Sustainability 2011/12

Financial Health

Product Competitiveness

Our financial turnaround has been based largely on our ability to deliver high-quality, innovative and desirable products everywhere we operate, in both mature and rapidly growing markets. To further our progress, we are continually improving quality and customer satisfaction and anticipating and responding to changes in customer demand. We have aligned our product development, manufacturing and marketing organizations worldwide to deliver the right products to the right markets as efficiently as possible.

We’re changing the way people think about midsize cars. We started this journey in 2006 with an all-new Ford Fusion that was designed to win market share from popular Japanese midsize sedans. In the years since, we have continued to improve the Fusion, adding a hybrid model that is bringing more new buyers to the brand than any other Ford vehicle.

In early 2012, we introduced our latest – and most groundbreaking – model, which will influence our product family moving forward. Known as the Mondeo in Asia and Europe, where it will be introduced in 2013, the 2013 model year Ford Fusion demonstrates our globalized approach to make all forms of the vehicle on the same assembly lines. This gives us the ability to make what customers want, and to make them affordably, too. Moreover, the new Fusion epitomizes our new globalized platform by giving our customers the power of choice: It’s the first sedan to offer the full range of fuel-efficient EcoBoost® engines, hybrid and plug-in hybrid choices – each with leading fuel efficiency.

The 2011 Ford Fiesta

The 2011 Ford Fiesta

The all-new Fusion is the latest in a series of vehicles – including the 2011 Ford Fiesta subcompact and 2012 Ford Focus small car – developed to offer improved fuel economy alongside helpful driver assist technologies. Under the ONE Ford approach, we brought our global teams together with a goal of developing a midsize car with several key attributes: revolutionary design; leading fuel economy; and technologies that can help make our customers safer and better drivers.

The new Fusion builds upon our commitment to be a leader in fuel-efficient cars and trucks, with each new model brought to market. The Fusion Energi – the plug-in electric version – is expected to deliver more than 100 MPGe. (MPGe is a mile-per-gallon equivalency metric for electrified vehicles.) At the time of the announcement, this was 7 to 12 MPGes more than the projected efficiency of competitor plug-in hybrid models. (Read more on our electrification approach.)

The new Ford Fusion garnered the “Best in Show” award at the North American International Auto Show in Detroit in early January 2012 – a rare win for a midsize sedan.

Meanwhile, our new Focus Electric, which we began producing in 2011, was the first five-passenger, all-electric car to achieve more than 100 MPGe, and it offers faster charging than competitor vehicles with comparably sized batteries. The Focus Electric is one of the headliners of our transformed lineup, one-third of which will feature a model with 40 mpg or more in 2012. Our rollout of electrified vehicles began in December 2010 with the 2011 Ford Transit Connect Electric (a small commercial van). In addition to the Focus Electric and Fusion Hybrid, other 40 mpg vehicles include the Fiesta SFE, the Focus SFE, the C-MAX Hybrid and the C-MAX Energi.

We plan to triple production capacity of electrified vehicles in the U.S. to more than 100,000 by 2013. We are boosting global production of smaller-sized vehicles, such as the Fiesta, which debuted in the U.S. in 2010. And we are expanding our lineup of vehicles with affordable advanced technologies, such as the EcoBoost. Indeed, we’re on track to offer EcoBoost on nearly 80 percent of Ford global vehicles by 2013. That’s more than 1.5 million engines EcoBoost-equipped vehicles annually around the globe.

Fuel economy is the top purchase consideration for new vehicles. Nearly 45 percent of customers say fuel economy is their highest priority, according to a Ford survey of Americans in 36 cities in the fall of 2011.

Our Sustainable Technologies and Alternative Fuels Plan, which highlights how we will meet our product carbon dioxide reduction goal, has positioned us to lead in our industry and will help us meet new regulatory emissions standards. In the U.S., government regulations will require approximately 35.5 mpg (fleet average) by the 2016 model year – a 30 percent improvement from the 27 mpg required for 2011 models.

The size and fuel economy of our light trucks and utilities have also been changing dramatically. Our all-new Ford Escape, revealed in 2011, is Ford’s first SUV to be available with two fuel-efficient EcoBoost engines, to deliver class-leading fuel economy and performance. (And like many of our other vehicles, the Escape also boasts even more sustainable materials than its predecessor, such as carpeting made from recycled plastic bottles; soy foam in the seats and restraints; and cotton recycled from jeans, sweaters and T-shirts for sound-absorption material.) Our revamped Ford Explorer, meanwhile, gets up to 30 percent better gas mileage than the prior model. We also began offering in 2011 our first full-size pickup built with a smaller, turbocharged engine.

As consumer demand for smaller vehicles increases, we need to provide the vehicles people want, and provide them profitably, in order to remain a sustainable business.

We have realigned our capabilities to deliver better products faster than ever before. We are continuing our investment in flexible manufacturing, which reduces costs for each new product and lets us shift production at an individual plant from model to model to address changes in