommend Ford Credit to friends and did not improve from 2000. Several satisfaction continues to improve every family members. month and, so far in 2002, both meas- of our competitors, however, did show ures are indicating an all-time high (see improvement.

www.ford.com/go/corpcit/cu 2001 Corporate Citizenship Report — Our Learning Journey 27 Stakeholder Performance •Customers

Focusing on Quality

In the United States, Ford has shown 2,500 6-Sigma projects that resulted steady and consistent improvement in customer satisfaction improve- Fig. 28.1 since 1997 in terms of long-term ments in many vehicle lines and Initial Quality Study J.D. Power and Associates durability, according to the J.D. Power $325 million in cost savings, a six- (3 Months in Service) and Associates Vehicle Dependability fold increase over 2000. Index (Figure 28.2). In that same study, In 1997 we began the Intensified 200 Ford leads domestic manufacturers for Customer Concern Definition More vehicle dependability in 2001. 175 (ICCD) program to identify and In Europe the Ford brand’s quality resolve product quality issues 150 improved a full five percentage points during the first year of a new roblems

P from 2000 to 2001. And in January product launch for Ford, Lincoln 125 of 2002, the German TÜV—an author- Mercury and Jaguar products sold itative, independent industry body throughout the world.

Less 100 ’98 ’99 ’00 ’01 that focuses on improving quality Through this program, we Ford Motor Company standards—rated Ford Focus created a quality “report card” for Industry Average Germany’s No. 1 car in terms of each vehicle based on information quality and durability. It is the first received from customers after Fig. 28.2 time since 1987 that a German-built they have owned the vehicle for Vehicle Dependability Index car achieved such recognition. 30 days, which is used to resolve J.D. Power and Associates (4–5 Years of Ownership) While overall levels of quality the customer’s issues and provide among major automakers including feedback to improve production

10% Ford have improved for several practices. Less decades, in the last few years we have 5% not progressed at the rate we targeted. Getting results A recent analysis of National Our rebuilding strategy has an 0 Highway Traffic and Safety explicit focus on improving quality Administration (NHTSA) data by

roblems per 100 roblems per 5% and building on work in progress P Ford of 2001-2002 major product to improve quality in our design, 10% launches showed that not only did ’97 ’98 ’99 ’00 ’01 sourcing and production processes. More Ford have fewer safety recalls than Ford Motor Company Building a toolbox its major competitors, but signifi- Industry Average to improve quality cantly fewer vehicles were affected. We are using 6-Sigma processes to In addition, the number of Ford’s identify and resolve quality issues recalls and customer satisfaction in our manufacturing and business actions was down 48 percent com- processes. This is an extensive quality pared with 2000, and the number improvement initiative designed of vehicles affected by them was to reduce variability and improve down 24 percent. efficiency. In 2001 we undertook

28 VISIT OUR WEB SITE www.ford.com /go /corpcit •Customers

Creating New Products for New Markets

In our business, it is not enough to developing many new products that to remain competitive. In the future, know what consumers want now. use less fuel, produce fewer emissions dramatic cost reductions and new We must have an understanding, both and use more renewable, recycled kinds of products may be key to empirical and intuitive, of what they and recyclable materials. Our plans opening new markets. Our India will want several years in the future to provide these technologies are assessment project, described on so we can offer them those products discussed on pages 48 to 49 and in page 11, represents one of our initial and services. the product performance section. efforts to find ways to provide afford- We believe that customers will We are constantly working with able products to customers in the increasingly look for vehicles with our value chain partners to find ways developing world. environmental attributes, and we are that reduce the cost of our products

Completing the Firestone Recall

In August 2000, Bridgestone/ Firestone announced a voluntary recall of more than 6.5 million Firestone ATX and Wilderness AT tires that posed a potential safety risk to our customers. In mid-2001, Tire crumb rubber in Rubber Modified Asphalt (RMA) gives new meaning to Ford acted to replace the remaining the phrase “where the rubber meets the road.” Seeking an environmentally 13 million 15-, 16- and 17-inch responsible alternative to burning or burying 13 million Firestone tires, the Wilderness AT tires equipped on road in the picture, and others like it, are being made with tire crumb rubber our vehicles. Ford’s Tire Replace- derived from some of those tires—half of which made their way back though ment Program ended on March 31, Ford and Lincoln Mercury dealerships. Paving projects across the United 2002. States will use millions of pounds of tire crumb rubber that increases the pavement’s useful life and reduces accompanying noise. When we began the tire replacement program, many people asked us what we were going to do with dealers. To help prevent the tires from fields, playgrounds, roadways and all of the replaced tires. We pledged being reused on cars, we contracted other projects using the recalled to recycle all of the tires collected with RTG, a large tire recycler, to tires. As of December 2001, more at Ford and Lincoln Mercury produce crumb rubber for athletic than 3.6 million tires had been converted to crumb rubber, the largest of three components “I applaud Ford Motor Company’s remaining after tires have been processed for recycling. (The other foresight and initiative to make the most components are steel and fiber.) of a difficult situation and promote More than 100 projects have been undertaken using the crumb rubber value-added markets for scrap tires.” in environmentally responsible Paul Ruesch, Environmental Engineer, EPA applications with support from the EPA and DOT.

2001 Corporate Citizenship Report — Our Learning Journey 29 Stakeholder Relationships •Investors

Our Responsibilities to Investors

At the end of 2001, our shareholders SELECTED2001 FORD FINANCIAL FINANCIAL PERFORMANCE MILESTONES INDICATORS owned more than 1.8 billion shares of the Company’s two classes of TOTAL COMPANY FULL YEAR MILESTONE FULL YEAR ACTUAL* common stock. Revenue Grow $5 billion Declined by $8 billion Automotive 1999 2000 2001 North America Achieve 4% + return on sales (2.3)% Institutional Investors 49% 58% 44% Europe Achieve 1% + return on sales 0.8% Top 15 20% 17% 16% Others 29% 41% 28% South America Improve results Improved by $12 million

Employees and 16% 20% 20% Rest-of-World Achieve profitability Earned $156 million Management Total costs Reduce $1 billion Increased $1.0 billion** Ford Family 6% 4% 7% Capital spending $8 billion or less Spent $6.4 billion

Individuals 29% 18% 29% Automotive-Related Ford Credit Improve return on equity Declined 3.6 percentage pts. Our responsibilities to our Grow earnings 10% Declined 22% *Results exclude unusual items investors include: **Excludes Firestone-related costs Providing total shareholder returns (dividends and stock price apprecia- Providing reliable information for quarterly financial updates that are tion) commensurate with the level decision-making. posted at www.ford.com. We include of risk posed by our business annual financial performance mile- Identifying and executing business Engaging with investors stones and report our progress against strategies that result in sustainable Our investors expect us to provide them in our quarterly reports. reliable information about the growth and are consistent with Last year, the Company’s annual Company’s financial situation and our values and business principles report to shareholders was rated expectations for future performance. Operating in a transparent manner best overall as a communication with no conflicts of interest As part of our disclosure to tool for investors by Sid Cato, a investors, we issue annual and well known reviewer of corporate annual reports. In addition, we meet regularly with Employee Ownership of Ford Stock Wall Street analysts, institutional and individual investors to discuss our Events of 2001 have raised governance concerns about how companies financial performance and plans for the provide employees with shares of stock and control what employees future. We also rotate the venue of our do with those shares. Many Ford employees and retirees are share- annual shareholders meeting to cities holders of the Company. with a significant Ford presence so Until it was suspended in 2001, Ford’s match to employee 401(k) more of our shareholders may attend retirement plan contributions was provided in Company stock. Once in the meeting. an employee’s account, however, employees who have at least five years In 2001 we expanded our investor service with the Company may sell the stock and allocate the proceeds communications efforts to focus on to the wide range of investments available through the 401(k) plans. Ford’s fixed-income investors. Since Stock options are an element of compensation plans for some manage- these investors are key stakeholders ment employees. Ford allows employees to convert investments in Ford in both Ford and Ford Credit, the stock acquired by exercising vested options and reinvesting the proceeds Company wants to ensure that their in other investments. needs are being addressed.

www.ford.com/go/corpcit/inv 30 VISIT OUR WEB SITE www.ford.com /go /corpcit •Investors

2001 Milestone Actual Results (Under) 2000

Regaining Investor Confidence

We ended 2001 with a net loss of $5.5 SELECTEDSELECTED FINANCIAL FINANCIAL PERFORMANCE PERFORMANCE INDICATORS INDICATORS billion, including charges of $4.1 billion 1999 2000 2001 primarily related to our revitalization plan. Other factors affecting our Annual revenue ($ Billions) $160.7 $170.1 $162.4 performance were higher marketing Automotive EBIT ($ Billions) $7.3 $5.3 ($9.0) costs, declining volume and costs asso- Net income/(Loss)1 ($ Billions) $6.52 $5.4 ($5.5) ciated with the Firestone tire replace- Automotive debt/equity ratio 43% 65% 177% ment program, as well as credit losses Stock price range3 High: $37.30 High: $31.46 High: $31.42 from Ford Credit. (per share) Low: $25.42 Low: $21.69 Low: $14.70 Diluted earnings per share We reduced our dividend payment from continuing operations $5.86 $2.30 ($3.02) mid-year from $1.20/share to $0.60/ Common stock dividend share, and again in January 2002 from distributed (per share)4 $1.07 $1.17 $1.05 $0.60 to $0.40. In addition, our share 1 From continuing operations 3 Adjusted for Value Enhancement Plan and Visteon spin-off price continued to decline, ending 2 Includes gain of $16 billion on 4 Adjusted for Value Enhancement Plan the year at $15.72, down 33 percent spin-off of The Associates for the full year. Restructuring the business in 2002 and beyond “Ford Motor’s restructuring plan is credible In January 2002, CEO Bill Ford and comprehensive, and meets or exceeds announced a plan for restructuring Ford Motor Company that focused our expectations on most elements. Patient on improving quality, rebuilding investors should be rewarded.” relationships and developing exciting, innovative products. Based on our Wendy Needham, CS First Boston, January 2002 market assumptions for 2003 and beyond, we expect this plan to deliver “On paper, the plan appears largely $9 billion of pretax profit improve- credible. Execution will be key.” ments by mid-decade. Steve Girsky, Morgan Stanley, January 2002

Who Audits Our Books?

The high-profile collapse of Enron in 2001 has raised concerns about the relationship between companies and their auditors. The Audit Committee of the Board of Directors selects and hires, subject to approval by the shareholders, independent public accountants to audit Ford’s books of account and other corporate records. PriceWaterhouseCoopers, LLP presently provides this service. Coopers + Lybrand, LLP (which has audited Ford’s books since 1946) and PriceWaterhouse, LLP merged July 1, 1998, to form PriceWaterhouseCoopers, LLP. The Company also employs PriceWaterhouseCoopers, LLP for assistance with tax services; SEC filings and statutory compliance; due diligence work for mergers, acquisitions and divestitures; and advisory and other services. [email protected]

2001 Corporate Citizenship Report — Our Learning Journey 31 Stakeholder Relationships •Dealers

Our Responsibilities to Dealers

Fig. 32.1 Number of Dealers (All Brands)

Thousands 10

0 ’00 ’01 Aston Martin Land Rover Mazda* Jaguar Mercury Ford Ford employees and the Company’s new No Boundaries display at the 2001 Lincoln Volvo *Partially Owned North American Dealer Association Conference in New Orleans, Louisiana. Note: Dealerships may sell more than one brand Ford dealers, who are very active in their own right in corporate citizenship and therefore are not additive. activities, are key partners in our efforts to better serve the needs and Fig. 32.2 expectations of our customers and communities. Vehicle Retail Sales (All Brands)

Like most other automotive manufac- owners. Until last year, we had more 8 turers, we do not sell our vehicles minority-owned dealerships in the 6 directly to customers. We work with United States than any other manufac- a network of independent, franchised turer. While we saw a slight decline Millions 4 dealers to market, sell and service the in the number of minority owners in 2 cars and trucks we produce. 2001, those dealers enjoyed their second 0 Our responsibilities to our dealers most profitable year on record. ’00 ’01 include providing: Aston Martin Land Rover Mazda* Engaging with dealers Jaguar Mercury Ford Appealing and high quality We have many different forums for products that meet customer needs Lincoln Volvo communicating and engaging with *Partially Owned Support that helps maintain healthy the dealers in our sales network. businesses. We have established intranet services to facilitate communications between We also have dealer councils for Building a diverse global network Ford Motor Company and the Ford, each of our brands that provide a In 2001 our dealers sold and serviced Lincoln, Mercury, Volvo, Jaguar, forum for dealers and Ford employees vehicles in more than 150 markets Mazda and Land Rover dealers. to share information, identify and around the globe. Total annual Each brand has sales and service resolve problems and provide feed- revenues and profits generated by representatives who work with back on Ford activities affecting U.S. our dealers in 2001 set new records. dealers in defined areas to determine dealers. Since 1984, Ford has worked actively desired inventory levels, undertake to expand the number of U.S. dealer- joint marketing efforts and resolve ships held by minority and women customer satisfaction issues.

32 VISIT OUR WEB SITE www.ford.com /go /corpcit •Dealers

Rebuilding Our Relationship with Our Dealers

Our dealers provide important feed- Enhancing the Increasing margins through back to us about key business issues. service experience parts inventory control Customers often are concerned Dealers are constantly working to Quality remains a top priority about the quality and cost of the maintain enough parts in inventory Product quality was of ongoing maintenance and repair services to address customer repair needs importance to our dealers. they purchase. We have developed quickly and with as little investment We are working closely with our a service training and certification of dealership capital as possible. In suppliers and our dealers to find and program to give customers greater 2001, we announced “Daily Parts eliminate the leading causes of any confidence in the quality and value of Advantage,” a program designed in customer dissatisfaction with our the services they receive from dealers conjunction with our dealers and the products. More details on these selling Ford Motor Company brands. UAW, to help our dealers with this efforts are on pages 27 to 28. By the end of 2001, a majority of important operational issue. Ford, Lincoln, Mercury, Volvo, Land During the next three years, Ford Competition is a Rover, Jaguar and Mazda dealers Customer Service Division plans to growing concern had gone through training and expand the number of parts distribu- Our dealers are increasingly concerned about competition from other brands, particularly in the SUV and truck markets. “Many of you have been selling our products We did many things in 2001, for almost as long as we have, and have third- including adding new features to our best-selling vehicles and offering or fourth-generation ownership. I often say that zero interest financing and substantial I am working for my children and grandchildren. customer rebates, to retain market share. These efforts remain competi- I know many of you feel the same way. tive and helped our dealers earn We are in this for the long haul.” record profits in 2001, but have not yet reversed the loss of market share Bill Ford addressing Ford dealers in Scottsdale, Arizona, February 2002 in some market segments. Between now and 2005, we plan to introduce 20 new product offerings received certification. An independent tion centers in the United States from per year across all brands to increase review by J.D. Power and Associates 10 to 21. This will help dealers access our appeal to customers. in 2001 credited these programs for parts and replenish inventory more As a part of our restructuring plan, improving customer satisfaction with quickly and efficiently. Dealers and we are selling all Ford-owned dealer- dealer services. customers are expected to benefit from ships and divesting our interests in cost savings from reduced inventory ancillary businesses. costs and fewer emergency and outside part orders. In addition, dealers will receive financial incentives and training to help support their use of the new system.

2001 Corporate Citizenship Report — Our Learning Journey 33 Stakeholder Relationships •Suppliers

Our Responsibilities to Suppliers

and exchange information and ideas. Further, we increased the number of Web broadcasts to ensure our suppliers are informed in real time of major announcements such as the Company’s revitalization plan and the new design cost-sharing program. Improving satisfaction As part of regular top supplier meetings during 2001, leaders in the Ford Purchasing organization held year-end meetings with key suppliers representing two-thirds of our global purchases to discuss the business outlook and the business challenges that we face together. Improving the The Supplier Values poster with its collection of signatures represents a cross stability of the product development section of the Company and symbolizes our united commitment to the values process and reducing variability to which we all aspire. in other parts of our business were identified as key supplier concerns. Recognizing that these issues are Our responsibilities to our suppliers Executive Champion Program, Top critical to customer satisfaction and include: Supplier meetings, Supplier Quality product quality, we are committed to addressing them and focusing Being clear about our needs and Roundtables and numerous specialty on rigorous execution of the basics. requirements forums provide opportunities to develop collaborative strategies Operating in an open, trustworthy and reliable manner Supporting collaboration and innovation. Major Ford-Supplier Engagement Forums Engaging with suppliers ISAC—Ford and supplier senior leadership discuss emerging industry Fundamental relationship values will issues and establish coordinated strategies. guide Ford employees in our interac- Executive Champion Program—The program connects Ford senior tions with our suppliers to help drive executives with the CEOs of major suppliers to address cross-company balanced ideas and actions. issues and ensure alignment. Recognizing that communication Top Supplier Meetings—Meetings are held in a series of small sessions is key to our relationships, we have with 15–20 suppliers. many forums for communication Supplier Quality Roundtables—Ford leadership and quality leaders and engagement with our suppliers. from our top 100 suppliers jointly address emerging quality and Meetings such as the International customer satisfaction issues and develop future strategies. Supplier Advisory Council (ISAC),

34 VISIT OUR WEB SITE www.ford.com /go /corpcit •Suppliers

Improving Product Quality and Sharing the Gains

One way of enhancing the current manufacturing processes and reducing variability in our systems will be the new Ford Q1 2002 standard. Since its inception, Ford Q1 (“Quality is Job 1”) certification recognizes supplier facilities and organizations whose quality systems meet stringent prerequisites. February 1, 2002, marked the beginning of the new Q1 2002 standard. It builds on existing requirements and stresses continual improvement, consistent metrics, manufacturing discipline, The new Q1 2002 variability reduction and customer book pictured above contains satisfaction. This standard incorpo- information on quality standards, rates the learnings from years of processes and expectations sent Ford and supplier quality expertise. to suppliers late last year. Sharing savings A key element of Ford’s North customer satisfaction and waste elimi- American revitalization program is nation. During 2001 we reached out to a new design cost-sharing program, 24 high-impact suppliers to focus our through which we will share 35 collective 6-Sigma resources on critical percent of the material cost savings customer concerns. Additionally, over Pictured is John Golden, a Van with our suppliers. To facilitate the 2,100 participants from supplier com- Nuys, California, employee at success of the program, 300 Ford panies, including approximately Superior Industries, which is a engineers were dedicated in 2001 80 supplier CEOs and presidents, chrome wheel supplier. An example to work with suppliers to ensure participated in more than 100 courses of Superior’s commitment to quality their ideas are implemented, and offered by the Learning Resource was its 6-Sigma partnership with an additional 700 will assist on a Center and Library in 2001. We will Ford Purchasing that maximized the part-time basis. continue to work with suppliers to yield of chrome wheels to support expand the reach of 6-Sigma into the increasing demand for Lincoln Supporting joint 6-Sigma efforts supplier facilities that significantly LS and Ford Thunderbird vehicles. Joint supplier/Ford 6-Sigma projects impact customer satisfaction. Through the joint efforts of Ford are producing improvements in both and Superior personnel, the 6-Sigma Black Belt Project was deemed a success and resulted in increased productivity and improved customer satisfaction.

2001 Corporate Citizenship Report — Our Learning Journey 35 Stakeholder Relationships •Suppliers

Enhancing Supplier Environmental and Social Performance in Our Value Chain

In 2001 we continued our efforts Corporation, said, “I have gone from to engage our suppliers to identify being the biggest opponent of ISO opportunities that improve our 14001 to its largest supporter.” collective environmental and Similar efforts are underway to help social performance. our suppliers understand ongoing changes in materials management and Establishing the Ford-Supplier work with the systems used to collect Environmental Forum the data. (Please see materials section The Ford-Supplier Environmental on pages 48–49 for more details.) Forum was formed in 2001 and met periodically to explore environmental Continuing to develop issues such as design for environment, a diverse supply network climate change, materials management Our Minority Supplier Development and approaches to integrated environ- Group works with individuals and mental reporting. This forum will communities to develop opportunities continue to develop a framework that for minority-owned businesses. In identifies issues and develops future 2001 we again exceeded $3 billion environmental strategies and metrics. in purchases from minority-owned The forum members play a vital role businesses in the United States. In in helping us better communicate and recognition of our efforts, the National refine our policies. Minority Supplier Development Council awarded Ford the 2001 Richard Honecker, former Ford Sharing best practices Corporation of the Year Award. Executive Director, Global In collaboration with our suppliers, Facilities, Materials and Services we have developed a number of ISO Learning more Purchasing, (left) and Dr. Ray 14001 tools for suppliers including Jensen, Director, Ford Minority about human rights on-line and classroom training and Select suppliers, senior Ford leader- Supplier Development (right), a supplier workbook. More than receive the prestigious Corporation ship and nongovernmental organiza- 90 percent of our major suppliers tions assembled in May of 2001 to of the Year 2001 Award from embraced ISO 14001 in 2001 and Harriet R. Michel, President, discuss and learn more about human met our request to certify at least rights issues. This was the first step National Minority Supplier one manufacturing site by year-end. Development Council, Inc. in educating each other regarding the Many of our suppliers have found complexity and magnitude of these value in the certification process. issues in our industry. Together with For example, Rebecca Spearot, our suppliers, we will continue to Environmental Director, Lear formulate a strategy and identify and address critical issues.

36 VISIT OUR WEB SITE www.ford.com /go /corpcit •Communities

Our Responsibilities to Communities

Our actions and decisions have direct economic, social and environmental impacts in the communities where our plants are located. In 2001, we operated 110 plants in many communities in 25 countries spanning six continents. We have a direct economic impact on governments at all levels through the payment of taxes, as well as investments in infrastructure development in communities where we operate. We also indirectly affect communities where our employees live, our suppliers operate production facilities, our dealerships are located and our products are used. A project initiated by employees in Japan last November collects abandoned bikes in Hiroshima, Japan, and ships them to South Africa. Ford personnel in Our responsibilities to these South Africa receive the bikes and perform any necessary repairs with parts communities include: provided by Ford Japan. In turn, Ford South Africa donates the bikes to an Providing economic opportunity organization called SOS Villages. This nonprofit organization forms and Operating safely manages villages of orphaned and abandoned children, providing a permanent Contributing to civic life family environment—including food, shelter and guidance—for children who otherwise would not have any. Since this effort began, nearly 60 bikes a month Being transparent about changes have been collected and returned to good use. in our business that could impact community life and working collaboratively with community Measuring satisfaction If a plant were slated for shift leaders to address these changes. at the community level reductions or closure, what would Engaging community leaders We do not have a formal process Ford do to help the community In many of the communities where for measuring satisfaction with address impacts from this decision? our facilities are located, we have our actions at the community level. Would Ford continue to invest in established community relations Instead, we use the feedback we plants and equipment during committees to facilitate communi- receive from our community relations difficult times? committees, community leaders, cation between the facility and Would Ford continue to make dealers, public officials and others community members. charitable and volunteer to help us gauge whether we are contributions? In addition, our governmental meeting community expectations affairs team works with community in a particular location. How will Ford take our views leaders and public officials at the local, into account as the business In 2001 we heard many questions state, federal and international levels restructuring proceeds? from community leaders including: to address issues affecting our stake- Our response to many of these Would Ford’s financial condition holder communities, our operations, questions follows on page 38. our value chain partners and/or affect our communities? markets for our products.

www.ford.com/go/corpcit/operations 2001 Corporate Citizenship Report — Our Learning Journey 37 Stakeholder Relationships •Communities

Continuing to Invest and Contribute

restructuring plan and will continue to do so. We announced in January 2002 Fig. 38.1 Fig. 38.3 Charitable Contributions Capital Expenditures (Total Company) our commitment to find mutually beneficial ways to address plant 150 10 closures. We will draw from the

120 8 lessons learned through the restructuring and redevelopment of our 90 6 Halewood and Dagenham operations

60 $ Billions 4 as we move forward. $ Millions 30 2 Investing in our future

0 0 In 2001 we invested $7.4 billion in ’98 ’99 ’00 ’01 ’98 ’99 ’00 ’01 research and development and more Ford Motor Company Fund Corporate Automotive Financial Services than $7 billion in plants and equipment. In 2002, we will continue these Fig. 38.2 Fig. 38.4 investments in our future, with a Worldwide Income Taxes Paid Capital Expenditures as a Percent particular emphasis on investments of Sales in flexible production and new 5000 10 product development. 4000 8 Giving in tough times 3000 6 Even in difficult times we believe

$ Millions 2000 it is important to continue our Percent 4 philanthropy and volunteerism 1000 2 programs. 0 ’99 ’00 ’01 0 Our total charitable giving reached U.S. Non-U.S. State and Local ’98 ’99 ’00 ’01 an all-time high in 2001 of $139 million for projects focused on education, the environment and Restructuring in a socially When it became clear in late 2001 community development. Examples responsible manner that significant workforce reductions of initiatives supported by our One of the most significant contribu- would be required in 2002 and charitable giving are discussed on tions we make to a community is beyond, we tried to craft an approach our Web site. in the form of employment. In 2001, that would give our workers and the In addition to financial contribu- we employed more than 350,000 communities where they live as much tions, we offer every Ford salaried employees, representing a slight time as possible to prepare for these employee up to 16 hours of paid time increase since 2000. (The increase changes. per year to work in teams on commu- was more than accounted for by We have worked closely with union nity service projects. In 2001 in the the acquisition of Land Rover.) representatives and local leaders in Detroit area alone, for instance, more communities adversely affected by the than 14,000 volunteers devoted 111,440 hours to assist in this capacity.

www.ford.com/go/corpcit/community www.ford.com/go/corpcit/service 38 VISIT OUR WEB SITE www.ford.com /go /corpcit •Communities

Our Responsibilities to Civil Society

During the past two years, in order In 2001 we invested resources …and gaining insight to better identify and understand the in building and expanding our rela- Through these relationships, we risks and opportunities posed by tionships with a number of national have gained an understanding about emerging social and environmental and international business, environ- social and environmental issues that issues, we have increased our efforts mental and social organizations. affect our Company. We’ve broadened to develop relationships with leaders Included among these are: our thinking about the kinds of of civil society organizations around responses we can make to these issues Business for Social Responsibility the world. As we have undertaken and how we can create business and (BSR) this work, we’ve recognized our societal value with our actions. And responsibilities including: Coalition for Environmentally we are beginning to see ways to work Responsible Economies (CERES) A willingness to participate with the nongovernmental organiza- in dialogue Greenpeace tions to define and build future markets for sustainable products. Accountability INFORM Transparency in our actions Interfaith Center for Corporate Expanding our engagement and our impacts. Responsibility (ICCR) efforts in 2002 Lawyer’s Committee on Despite tough times, we think it Starting the dialogue… Human Rights is critical to continue our efforts to In August 2000 we brought together Prince of Wales Business “bring the outside in” during 2002. more than a dozen leaders of outside Leaders Forum We will continue to reach out to, and organizations to help us identify key understand better, the perspectives of strategic issues. Our focus on climate Sierra Club environmental, consumer and social change and human rights came from Union of Concerned Scientists organizations around the world. this dialogue. (UCS) World Business Council for Sustainable Development (WBCSD)

2001 Corporate Citizenship Report — Our Learning Journey 39 Product Performance

Products are Key to Performance

2001 performance indicators—and progress OBJECTIVE TARGETS PERFORMANCE COMMENTS PAGE toward meeting most of them. We plan Among the leaders By vehicle 41 to work on our performance indicators in vehicle safety to make them more forward-looking Decrease greenhouseEurope: ACEA commitment1 See Sustainable 46 and relevant in our management gas emissions from 2 Mobility on vehicles U.S. SUV goal 44 approach. Our current indicators are pages 14 and primarily focused on outcomes, and Develop advanced and 15 for discus- 17 alternative propulsion 45 sion of related therefore are equivalent to a look in the systems, alternative fuel vehicles issues rearview mirror. We would like to add indicators that serve as “headlights” to Decrease vehicle Meet or exceed 50 illuminate questions about our ability air emissions requirements 51 to accomplish our goals in the future. (other than GHG) Demonstrate ULEV II ✔ 47 Volvo Car Corporation and Jaguar Control materials Increase minimum 48 usage economic recyclability have tested innovative ways of 100% polymeric partsMeet goals set 48 assessing the environmental and marking 3 for each vehicle sustainability issues associated with Increase recycled Volvo S80 2003/4 49 particular vehicles. Examples include: materials use goals by vehicle Volvo Cars has prepared Environ- mental Product Declarations (EPDs) Reduce use of lead, 49 mercury, cadmium, for 72 percent of its models. The hexavalent chromium declarations examine environmental Key: ✔ Accomplished Progress towards /on track management overall and rate nine factors at each stage of the life 1 25% reduction in European fleet CO2 emissions from 1995 levels by 2008 cycle of the vehicle, comparing the 2 Improve fuel efficiency of U.S. sport utility vehicle fleet by 25% by 2005 vehicle’s performance to the “best” 3 Of polymeric parts which weigh over 50 grams and “worst” cases for each indicator. The EPDs and information about Our Company has tremendous This section addresses several key the process are available at impacts across a wide range of issues direct environmental and social per- www.epd.volvocars.se. —social, economic and environmental. formance issues associated with our Jaguar retained an independent Some of these impacts are more direct- products: safety, climate change, fuel expert to assess the sustainability of ly under our control, such as emis- economy, conventional emissions and the new Jaguar X-TYPE according to sions from vehicles and factories. materials use. Safety is addressed in its economic, societal, environmental Some are more indirect—traffic this section rather than the customer and natural resource dimensions. congestion, for example. Life cycle section because the safety of our vehicles The study covered the life cycle of analyses have shown that the greatest has impacts well beyond their drivers the car and compared it with current environmental impacts occur during and passengers. The larger set of ques- practice within the auto industry and the customer’s use of our products tions about the sustainability of our in- compliance with legal requirements rather than in their manufacture dustry is addressed on pages 14 to 15. (see www.jaguar.com/uk for more or disposal. The table above summarizes goals information). We have chosen to report on our and progress related to our products These and other steps are helping product and manufacturing perform- and is based largely on the ISO 14001 us to better integrate our corporate ance in separate sections to emphasize environmental management system citizenship approach into the product product performance and to delineate control plan for product development. development process so we can see how the management processes for Compared to previous years, we our aspirations fully reflected in these two areas are distinct. see a more robust set of targets and our products.

40 VISIT OUR WEB SITE www.ford.com /go /corpcit Safety is a Global Concern

An analysis for the World Business Council on Sustainable Development’s Fig. 41.1 sustainable mobility project found that Possible 5-Star Ratings in Frontal road safety has improved in devel- Crash Test (U.S. NCAP)1 oped countries. However, trends are 60 worsening in the developing world as 50 congestion increases and pedestrians, 40 bicyclists, two- and four-wheeled Percent 30 20 motor vehicles, buses and trucks often 10 share the same inadequate road infra- 0 structure. Some of the major vehicle ’97 ’98 ’99 ’00 ’01 safety issues we are working on are: Model Year Fig. 41.2 Occupant protection in various Possible Double 5-Star Ratings in accident scenarios, including Frontal Crash Test (U.S. NCAP)1 rollovers In the near future, Ford’s Personal 60 50 Safety System will include adaptive Child safety 40 venting of air bags to help regulate Driver distraction Percent 30 the size and pressure of the bag Pedestrian safety 20 to the passenger for whom it 10 Vehicle-type compatibility is intended. 0 in accidents ’97 ’98 ’99 ’00 ’01 Model Year Fig. 41.3 Possible 5-Star Ratings in Side Crash The cost in human lives, injuries and suffering Test (U.S. LINCAP)1 60 attributable to highway and road crashes is 50 staggering, particularly compared to other, less 40

Percent 30 common risks of harm that invoke much 20 greater publicity with far fewer victims. 10 0 World Business Council on Sustainable Development, ’97 ’98 ’99 ’00 ’01 Mobility 2001 Model Year Fig. 41.4 European Vehicle Sales Attaining 4- and 5-Star Euro-NCAP Ratings Accident prevention through vehicle product development and extensive 70 technology and infrastructure testing of our products. 60 design. 50 Measuring results of 40 Focusing on safe products our safety efforts 30 Percent The quality and safety of our Our vehicles have continued to per- 20 products are fundamental to our form well in the United States and 10 corporate success. To be among the European New Car Assessment Pro- 0 ’99 ’00 ’01 leaders in vehicle safety, we must grams (NCAP) compared to the rest Ford Motor Company Rest of Industry commit ourselves to ongoing improve- of the industry combined (see Figures Vehicles Vehicles ment of the safety and value of our 41.1 through 41.4). For example, in the 1 Includes Volvo and Mazda beginning in 2000. All charts represent the proportion of vehicles that attain products. We do this through research, U.S. Frontal NCAP test program for the highest ratings (e.g., if all tested vehicles received 5 2001 (Figure 41.1), 58 percent of the stars, the percentage would be 100).

2001 Corporate Citizenship Report — Our Learning Journey 41 Product Performance

In all 2001 Ford, Lincoln and Mercury products in North America, Ford voluntarily provides a system called BeltMinder™ that reminds people to buckle up. A recent study conducted by the Insurance Institute for Highway Safety (IIHS) has con- firmed BeltMinder™’s effectiveness. The study showed that safety belt usage rates overall were 76 percent among drivers of vehicles with the new reminder systems compared with 71 percent among drivers of other vehicles. If expanded to include the entire North American driving pop- “Clive,” the crash test dummy, buckles up with a four-point safety harness in ulation, this system could save an the Volvo Safety Concept Car, designed and built jointly by Ford and Volvo, estimated 1,200 lives each year. that also features a see-through A-pillar. In Europe, Ford has been a key contributor in the development of Ford vehicles with ratings posted are adds a seat weight sensor to the the proposed Pedestrian Protection 5-star compared with 23 percent for system’s collection of sensors that Negotiated Agreement between ACEA the “rest of industry.” gathers information about the nature (Association of European Vehicle Manufacturers) and the European In Europe, the percentage of Ford of the collision, the occupants andtheir Commission. The binding commitment vehicles achieving 4- or 5-star ratings seating positions. Based on this infor- contains innovative, but feasible meas- has increased from 42 percent to 62 mation, the system can deploy the air ures resulting in significant pedestrian percent since 2000 due largely to the bags at two different power levels to safety improvements for new models first full year of production for the help reduce the risk of injuries including both active and passive new Ford Mondeo and the cessation of associated with air bag deployment. measures. A final decision on the Ford Escort production. The European These improvements are part of approach is expected from the Com- industry average also has improved the evolution of air bag restraints. mission in the second quarter of 2002 over the same timeframe, illustrating Although first-generation air bags following completion of review by the the importance of safety in the highly have saved many lives, they also European Parliament. The EU member competitive European marketplace. were associated with injuries to some states, represented by the Council of passengers including children and Volvo cars continue to get top Ministers, already have decided to unbelted small adults. Technical ratings on a variety of safety tests support the Agreement. and assessments. improvements and education campaigns about seating children We introduced several safety Learning from experience in back seats have had the intended features on new and redesigned SUVs and experimentation effect—in 2001, for the first time since (see page 44). We continue to roll out Improving the safety of vehicles and the introduction of air bags, the U.S. the Personal Safety System—a sophis- road systems is a continuing process National Highway Traffic and Safety ticated “smart” safety belt and air bag that involves learning about the effec- Administration did not confirm a system—to more vehicles. The newest tiveness of technologies and systems single report of a death due to an air version, available in the 2002 Ford we put into our products even as we bag deployment. Windstar and 2003 Lincoln Town Car, research ways to address emerging issues. A few examples follow. www.ford.com/ccr/volvo www.ford.com/go/corpcit/productsafety 42 VISIT OUR WEB SITE www.ford.com /go /corpcit Boosting Child Safety

Throughout 2001, Ford led Boost America!, the largest child passenger safety campaign ever launched by an automotive company in the United States. The program delivered an educational curriculum to millions of children in over 152,000 schools, provided over $1 million to safety organizations to support the training of child seat-fitting technicians and the establishment of hundreds of permanent child seat-fitting stations and distributed over 550,000 booster seats to Ford customers and needy families through a partnership with the United Way charity. Boost America! also commissioned a survey of booster seat usage and parental attitudes and lobbied in favor of child safety laws, helping increase from two to seven the number of states with booster seat laws. We also have partnered with Allstate Insurance to fund a safety exhibit— Play It Safe —for the Chicago Children‘s Museum. The exhibit, opening in June of 2002, will teach children about many childhood safety issues including car safety.

As the range of electronic devices Volvo’s Eyecar automatically locates to study real-world crashes in the that can be used in a vehicle has ex- the eyes of each driver and positions Washington, D.C. area. The data from panded, integrating these devices so the driver to enhance visibility. the CIREN case reviews are incorpo- that they become an aid to drivers and Rear Facing Sensors detect possible rated into a national CIREN database not a potentially dangerous distraction rear-end collisions before they available for safety research. is an increasingly important design happen. If a rear-end collision is Volvo Car Corporation teamed with question. Ford is using its state-of-the- imminent, motorized retractors a hospital in Gothenburg, Sweden, art motion simulator called VIRTTEX tighten the front seat safety belts. to investigate cars and accidents that (Virtual Test Track Experiment) to study Panoramic rear cameras provide an resulted in whiplash injuries to learn how drivers using various devices unprecedented view of the roadway how vehicle design can continue to respond as they experience realistic behind. reduce them. driving conditions. The results are being Consistent and rigorous vehicle used to set criteria and help minimize Forward-looking cameras let drivers testing also is an important element driver distraction from vehicle devices. see around the vehicle in front of of enhancing vehicle safety. Ford of Talking on cell phones is certainly not them to help avoid potential prob- Germany has taken the lead in devel- the only reason drivers might lose lems with other cars or pedestrians. oping the Path-Following Robot that concentration on the task at hand, but To better understand how today’s uses a steering robot guided by a their proliferation has put a spotlight vehicles perform in the real world, Global Positioning Sensor (GPS) on the issue of driver distraction. Ford Motor Company and Inova system to follow a specific path on Fairfax Hospital in Virginia partnered The flip side of driver distraction is a test track, eliminating driver vari- to establish a Crash Injury Research helping to draw drivers’ attention to ability (a significant source of testing and Engineering Network Center in potential dangers—even those they variation) and allowing more accurate partnership with NHTSA. The CIREN may not be able to see with the unaided assessment of vehicle handling, Center brings the medical, engineering eye. Several advanced technologies are including rollover resistance. under research or development: and rescue communities together

2001 Corporate Citizenship Report — Our Learning Journey 43 Product Performance

SUV Update

economy improvements for the Escape/Tribute. Fig. 44.1 Even in light of the challenges in U.S. SUV Corporate Average Fuel this economic climate, we continue Economy (Estimated) on the path to meet our goal of 10 2000 improved U.S. average SUV fleet 8 vs. fuel economy by 25 percent by 2005. t 6 Data are reported here for the United States because the goal specifically 4 mprovemen I

addresses U.S. fuel economy, but t 2

the new products and technologies ercen 0 achieving improvements are being P ’00 ’01 ’02 Model Year introduced worldwide. The 2003 Ford Expedition and Fig. 44.2 Lincoln Navigator, available in Reducing emissions Ford SUV Possible 5-Star Ratings in Side Crash Tests (U.S. LINCAP) mid-2002, qualify as Ultra Low Since the 1999 model year, all Ford, 100 Emission Vehicles. Both vehicles Lincoln and Mercury SUVs sold in North America have been certified to come equipped with a brake assist 75 system and Ford’s Personal Safety Low Emission Vehicles standards— System of advanced safety belts from two to five years ahead of the 50 requirements—resulting in a reduc- Percent and air bags; tire pressure sensors 25 will be available later this year. A tion of more than 4,250 tons of smog- ™ forming pollutants being released 0 Safety Canopy, combining rollover ’99 ’00 ’01 sensors and side air curtains, is into the atmosphere each year. Model Year standard on the Navigator and Improving safety Testing program began with model year 1999. Ford Motor Company Rest of Industry optional on the Expedition, as All North American-produced 2002 Vehicles Vehicles is AdvanceTrac™, an electronic Ford Explorers and Mercury Moun- stability enhancement system. taineers are available with side Fig. 44.3 Ford SUV Possible 5-Star Ratings in curtain air bags to help protect an Frontal Crash Tests (U.S. NCAP)

occupant’s head in a side collision. 60 Progress on fuel economy, emissions ™ The Safety Canopy, introduced in 50 and safety are summarized here; March 2002, combines the side cur- 40 please see pages 14 to 17 for tain air bags with a rollover sensor discussion of broader sustainable 30

that activates the side curtain air bags Percent mobility and technology when a rollover event is sensed. The 20 development issues. device uses a new technology that 10 0 Increasing fuel economy allows it to stay inflated longer ’98 ’99 ’00 ’01 and helps keep occupants inside Model Year The average fuel economy of Ford’s Ford Motor Company Rest of Industry the vehicle for the duration of the Vehicles Vehicles U.S. SUV fleet improved approxi- rollover event. mately 7 percent from the 2000 to 2001 model years because of the Ford designed its recent SUVs ratings awarded in U.S. government introduction of the Ford Escape, with a “blocker beam” on a level testing. In a comparison of real- Mazda Tribute and Volvo XC. Fuel with typical passenger cars, enhanc- world accident data, for example, economy is projected to improve ing SUV-to-car crash compatibility. the Ford Explorer, continues to be for the 2002 Model Year (see Figure Ford’s SUV offerings compare among the safest compact SUVs in 44.1) with the introduction of the favorably to the competition in the all accident types including rollover. Land Rover Freelander and fuel percent of possible 5-star crash test www.ford.com/go/corpcit/suvsafety

44 VISIT OUR WEB SITE www.ford.com /go /corpcit Reducing Greenhouse Gases by Improving Fuel Economy

Greenhouse gas emissions in the engines that show potential for European Association of Automobile automotive sector are related to the approximately 20 percent improve- Manufacturers (ACEA) and the following factors: the fuel economy ments in overall fuel economy of European Commission on the reduc- and type of fuel used by a vehicle, gasoline engines tion of new car CO2 emissions, and the road and traffic conditions, the Demonstration of the use of contin- still plays a key role in maintaining the driving patterns of the consumer uously variable transmissions on ACEA commitment. The agreement and emissions from the vehicle’s air large vehicles such as the Ford requires that the average new car fleet conditioning system. Expedition achieve 140g CO2/km by 2008, a reduction of 25 percent over 1995 levels. The fuel economy of a vehicle Use of low-friction motor oil to im- in turn is affected by powertrain prove engine efficiency while main- In the United States, we committed efficiency and the inherent energy taining or improving horsepower to improve the average fleet fuel losses of a typical vehicle, examples economy of our SUVs by 25 percent Improvements in aerodynamic of which are shown below. from 2000 by 2005. design to cut wind resistance, a particular benefit in highway driving POWERTRAIN-RELATED EFFICIENCIES Making progress Engine efficiency New four-wheel drive systems to against our goals Transmission efficiency reduce operating friction by discon- In Europe, the auto industry is on Engine-transmission matching efficiency necting drivetrain components when track to meet the interim target for VEHICLE ENERGY LOSSES they are not needed 2003 (165g–170g CO2/km). Over the Weight Drag coefficient and frontal area Rolling resistance Driveline losses Although we’ve seen areas of progress, Mechanical accessory loads reducing average vehicle CO2 emissions in Electrical accessory loads North America has been challenging. Our greatest engineering challenge is to provide a vehicle that has the We recognize that more can be done to highest possible fuel economy and improve vehicle fuel economy and reduce meets the needs of our customers. Ford is developing a range of greenhouse gas emissions. technologies that improve the fuel economy of gasoline and diesel Increased use of all-aluminum 1995 –2001 period, ACEA has cut its engines and demonstrate new engines to save vehicle weight and new car average CO2 emissions by 11.4 powertrain systems, for example: contribute to better fuel economy. percent. In 2001, fleet consumption of Fuel cell, hydrogen internal com- gasoline cars was down by 8.5 percent bustion, hybrid and battery electric In the long term, use of lower- (to 7. 3L/100km or 32.1 U.S. mpg), and vehicles (see page 17) carbon fuels, production of fuels using renewable energy and effective action those from diesel cars by 13.1 percent A new family of I-4 gasoline on broader sustainable mobility issues (to 5.8L/100km or 40.4 U.S. mpg). engines, first introduced in the (discussed on pages 14 to 16), hold These reductions were achieved Mondeo in Europe and Ford Ranger promise for de-linking mobility and despite average car mass, engine pickup in the United States greenhouse gas emissions. capacity and power increases between Common-rail diesel technology 1995 and 2001 of 8.8 percent, 4.8 developed in partnership with PSA Setting goals in the percent and 19 percent, respectively. Peugeot Citroën (see page 47) U.S. and Europe Since 2000, Ford has improved its Direct-injection spark ignition (DISI) Ford was instrumental in securing EU fleet average CO2 emissions by 2 a negotiated agreement between the percent, Jaguar by 7 percent and Land www.ford.com/go/corpcit/csc 2001 Corporate Citizenship Report — Our Learning Journey 45 Product Performance

Fig. 46.1 European CO2 Performance Passenger Vehicles 120

110

100

% Reduction from 1995 Base % Reduction 70 ’95 ’96 ’97 ’98 ’99 ’00 ’01 Model Year Jaguar ACEA Volvo Ford Land Rover

Fig. 46.2 Ford U.S. Corporate Average Fuel Economy* 35

25 Cologne Mayor Fritz Schramma test drives the Ford Focus FCV (Fuel Cell Vehicle) from the Cologne Cathedral to the Town Hall. 20 Miles per Gallon

15 ’98 ’99 ’00 ’01 ’02 (est.) Rover by 5 percent. Compared to the Model Year 1995 baseline for the ACEA agree- Cars Trucks Combined ment, Ford has improved its perfor- Awards For the third consecutive year, the VCD Fig. 46.3 mance by 13 percent, Jaguar by 6 Ford U.S. CO2 Emissions Per Vehicle* percent, Land Rover by 15 percent and (Mobility Club Germany) has named Combined Car and Truck Fleet Average Volvo by 11 percent (see Figure 46.1). the Ford Focus the most environmen- CO2 Emissions tally friendly family-size car. The 1.6- In the United States, however, our 260 and 1.4-liter engine versions of the Ford average fuel economy and CO2 emis- 240 Focus estate (wagon) were named first sions of our vehicles are relatively stable and second, while the bi-fuel version 220 (see Figures 46.2 and 46.3) because of a was named the best alternatively fueled 200 combination of countervailing trends: car. The ratings take into account fuel 180 SUV fuel economy improved consis- economy, emissions and noise.

Grams per Kilometer 160 tent with our commitment (see Figure 140 44.1 and discussion on page 44) ’97 ’98 ’99 ’00 ’01 Model Year SUVs and other light trucks, which 56 percent of sales, compared to generally are heavier and use more 50 percent in 2000. This shift has * Includes Ford, Jaguar, Aston Martin, Volvo (beginning 2000) and Land Rover (beginning fuel, continued to grow in popular- partially offset some of the other 2001). 2001 and 2002 status are estimates ity: For 2001, light trucks constituted fuel economy improvements. (reported to the U.S. government).

46 VISIT OUR WEB SITE www.ford.com /go /corpcit Clean Diesel—a Bridge Technology?

Diesel compression-ignition engines offer approximately 10 to 20 percent better fuel economy than typical gasoline spark-ignition engines. Although diesel passenger vehicles used to be known as noisy, smelly and dirty, the technology has advanced considerably in the last couple of decades, and they now are competitive with their gasoline counterparts. In 2001, for example, Ford introduced a second generation common-rail injection engine for the Focus that offers improved performance at no fuel economy penalty compared to other diesel technologies. This engine was the product of a unique, long-range partnership between Ford and PSA Peugeot Citroën to develop a new family of advanced diesel engines for use by both companies. In Europe, nearly 40 percent of new vehicles sold in 2001 were diesel- powered, a major factor in the improving picture of European average fuel economy. Although diesel engines produce fewer emissions of greenhouse gases, The Ford Mobile Laboratory is their emissions of particulates and nitrogen oxides are higher than compa- equipped to collect emissions rable gasoline engines. The relationship between particulate air pollution data from moving objects. Here it and adverse health effects continues to receive scientific and press atten- samples exhaust from a diesel test tion. These concerns have inhibited broader use of conventional diesel vehicle on a high-speed track. technologies in North America. Ford is working intensively on the development of a range of technologies to further reduce emissions of particulate matter and nitrogen oxides. These include particulate trap filters and engine thermodynamic improvements. A Ford research vehicle introduced in 2001 uses co-fueling of diesel and urea, an ammonia-based compound, to achieve the stringent Ultra Low Emission Vehicle II standard—which requires particulate and nitrogen oxide emission 90 percent lower than current standards. The technology would require modified infrastructure to provide urea along with diesel fuel. It also is clear that for any advanced after-treatment system to be fully effective, diesel fuel sulfur levels of below 10 ppm are required.

Doing more on fuel economy the issue by research and development Although we expect these steps to We have made progress, but we realize of more fuel-efficient conventional yield a more coherent and effective that more can be done to improve fuel technologies and powertrains that use approach to reducing greenhouse gas economy and reduce greenhouse gas lower- or zero-carbon fuels (see page emissions from our vehicles, we may emissions. Although there are areas of 17). These offer the promise of no- not see immediate results given the improvement (SUV fleet and develop- compromise solutions for customers. long-lead time required to bring new ment of advanced technology vehicles We also are working with external products to the market. In addition, that will soon be in production), organizations on green marketing and we need to develop product solutions progress in reducing average vehicle policy initiatives—such as consumer that do not compromise the traditional CO2 emissions in markets with low incentives for early adoption of new vehicle attributes (e.g., safety, low fuel prices, such as North America, has technologies. emissions and functionality) that been challenging. We are addressing our customers want.

2001 Corporate Citizenship Report — Our Learning Journey 47 Product Performance

Managing Materials Takes Partnership

Taken together, these trends support our approach to: 1) better understand and track the materials going into our vehicles, 2) consider the use of recycled and renewable materials and vehicle end-of-life during product development, and 3) work closely with our suppliers to control materials use and develop innovative approaches that meet these challenges. Setting goals to improve our materials use Ford has set the following global materials use goals: Increase the recyclability of our vehicles1 Mark 100 percent of polymeric parts more than 50 grams in weight (to facilitate recycling) The 2001 Ford Mondeo, sold in Europe, contains 55 parts made of recycled, non-metallic material and 21 parts made of renewable material, (of which 10 Continuously increase the recycled parts also are recycled). This includes an air channel footwell made of recycled content of polymers from the bottle caps, a fan and shroud radiator made of recycled carpets and an insert current level (targets are set for new door trim panel made from kenaf natural fibers. vehicles as a percentage increase over the levels of previous models) 2 In addition to other substances, Several trends are converging to make in 1984 through its Restricted globally reduce or eliminate where materials management an increasingly Substance Management Standard.) possible the use of lead, mercury, important issue for automakers: The ultimate recycling and disposal cadmium and hexavalent chromium Automobiles are made of thousands of vehicles also has been the subject in line with the strictest global of parts and thousands of materials. of regulation in Europe, requiring a requirements Both the complexity of automobiles close look at how vehicles can be Achieve materials and substance and the number of materials used disassembled and materials recovered. reporting by suppliers on materials to make them has increased as engi- We have been increasing the amount neers add new features for safety, of recycled material we use to help 1 In theory, end-of-life vehicles are nearly 100 percent comfort and other purposes while recyclable. However, the cost in energy and labor to reduce landfill disposal and build recover the final fractions often exceeds the value of seeking weight reduction to improve markets for recovered materials. the materials. Ford focuses on increasing the econo- fuel economy. mically viable and environmentally sound recycling We’re also increasing the use of percentage through a number of means: selection of Over the past two decades, concerns renewable materials based on life materials, labeling, reducing the number of different have risen about certain substances, cycle analyses that show they have materials and providing information to dismantlers on materials and methods for disassembly. recently reflected in bans on the use lower environmental impacts. 2 There are no shared definitions for recyclability of certain materials and substances Automakers increasingly rely on or recycled content in the auto industry. Ford’s in products manufactured or for sale external suppliers to provide parts, definitions are conservative, focusing on the in Europe. (Ford addressed these economic recyclability of parts and materials and components and assemblies. counting as recycled content only the weight of substances of concern beginning actually included post-consumer and post-industrial materials that would otherwise require disposal. www.ford.com/go/corpcit/materials 48 VISIT OUR WEB SITE www.ford.com /go /corpcit use, polymeric part marking and To increase recycled and renewable recycled content through the material use, materials specialists International Material Data work with product development Fig. 49.1 Number of Parts Launched System (IMDS).* teams to identify possible applications Containing Recycled *IMDS is an industry-wide, Web- and test materials to ensure that they Non-Metallic Materials based database that collects infor- meet specifications for quality, perfor- mation on materials used in the mance and cost. These efforts have 1000 auto industry for compliance moni- resulted in steady increases in the 800 toring with global regulatory number of parts launched with recy- 600 requirements including the EU cled or renewable content, and total End-of-Life Vehicle Directive. recycled materials used (see Figure 49.1). 400 Number of Parts Ford’s research and recycling teams 200 Using materials information also help by investigating specific 0 to make better decisions materials and providing design tools. ’97 ’98 ’99 ’00 ’01 Since 1984, Ford has used a Restricted For example, they have developed a Substance Management Standard life cycle assessment tool that allows (RSMS) to determine which substances designers to compare in real time should be avoided, eliminated or various materials choices for their life The demands on our suppliers, phased out in Ford plants and prod- cycle environmental impacts. particularly for participation in the ucts. In March 2001, we requested IMDS, have been considerable, and that all suppliers to all of our brands Integrating a life cycle approach we appreciate their cooperation. phase in the use of IMDS to collect We are making good progress toward They are crucial to improvement of and report information required by the our specific goals and toward an inte- our materials management. restricted substance standard. In early grated, information-based system for Ford, our suppliers, consumers 2002 we began assessing compliance materials management that allows us and recyclers all have roles to play in with the requirements through to make choices that reduce environ- addressing the environmental impacts periodic supplier reviews. mental impacts through the life cycle of automobiles (see Figure 49.2). We Ford’s action helped establish con- of our products. We recognize that will work with these stakeholders and sistent requirements for suppliers by we have a long way to go. others as we seek continued progress. encouraging other global automakers to adopt IMDS reporting. During 2001 Fig. 49.2 Roles in the Life Cycle Management of Vehicle Environmental Impacts Ford helped enhance the IMDS in 11 PRODUCER CONSUMER RECYCLER areas to make it more user-friendly. Upstream in the Green supply chain Purchase greener pro- Inform end-users of We have worked with industry associa- life cycle ducts (at higher price?) proper management tions and suppliers in coordinating Materials management targets Provide feedback various restricted substance lists, which ultimately will reduce cost and confu- Product ownership Environmental perfor- Eco-driving Environmentally life cycle phase mance of manufacturing sound operations sion and help meet industry-wide goals (e.g., ISO14001) Proper maintenance (e.g., ISO14001) to better manage restricted substances. Design for environment, Inter-modality Ensure quality of Textiles and leathers used in Volvo product improvement recovered materials cars meet the German Oeko-Tex stan- Downstream in Work with dealers on Correct disposal Feedback to dard that limits certain materials and the product life green approaches manufacturers on cycle disassembly and requires testing and verification. Inform consumers recovery about choices We also completed the phase-out of Provide information mercury-containing convenience light on end-of-life switches in all Ford products in 2001.

2001 Corporate Citizenship Report — Our Learning Journey 49 Product Performance

Cutting Conventional Emissions Worldwide

the amount of gasoline that can evap- a major barrier to basic and proven orate, permeate or leak out of the emission control technologies. vehicle’s fuel system. Over the last 35 years, these emissions have been re- Making progress duced by more than 95 percent in the Given the complexity of new regula- United States. The State of California tory requirements, the focus of our has tightened these standards by near-term efforts for emissions control another 75 percent, effective with the is to meet the stringent new standards, 2004 model year, while U.S. federal producing clean vehicles that also requirements mandate a 50 percent meet customers’ needs for fuel reduction. Ford and other auto manu- economy, safety and other features. facturers have voluntarily committed There also are many instances where to using the same technologies needed we have gone beyond the requirements: The Volvo Adventure SUV, available to meet the more stringent California Since 2001, the high volume versions in early 2002, will meet ULEV (Ultra standards on virtually all vehicles sold Low Emission Vehicle) standards. of the Volvo S60, Volvo S80 and Volvo in the United States. V70 conform to Ultra Low Emission We are seeing similar trends toward Vehicle standards and also meet By the mid-1990’s, new vehicles were more stringent standards worldwide Europe’s Stage IV requirements.Volvo substantially cleaner than their pre- as more countries adopt emissions offers these vehicles globally, regard- decessors that lacked emission control standards based on U.S. and EU less of local regulation. During 2001, equipment. Technology breakthroughs requirements. For example, prior to 31 percent of Volvo cars bought that reduced carbon monoxide (CO) January 2000, China had no emission met these requirements. and hydrocarbons (HC) by 96 percent, and nitrogen oxides (NOx) by 75 percent allowed us to meet the stringent standards in the United States, Europe Beginning with the 2004 model year, new and Japan. Since then, further emis- vehicles in the United States will have to meet sions requirements, as well as voluntary efforts by Ford to go beyond the a complex set of new requirements that requirements, have cut remaining lev- significantly ratchet down permitted emissions. els of smog-forming emissions from These “Tier II” requirements, however, provide our products by more than half. The United States, Europe, and a simple rating system that will allow Japan now are poised for further consumers to choose cleaner vehicles. major reductions by 2004 and 2005. Beginning with the 2004 model year, new vehicles in the United States must meet a complex set of new federal control requirements but intends Jaguar has pledged that, outside Tier II requirements that ratchet down to implement the same requirements the United States and where regulated emissions by an additional 50 as Europe by 2010 (matching over 40 supported by fuel infrastructure, to 95 percent, depending on the pollu- years of European emissions evolution all its vehicles will meet European tant and vehicle class. Europe’s Stage in just 10 years). Faster adoption of emissions standards. IV requirements will achieve similar state-of-the-art emissions standards in The Ford Ikon, developed for the levels of control (see Figure 51.1). China and many other countries is Indian market, emits from 40 to often prevented by local market condi- 60 percent less than legal limits, At the same time, we are facing tions. Fuel quality, for example, can be stringent new requirements limiting depending on the pollutant.

50 VISIT OUR WEB SITE www.ford.com /go /corpcit Rare Earth Oxide Catalyst Improves Fig. 51.1 Emission Reductions (Standards) Environment and Cuts Costs Europe, U.S.*

A Ford-invented catalyst uses rare earth oxides to substitute for 75 120

percent of the precious metals used in conventional vehicle emission 100

control devices. Though initially developed to make emission control 80 more affordable on new and existing vehicles in emerging markets (and therefore, more widely used), the technology has been adopted world- 60 wide, saving Ford an estimated $100 million per year. The Pacific Basin 40 Economic Council awarded Ford its Silver Award for Environmental 20 Percent Reduction of HC Reduction Percent and NOx from Pre-Control stewardship for its development and implementation of the rare-earth 0 oxide catalyst. ’65 ’71 ’77 ’83 ’89 ’95 ’01 Europe (ECE) United States

* This chart shows the trend of declining Tackling tough issues In some countries such as Germany, emissions as the percent reduction in emission through innovation Ford has offered vehicles that meet standards. Differences in test procedures prevent direct comparison of European and U.S. The challenge to develop even cleaner legislated levels up to five years standards. The chart does not reflect European vehicle technologies is heightened by early in response to consumer controls on CO2 and HC that began in 1975. the need to make those same vehicles interest. more fuel efficient. Technologies Several programs in Japan at known for significantly improved fuel the national and municipal level Looking ahead efficiency—such as gasoline direct provide a voluntary designation of Beyond 2005, breakthrough reductions injection and diesel fuel operation— vehicles, for example, as “good,” in conventional emissions from new tend to produce more tailpipe emis- “excellent” or “ultra low emission.” vehicles in developed countries will sions. Ford is working continuously In 2001, Mazda offered more than likely come from the introduction of to offset these emissions and create 40 models designated as low- new technologies such as hybrid elec- vehicles that are both clean and emission vehicles. tric and hydrogen-fueled vehicles that less “hungry” for non-renewable Beginning with the 2004 model year, also emit fewer greenhouse gases and resources. new vehicles in the United States reduce dependence on imported fuel. Offering “greener” vehicles will have to meet a complex set of A major source of potential emission Over the next few years, Ford and new requirements that significantly reductions, particularly in countries other automakers will introduce reduce permitted emissions. These that only recently have started to con- vehicles that meet a complex array of “Tier II” requirements will establish trol vehicle emissions, is retiring or new standards. Consumers who wish 10 “bins” of certification standards retrofitting older vehicles still on the to do so will have the opportunity to representing a range of emissions road that typically emit significantly purchase low-emission vehicles. performance. Each vehicle will be more pollutants than new vehicles. certified to a bin, where “1” is the In Europe, Ford has pioneered (and Along with our efforts to reduce cleanest with progressively higher now all automakers must provide) emissions from vehicles we make, we levels up to a category “10.” These the use of Eco-Labels that affix infor- intend to continue working through requirements will provide a simple mation on a vehicle’s fuel economy, partnerships that develop systematic rating system that allows consumers safety and emissions class to the approaches to the issues of congestion to choose cleaner vehicles. window at the point of sale. and infrastructure (see pages 16 to 18 for examples).

2001 Corporate Citizenship Report — Our Learning Journey 51 Manufacturing Performance

Improving Environmental Management through Manufacturing Performance

2001 2001 processes throughout our complex OBJECTIVE TARGETS PERFORMANCE COMMENTS PAGE value chain. Below are some examples: Expand ISO 2001 Certification of Primary PD Ford Land Site Manage- 52 14001 EMS Product Development functions certified ment, Dearborn, MI, At the end of 2001, 91 percent of (PD) function Research and Ford’s major suppliers had certified 2003 suppliers1 91% certified at Engineering Vehicle 52 at least one of their manufacturing least one facility Testing Operations also certified in 2001 facilities to the ISO 14001 manage- Increase energy Energy efficiency Measures production ment standard. The ISO 14001 efficiency index per unit: efficiency, 2000 baseline requirement has been integrated 2001 — 96 95.7 equals 100. Excludes 53 into the sourcing process for “Q1” 2002 — 93 Volvo, Jaguar and 53 Aston Martin preferred suppliers. Use of renewable 2% of energy from 2% 54 We extended ISO 14001 certification energy Green Power (0.1% new sources) (U.S.) to the key business function of Increase water 2001 Establish baseline Baseline 56 product development by examining efficiency 2003 — 3% reduction established; 8.9% 56 our processes, identifying environ- over 2000 reduction over mental issues and setting and 2000 tracking targets. Decrease VOC emissions 2002 North America — 57 from painting 31 g/m2 32 g/m2 As the Ford Production System Reduce wastes Establish waste Complete 58 (FPS) (a set of common principles generation baseline for U.S. and and processes used in manufac- using TWM system Canada turing worldwide since 1999) Increase use Percent of part numbers of returnable 2002 — 68% 95% returnable 2002 metric revised 58 was under development, processes packaging incoming cubic to provide more detailed and requirements from the Ford volume tracking of projects Environmental System were Eliminate use of PCB Percent remaining of A possible source of transformers 1995 base emissions if not properly integrated into it including 2006 — 5% 38% maintained and disposed environmental training and 2010 — 0% production work group identifi- 1 Ford has asked that all suppliers with manufacturing facilities certify at least one site by the end of 2001 cation of environmental issues. and all facilities by July 1, 2003. Volvo and Mazda suppliers have been requested to complete certification by the end of 2002. The business planning process and “scorecard” used to evaluate This section covers environmental Integration of environmental plant managers was expanded issues in our manufacturing operations. objectives into business processes to establish accountability for performance on the full range of Employee health and safety is addressed Continual improvement in issues integrated into FPS. A typical in the employee section (page 26), com- manufacturing site emissions munity programs at our plants in the scorecard encompasses employee Compliance with both the letter community section (pages 37 to 38). health and safety, quality, delivery, and spirit of environmental cost, morale and environment. Ford’s principles for environmental regulations. management of its facilities are to In the sections that follow, you will demonstrate environmental steward- Making progress on read about how we also focused in ship at manufacturing facilities: business integration 2001 on improving our measurement of key environmental indicators— Our commitment to the ISO 14001 Transition to sustainability and including energy and water use and environmental management frame- eco-effectiveness waste generation—as the basis for work for all of our facilities1 has been Open, transparent connection with better setting and meeting our goals. one of several valuable vehicles for external stakeholders (community communicating environmental goals 1 Ford manufacturing facilities completed ISO and regulators) 14001 certification using the Ford Environmental and integrating them into business System in 1998. www.ford.com/go/corpcit/compliance 52 VISIT OUR WEB SITE www.ford.com /go /corpcit Managing Operations to Cut Energy Use

The energy used at Ford facilities has environmental impacts locally as well as globally. Energy management gained importance in 2001 because of the reduction goal set in 2000 and the Company- wide focus on efficiency and elimina- tion of waste. The tough economic conditions have made it challenging to secure resources for investment in energy projects. Because of this, Ford has been developing and strength- ening relationships with energy service suppliers that can finance projects through shared savings in The North American headquarters of the Premier Automotive Group, opened energy costs. in Irvine, California, in November 2001, showcases “green building” design Other important issues during 2001 practices. The 300,000-square-foot facility houses North American operations were finding mechanisms for sharing for Aston Martin, Jaguar, Land Rover and Volvo, and is best practices and measuring and global headquarters for Lincoln and Mercury. tracking progress.

“Our focus is good environmental stewardship through sound economic discipline.We’re cutting costs and energy-related emissions by examining every aspect of our energy use, purchasing ‘negawatts’ instead of megawatts and leveraging our buying power. A fuel cell producing 200 kilowatts of electricity and Energy management and efficiency projects 900,000 BTUs of heat provides 25 saved Ford $77 million in 2001.” percent of the building’s power. Tim O’Brien, Vice President, Ford Real Estate A “green” roof on the Product Development wing uses rooftop landscaping to create a home for Beating our target for 2001 This performance measure was con- more than 30 categories of vegetation Ford’s global operations have set a verted to an “energy efficiency index,” and save energy through insulation. target to reduce energy use by 14 set at 100 for the year 2000, to simplify The building is the first in Orange percent from 2000 levels on a pro- tracking. Thus, the target is an energy County and only the third in duction-normalized basis1 by 2005. efficiency index of 85 in 2006. California to secure Leadership in Energy and Environmental Design certification from the U.S. Green Building Council. 1 An engineering calculation that adjusts for fixed and variable portions of energy use and production to track production energy efficiency.

2001 Corporate Citizenship Report — Our Learning Journey 53 Manufacturing Performance

Leveraging Our Resources Fig. 54.1 Worldwide Facility Energy Consumption Ford has extended its ability to implement energy-saving projects through “performance contracts” with energy service suppliers that 100 finance and install energy-saving projects and equipment and are paid

80 from the resulting cost savings. The approach allows Ford to do more projects faster. At the end of the contract term, Ford receives all energy 60 savings. Results include: 40 28 PROJECTS INSTALLED AT 21 PLANTS Trillions of BTUs Trillions 20 Supplier Investment $93 million 0 ’97 ’98 ’99 ’00 ’01 Annual Energy Savings $18 million

Other Benefits $4 million Fig. 54.2 Worldwide Facility Energy Consumption Per Vehicle1

15 In 2001, we cut total energy use at and usage, identify opportunities for 12 our facilities by 7.6 percent (see Figure savings and new energy sources, 54.1) and reduced global CO2 emis- develop targeted initiatives, facilitate 9 sions by 8.6 percent (see Figure 54.3). sharing between facilities and 6 The reduction reflects lower produc- establish partnerships with energy

Millions of BTUs 3 tion but also greater efficiency in the service suppliers. manufacturing process. Our facilities During 2001, Ford joined two U.S. 0 ’97 ’98 ’99 ’00 ’01 achieved an energy efficiency index of Environmental Protection Agency 95.7, slightly ahead of the 2001 target voluntary efforts aimed at reducing Fig. 54.3 of 96. Energy consumption per vehicle energy use and increasing use of Worldwide Facility CO2 Emissions increased slightly (see Figure 54.2), renewable energy. Ford is a founding 10 however, because facility energy member of the Green Power Partner- use was divided by a smaller number ship under which we committed to 8 of vehicles produced. secure 2 percent of our energy 6 These programs saved more than supply from renewable energy, with

4 $77 million. About half of those 5 percent of this amount in the form savings were due to operational of new sources. 2 changes and projects to improve Millions of Metric Tons We also were accepted into the 0 energy efficiency, with the remainder ’97 ’98 ’99 ’00 ’01 Energy Star Program, which is based due to cutting the cost of energy on ISO 14001 principles and requires Excludes Volvo, Land Rover and Aston Martin. supplies. corporate policies, measuring and tracking facility energy usage, devel- Visteon has been spun off and data not included Managing energy takes oping plans and employee education. for any year. focus and yields benefits We are reducing energy use through 1 Energy use per vehicle divides actual energy Ford Land (which manages Ford’s use by vehicles produced. properties) is responsible for energy a wide range of methods, some low- management globally. Together with or no-cost and some requiring signifi- manufacturing they track energy costs cant investment. Major initiatives in 2001 included:

54 VISIT OUR WEB SITE www.ford.com /go /corpcit Shutdown procedures: Ford’s energy managers surveyed how plants were Putting It All Together at the Rouge reducing energy use when production has stopped (generally late The Rouge revitalization project described briefly on page 60 and in more nights and weekends) and found detail on the Web, is both showcase and proving ground for a collection room for significant improvement. of features to cut energy use and develop new energy supplies. As we By developing and implementing gain experience with the technologies, they are being adopted at our shutdown procedures, facilities plants worldwide. These features include: cut energy use by an additional A “living roof” to capture, store and clean rainwater falling on the vast 10 percent to 12 percent during assembly plant roof also reduces heat loads and improves insulation shutdown periods. Extensive use of natural lighting to cut lighting energy requirements Paint shops: Accounting for one- by 15 percent third of energy use, we have focused on measures to cut current energy “Big foot” (i.e., very large air handling units) heating and ventilating use and are working with equip- systems that are 98 percent efficient compared to 75 percent for indirect ment makers to provide lower gas-fired and 60 percent for steam energy-consuming equipment in Use of efficient lighting and power transformers the future. Continued use of combined cycle cogeneration (generation of electricity Other areas of focus include heating, and capture of waste heat for use) that reduces overall CO2 releases ventilation, compressed air use, heat We also are evaluating potential uses of fuel cell technology as part recovery and temperature setback. of the Rouge Project. All told, the energy efficiency features at the Rouge will save $ 423,800 per year at the two buildings where they will Measuring, learning and be used. sharing are part of the process Qualifying for the Energy Star IMPROVEMENT SAVINGS CO2 AVOIDED Program involved our conducting a ($) (METRIC TONS) detailed self-assessment and program • “Big Foot” heating and ventilation system $ 277,800 9,844 benchmarking against those of energy management leaders. We found that • Photo sensors turn off lights when not needed 46,000 826 we have most of the elements in place • High efficiency lamps 8,000 138 for an effective program but need • High efficiency lighting design 30,000 550 to improve in a couple of areas, • Reduced losses from power transformers 62,000 1,124 including training. We also plan to strengthen our processes for sharing TOTAL $ 423,800 12,482 best practices from one site to another. More frequent, accurate and up-to-date monitoring of energy use has helped us learn a lot about areas for potential improvement. We have begun to use remote monitoring of North American facilities’ energy use. This will allow real-time Web- based energy use tracking and supports our reduction efforts.

2001 Corporate Citizenship Report — Our Learning Journey 55 Manufacturing Performance

Focusing on Water

use as a significant environmental opportunity and set targets to improve Fig. 56.1 their water management. By the end Global Manufacturing Water Use of 1998, Ford global manufacturing plants had reduced water usage by 50

approximately 11.4 million cubic 40 meters compared with 1996. Estab- lishing further goals and tracking 30 progress, however, proved difficult 20 for many facilities because of a lack 10 of baseline data on the full range of Millions of Cubic Meters water sources and uses. 0 ’00 ’01 Setting a target to reduce water use goals, resulting in an 8.9 percent re- We know that goals and targets are duction in water use (2.8 percent on needed to drive progress. However, a per-vehicle basis), a total savings when we announced our Water of 4.1 million cubic meters of water Ford’s Sharonville, Ohio, Transmis- Conservation Initiative in mid-2000, (see Figure 56.1). Loaded into rail sion Plant slashed its process water we found we lacked the baseline data cars, this amount would make a train usage using 6-Sigma (quality man- needed to develop a meaningful goal. stretching 400 miles. For example, agement) methodologies. By inves- During 2001 we conducted pilot Ford’s Cologne, Germany, facilities tigating and monitoring process projects at several plants to pinpoint have used innovative manufacturing water usage within the plant, a all processes using water in order to techniques and recycling to reduce team identified ways to reduce identify the best opportunities to water use by about 10 percent over water usage such as process reduce water use. We also expanded five years including a 5.7 percent changes to an existing cooling our data tracking to include all water reduction from 2000 to 2001. water system. Completion of the use: purchased and non-purchased; The importance of water manage- relatively minor process changes potable (drinking water quality) and ment was brought home to Ford’s resulted in savings of 22,000 gallons nonpotable; groundwater, surface Dearborn, Michigan, headquarters per day (more than 8 million gallons water and municipal or industrial when a serious drought affected per year) of purchased water and supplies. southeast Michigan in the summer of $100,000 annually. The baseline study was used to 2001. Ford took a series of steps that establish a three-year global target to saved more than 1,900 cubic meters of reduce our water use by 3 percent by water per day, equal to the summer Though water is essential to all life on 2003 compared with 2000. Manufac- water use of 1,250 typical households. earth, in many cases it also is “free.” turing and non-manufacturing facili- Ford facilities use water from diverse ties that use in excess of 30,000 cubic …and expecting sources in a variety of ways. In some meters of water per year set individual more in the future areas (particularly where water is targets based on their needs and We have developed tools to help our scarce), water supply is a significant opportunities. facilities better measure and manage cost, but in other regions it is drawn water use as a basis for developing from rivers or water bodies at little cost. Seeing initial progress… facility-specific water conservation and Nevertheless, through the ISO 14001 Even as we have wrestled with how management plans. We also are requir- environmental management process, to measure and track progress in ing regular reporting of water use many Ford facilities identified water reducing water use, our plants have along with other key environmental data. continued to pursue their individual www.ford.com/go/corpcit/water 56 VISIT OUR WEB SITE www.ford.com /go /corpcit Clearing the Air

based on site-specific factors such as the VOC control equipment. Targets Fig. 57.1 use the grams of VOCs emitted per Ford U.S. TRI Releases square meter of surface area coated. 20 This allows us to compare a manufacturing facility that paints a Focus with 15 one that paints an Excursion. We also 10 have established goals on a company- wide basis and track performance 5 monthly. 0 We track and report on our emis- Released Millions of Pounds ’96 97 ’98 ’99 ’00 sions under the U.S. Toxic Release Inventory and the Canadian National Fig. 57.2 Ford U.S. TRI Releases Per Vehicle Pollutant Release Inventory (see Ford uses steam from a nearby Figures 57.1 through 57.4), and similar 6 industrial facility to heat a vehicle systems in Australia and Mexico. 5 paint line at its Cologne, Germany, A number of individual VOCs also are 4 assembly plant. reported under the pollutant release 3 inventories of these countries. 2

Pounds Released Pounds 1 The most important impact on air Making progress 0 quality from our manufacturing facili- toward the target ’96 ’97 ’98 ’99 ’00 ties is due to volatile organic compound Our plants are making steady progress (VOC) emissions from painting toward the targets. The upgrade of Fig. 57.3 Ford Canadian NPRI Releases* vehicles. The control equipment that paint application equipment at numer- 2000

1500 Ford’s most important impact on air 1000 quality from its manufacturing facilities is 500

due toVOC emissions from painting vehicles. Released Tonnes 0 We’ve set goals and are actively working ’96 ’97 ’98 ’99 ’00

to reduce VOC emissions. Fig. 57.4 Ford Canadian NPRI Releases* Per Vehicle reduces VOC emissions also is a signif- ous plants has reduced the quantity of 0.0035 icant energy consumer; thus, we are paint used and the associated 0.0030 looking hard at our painting processes VOC emissions. 0.0025 0.0020 to reduce both emissions and energy Our plants in North America (the use. 0.0015 United States, Canada and Mexico) 0.0010

averaged 32 grams/square meter in Released Tonnes Setting reduction targets 0.0005 2001. Using this as a baseline, we set 0.0000 We have set VOC emission reduction ’96 ’97 ’98 ’99 ’00 a target for North America of 31 *>Data have been restated to remove a Visteon plant that was “spun off” targets for each manufacturing facility and two plants that now are part of a joint venture with 25 percent grams/square meter for 2002. Ford ownership.

www.ford.com/go/corpcit/emissions 2001 Corporate Citizenship Report — Our Learning Journey 57 Manufacturing Performance

Tracking and Trimming Waste

“Solid wastes” (that include some liquids and sludges) are defined Fig. 58.1 Waste Minimization Award and their management regulated Manufacturing Waste 2001 Ford’s Lio-Ho facility was awarded the Taiwan (U.S. and Canada) on a national, state and sometimes National Industrial Waste Minimization municipal level. For some, but not Excellence Performance Award in August all wastes, there are requirements for Incidental 2001 for its design for the environment, waste Priority tracking and reporting. Thus, com- Sludge minimization and pollution prevention efforts. Metals pliance-oriented systems for waste management tend to be a diverse Packaging collection of reactive programs. We developed a baseline of waste generation for the United States and Several years ago, Ford decided Monitor Canada (see Figure 58.1). North to take a more strategic approach and American assembly plants continued develop a total waste management to increase reusable packaging use (see program (TWM). It consolidated its Total = 755,304 Tons Figure 58.2). Since 1997 these plants Packaging Materials – Paper and pulp products contracts with a small number of have cut packaging waste by more than (excluding plastics) that are used to package or waste management service suppliers wrap motor vehicle parts & accessories. half, but the waste per vehicle increased Incidental – Wastes generated by non- and asked them to share responsibility manufacturing activities, which are episodic or slightly in 2001 because of the mix of overhead in nature. for measuring, managing and reduc- vehicles processed (newer models have Monitor – Low priority wastes generated by motor ing solid wastes. This system has less associated waste—see Figure 58.3). vehicle manufacturing processes or activities. begun to produce results. Priority – High priority wastes generated from used Beginning in 2002, progress in reducing or off-specification chemicals or fuels. packaging waste will be measured by Sludge – Waste generated from various processes. Putting a management system in place the percent of parts numbers received Metals – Scrap metals in returnable packaging. The previous A key element of our system is defin- metric—volume of parts received in Fig. 58.2 ing solid wastes in categories globally returnable packaging—appropriately Volume of Parts Received in relevant in the auto industry. Ford Returnable Packaging (Global) targeted high-volume parts. The new defined 135 kinds of wastes in six 100 metric targets the large number of broad categories for TWM supplier diverse, smaller parts for conversion 80 partners to use in tracking waste to returnable packaging. 60 generation and management. As the system develops complete baseline Looking ahead

Percent 40 information, we will use it to set In implementing this program, we 20 global targets for waste reduction. have learned some of the complexities 0 of categorizing wastes in a consistent ’97 ’98 ’99 ’00 ’01 Making steady progress and meaningful way. Fig. 58.3 During 2001 we worked closely with Packaging Waste per Vehicle Gener- our TWM partners to implement our As we get higher quality data, we ated at Ford North American Plants waste categorization and tracking expect it to prove very helpful in 120 system. All TWM contractors have benchmarking and sharing best prac- 100 demonstrated good cooperation in tices, identifying additional opportunities and providing a reliable 80 supporting our data tracking system. There are some plants in new markets basis for setting targets. 60

Pounds and Premier Automotive Group plants Next year we expect to have com- 40 where TWM has not yet been establish- plete data from Mexico and global 20 ed, in some cases because of their data shortly thereafter. We will also 0 ’97 ’98 ’99 ’00 ’01 country-specific waste management put the systems in place to analyze market situation. how the wastes are managed. www.ford.com/go/corpcit/waste 58 VISIT OUR WEB SITE www.ford.com /go /corpcit Recognizing Our Impacts on Land

Accommodating nature and industry… Industry and nature are often per- ceived to be in conflict. At many of our manufacturing sites and other properties, we strive to show that we can coexist and, in some instances, enhance the wildlife, biodiversity or natural functioning of the land at our sites. There is no doubt that the construction and operation of our facilities have impacts on the land where they are located. We do not systematically measure these impacts on nature. At this stage in our Company’s A great egret is one of the migratory waterfowl and nontropical migratory growth, we are reinvesting in birds that finds food and habitat around the man-made lake at Ford Motor existing properties more often than Company’s Powertrain Operations in Taubaté, Brazil. The site was certified building new ones. by the Wildlife Habitat Council in 2000. One exception is Ford’s newest plant in Bahia, Brazil, described further on page 61, where we are planting native vegetation and trees on 7 million “Our manufacturing and office sites are more square meters of land on or adjacent than steel and concrete. They often include land to the plant property. Though the Brazil plant is perhaps that can be used for wildlife habitat and our most dramatic effort to restore education with help from Ford employees and degraded land, many of our sites partnership with other organizations.” present opportunities on a smaller scale to work with the natural features Tim O’Brien, Vice President, Ford Real Estate of the property to restore nature.

…takes partnership Ford’s Research and Engineering plant has developed a lagoon system Managing lands to improve their Center, located along the Rouge River using treated wastewater that comple- natural features requires partnership in Dearborn, Michigan, has partnered ments the park habitat by providing with experts from governmental and with nearby schools to use the certi- important shelter and breeding sites nongovernmental organizations. fied site for educational purposes for several bird species. In cooperation Nearly 40 Ford sites worldwide have including engaging the students to do with the organization SEO/BirdLife, a worked with the Wildlife Habitat research on restoration projects. The five-year plan for the total lagoon area Council assessing opportunities to facility received the Wildlife Habitat has been developed to improve the improve the site for wildlife habitat. Council’s 2001 Corporate Lands for environment for the birds. The plan Eight sites have been certified as Learning Award. includes landscaping, encouraging wildlife habitat through the Council’s In Valencia, Spain, Ford’s plant is new species, increasing the diversity rigorous review process. located very near the Natural Park of of natural fauna and providing educa- L’Albufera, a key international marsh tional and leisure activities for the and special bird protection area. The community.

www.ford.com/go/corpcit/whc 2001 Corporate Citizenship Report — Our Learning Journey 59 Sustainable Manufacturing

Is Sustainable Manufacturing an Oxymoron?

Outside of nature, it may be hard Developing a comprehensive to find examples of truly sustainable model at the Rouge manufacturing. That is why Ford In 2000 Ford laid out an ambitious plan is borrowing concepts from nature to revitalize the Rouge manufacturing to use at its manufacturing sites, complex in Dearborn, Michigan, as a including the venerable Rouge model of sustainable manufacturing. complex in Dearborn, Michigan. But The plan includes flexible, lean manu- sustainability encompasses human facturing methods at a new assembly aspects as well. Is the plant a good plant, features designed to protect the place to work? Does it support the safety and promote the well-being of people who work there and help them employees and energy efficiency and grow? Are the products made there habitat elements (described in more and the processes used to make them detail in Ford 2000 Corporate sustainable? Citizenship report; see page 55 for Natural processes evolve toward summary of energy features). The greater interconnectedness, efficiency project is taking place in consultation and resiliency. Our model of sustain- with community groups and within able manufacturing also includes lean, a landscape context linked to other flexible, manufacturing processes restoration and historic preservation that provide flexibility to respond to efforts in the Rouge River Basin. rapidly changing global conditions. Ford is proceeding with implemen- These processes cut waste of materials, tation of the plan. Construction began money and time and help drive a during 2001 on the new assembly highly motivated and skilled work- plant. Preliminary results of studies to force. Many include seamless inte- test the effectiveness of using plants to gration with suppliers located at or clean up impacted soil from the coke adjacent to the Ford site. oven area (slated for demolition) are We see these elements coming promising. The “green roof” design for together in exciting ways at facilities the assembly plant, composed of living around the world—from the Rouge plants, has been modified to make it to Chicago, to Cologne and Brazil. lighter and easier to build. A test of the paving system that allows rainwater Although these features are not yet to pass through the porous pavement standard practice at all manufacturing and be cleansed by soil is working sites, we are consciously sharing well. Drivers who use the paved area lessons learned and best practices. particularly appreciate that it does The examples below show some of not ice over in the winter months like the learning that is taking place as adjacent, nonporous areas. management of other sites works with the Rouge team, in particular, to adopt The Rouge Project won an innovations that will work at their site. Environmental Achievement Award from the Environmental Management Our success in adopting a sustain- Association in early 2002. able manufacturing model that encompasses people, products and processes, Using stakeholder input to and works with nature, is essential to shape plans in Chicago our revitalization as an efficient and Ford’s Torrence Avenue Assembly profitable corporate citizen. Plant is located in the heart of

60 VISIT OUR WEB SITE www.ford.com /go /corpcit Chicago’s Lake Calumet area, an area of heavy industry past and present (much now abandoned), which also has valuable, though degraded, wetland resources. Since late 1999, Ford has participated in a “good neighbor dialogue” initially convened by the U.S. EPA to address the interests of government agencies, community and environmental NGO stakeholders in the cleanup and redevelopment of the area. Ford met in a facilitated dialogue to learn about those interests that included pollution prevention, re- Readers of one of Brazil’s leading business newspapers, Valor Econômico, duction of air emissions and odors, chose the Ford Northeast Complex Plant in Bahia, Brazil, as winner of the worker and community safety Social Value Award in the paper’s “Respect for Environment” category. and employment. Ford agreed to locate a $400 million supplier park adjacent to the assembly Restoring Atlantic meters, and devotes 7 million square plant, leveraging an additional $85 Rain Forest in Brazil meters—both within and adjacent million investment by local and Ford’s newest manufacturing facility, to the manufacturing areas—to state governments for infrastructure the Complexo Industrial Ford recovery efforts, with the planting improvements. The supplier park will Nordeste (Ford Northeast Industrial of native vegetation and trees. The design of the complex uses natural light and ventilation for “In revitalizing the Rouge, Ford is demonstrating energy efficiency and favors natural materials available within the its commitment to a sustainable manufacturing region, such as granite and wood model of ‘People, Products and Processes’ of certified origin. Rainwater is collected and discharged to three because it makes environmental, social new lakes designed to control runoff and economic sense.” and provide wildlife habitat. Anne Stevens The site is testing a pilot system Ford Vice President, North American Vehicle Operations of constructed wetlands that use soil planted with rice, water lily and cattail culture to purify the produc- incorporate a number of “green” Complex), is located near the city of tion facility’s sanitary waste water. features including energy efficiency Camaçari, in the State of Bahia, Brazil. All sewage is planned to be treated measures, native landscaping and The complex, capable of producing as such, with no help from public diesel particulate emission reductions. 250,000 vehicles per year, is located sewage systems, and the resulting It also will establish the Calumet within a developing industrial district purified water will be used to irri- Environmental Center and create that included areas where topsoil and gate the facility’s gardens. Suppliers programming, scientific research and vegetation had been removed. are found on-site and are an integrated part of the production and educational outreach programs for The complex occupies a tract of communication processes. people throughout the area. land measuring 4.7 million square

2001 Corporate Citizenship Report — Our Learning Journey 61 Policy Performance

Public Policy Review

Ford Motor Company is an active par- Though we engaged in a broad spec- new ways to improve product and ticipant in the development of a wide trum of public policy issues, our major pedestrian safety. array of public policies. We support areas of focus in 2001 were: Climate change and CO2 emissions local, national and international public Safety continue to be very complex and chal- policy proceedings in many ways Climate change lenging issues for the Company. including: We’ve demonstrated our continued Fuel economy Providing scientific, economic and commitment to the issue by pledging environmental research to public Tailpipe emissions standards to voluntarily reduce the amount of officials and other interested parties European vehicle distribution energy our global plants and facilities Supporting public education European end-of-life vehicle use on a production-normalized basis, campaigns on issues such as safety requirements by being the first automobile manu facturer to participate in the U.K. and environmental awareness Pension management and 401K plans Emissions Trading Scheme and the Participating in trade associations Health care issues (e.g., prescription Chicago Climate Exchange pilot proj- and other coalitions engaged in drug benefits, universal coverage, etc.) ects to design a voluntary U.S. trading public policy advocacy activities Trade policy program. We also are initiating a study Conducting direct lobbying in New Delhi, India, to research Clean Corporate restructuring (e.g., campaigns Development Mechanisms for the plant closures, tax abatements and transportation sector. Our Governmental Affairs office, incentives, etc.) which is a part of our Corporate Affairs We understand that more needs to New technology acceleration initia- organization, has primary responsi- be done, and we will continue to focus tives such as Freedom CAR, con- bility for tracking emerging issues, our efforts on advanced vehicle tech- sumer tax incentives and research developing public policy positions and nology research, cooperative partner- and development partnerships supporting Ford’s participation in the ships with leading environmental public policy process. The team has Developing policies in these key groups and universities, and exploring staff in numerous key locations around areas is an important process. We new policy options and flexible mech- the globe. Governmental Affairs weigh the long-term impacts of our anisms to develop long-term solutions. works closely with other offices in decisions with the consequences any Corporate Affairs including Environ- policy may have on our business, Working with associations ment and Safety Engineering, customers, shareholders and company We are members of several automotive, Corporate Governance, Ford Motor values and reputation. We have manufacturing and trade associations Company Fund and PublicAffairs. broken new ground with a variety that are involved globally in the devel- of policy efforts such as working to opment and implementation of public Identifying the issues create consumer-based tax incentives policy issues. Our public policy activities center on for fuel efficient advanced technology We also are members of business issues that affect our business. These vehicles such as hybrids, fuel cells, organizations focused on sustainability issues can impact our global opera- electric vehicles and alternative and corporate responsibility including tions, a particular market or specific vehicles in the United States. We Business for Social Responsibility, the activities in which our plants, suppliers developed and negotiated the imple- Prince of Wales International Business or dealers operate. mentation of a significant CO2 reduc- Leaders Forum and the World Business tion target in Europe and negotiated Council for Sustainable Development.

www.ford.com/go/corpcit/gao www.ford.com/go/corpcit/eurodistrib www.ford.com/go/corpcit/euroend 62 VISIT OUR WEB SITE www.ford.com /go /corpcit Making political contributions The Ford Motor Company Civic Action Vehicle Fuel Consumption Fund, supported by voluntary donations from Ford employees, gives campaign In 2001–02, corporate average fuel economy (CAFE) standards were a contributions to national, state and local controversial issue in the U.S. Congress. CAFE is a weighted average that political candidates from both major reflects what a manufacturer is able to sell, not merely what vehicles it political parties in the United States. offers. For example, an automaker can increase the fuel efficiency of all of A list of contributions made during its vehicles, but, if it sells a higher number of large cars or trucks, its CAFE 2000-01 can be viewed at www.fec.gov. average may still decline. This means that full-line manufacturers like Looking forward Ford that sell a significant number of full-size cars, performance cars, pickups, minivans and SUVs have a significantly higher CAFE task than We are committed to improving our manufacturers that produce primarily smaller vehicles. As a result, we relationships and developing our opposed legislation that would not have taken these competitive impacts public policies, and we will continue into consideration and would have selected fuel economy (CAFE) stan- our discussions with a variety of stake- dards through a political, rather than a scientific, process. We instead holders in order to achieve our business supported alternative legislation that requires the scientists and experts goals and our corporate citizenship at the National Highway Traffic Safety Administration (NHTSA), the objectives. We will continue to address government agency with jurisdiction over CAFE, to establish new fuel societal problems in an innovative and economy standards at the maximum feasible levels after considering all cost-effective manner while reacting the potential employment, safety, economic, and competitive tradeoffs responsibly to business and economic and impacts. conditions. We will work cooperatively with governments around the world to While many of our stakeholders supported the position we took, others address issues of societal concern and did not, believing that the CAFE standards could be met using existing continue our efforts to engage and technologies and that CAFE would force greater environmental innovation. deepen our relationships with key The House and Senate passed legislation that directs NHTSA to estab- stakeholders. As alternatives to regula- lish new fuel economy standards and offers new customer tax incentives tory mandates, we will continue to for the purchase of advanced technology vehicles. We support perform- emphasize innovation, advanced ance-based customer tax incentives because they will encourage the technology, and flexible mechanisms acceptance of fuel-efficient technology vehicles, and we will work as long-term solutions to address with NHTSA throughout its rulemaking process. environmental and safety issues.

www.ford.com/go/corpcit/gao 2001 Corporate Citizenship Report — Our Learning Journey 63 STAYING CONNECTED

Listening and Learning

We are committed to continuous thought it was important and appro- Second, while we reported on a improvement in our corporate priate for Ford to report on its en- fairly comprehensive set of environ- citizenship reporting. vironmental, social and economic mental, social and economic issues, To prepare this report, we started performance. we did not have clear goals, strategies, by reviewing the feedback we received We also heard from several advo- performance targets and metrics for on our 2000 report and benchmarking cacy organizations. Most thought Ford managing these across the full range leadership and competitors’ reports. had done a good job of discussing the of issues. Although we have not dot- issues of climate change and human ted all the “i”s and crossed all our Reviewing feedback rights and setting a course for action. “t”s, we have tried to be very clear on the 2000 Report However, they thought action was about where we have goals, strategies, We received many comments about needed and that their final opinion performance targets and metrics, and the 2000 report from our employees, about the Company would depend on where we don’t. Over the next few business partners and advocacy organ- its performance, rather than its words. years we hope to fill in these gaps. izations. This feedback came to us We also got very detailed feedback Third, we need to continue directly—through e-mails, phone calls, on the report from SustainAbility in expanding distribution of this report. post cards and letters. We also got the form of a benchmarking report. In a Web survey we commissioned indirect feedback through media in the days following the release of stories and public opinion research Improving our 2001 Report the report, we found that 10 percent we commissioned on the report. All of this feedback helped us identify of all respondents had heard of the The majority of the feedback from some key areas for improvement in report, and of those who were aware our employees was positive. Most the 2001 report. of the report, 92 percent thought that discussing the issues was a good idea, First, people thought it was impor- and 40 percent had an improved tant to further explore the issue of opinion of the Company. “I think it is important that they sustainability and what it means for [college students] understand our business. We have tried to do this Planning for our 2002 Report many companies talk social with our discussion of sustainable In the next report, we will broaden responsibility. The fact that Ford mobility on pages 14 to 15, where we the scope and depth of the report in share the current state of our thinking is using GRI standards sets them line with the GRI guidelines and about sustainability, some of the apart somewhat. Independent consider: organizations setting standards lessons we learned through our participation in the WBCSD sustainable Expanding coverage to all of the for companies to follow may be entities in Ford Motor Company the difference. … with reference mobility project and how that is influ- encing our thinking on climate change Further refining performance to your publication Connecting and technology development. reporting so progress is clear with Society … I have reviewed this document and would like to Adding data about leadership and competitor activities to promote incorporate it in my class.” Your comments… benchmarking and comparison Steven B. Gilbert are extremely important to us as Continuing to explore verification Department of we shape future reports. Please send us your thoughts on the Enhancing the Web version of our Marketing/Management enclosed comment card or via report. Northwest Missouri State e-mail at [email protected] or University the Ford Web site, www.ford.com.

www.sustainability.com 64 VISIT OUR WEB SITE www.ford.com /go /corpcit Index to Global Reporting Initiative Indicators Below is a cross-reference between indicators recommended by the Global Ford Reports and Reporting Initiative Sustainability Reporting Guidelines (June 2001) and the Web Resources pages where they can be found in this report. Other Ford reports, including those listed below, can be obtained from the following sources: Ford CEO Statement GRI Section 1 Ford Motor Company Annual Report 2 Letter from Ford Chairman and CEO William Clay Ford, Jr. www.ford.com S.E.C. Form 10-K Annual Reports Corporate Overview GRI Section 2 S.E.C. Form 10-Q 5 Operating Highlights Quarterly Reports Proxy Statement Quarterly Financial Executive Summary Results Announcements and Key Indicators GRI Section 3 Ford Motor Company Fund Annual Report 5 Operating Highlights www.ford.com 19 Making Steady Progress Available from: Ford Motor Company Shareholder Relations One American Road Vision and Strategy GRI Section 4 Dearborn, MI 48126-2798 7 Introduction (800) 555-5259 (U.S. and Canada) 8 Climate Change (313) 845-8540 (elsewhere) 10 Human Rights Mazda’s Environmental Report 2001 12 Business Principles www.mazda.com 14 Sustainable Mobility Jaguar’s Environmental 16 Partnerships and Technology Report 2001 www.jaguar.com/uk

Volvo Corporate Policies, Organization and Citizenship Report 2001 Management Systems www.citizenship.volvocars.com and Performance GRI Sections 5&6 Other Ford Resources: 20 Stakeholder Relationships Envirodrive (environmental 40 Product Performance information on U.S. products) www.fordenvirodrive.com 53 Manufacturing Performance TH!NK 60 Sustainable Manufacturing: A Special Section www.thinkmobility.com 62 Public Policy Review Ford Supplier Network fsn.ford.com

2001 Corporate Citizenship Report — Our Learning Journey 65 As we at Ford Motor Company look forward to our 100th anniversary in 2003, we feel more connected than ever to our heritage. Throughout this report, you will find images of Ford Motor Company people, products and processes from the past and present, as well as a few that hint at the shape of the future.

This report is printed on recycled paper, using non-toxic soy-based inks.

TM Strategic Issues Update

www.ford.com/go/corpcit/climate1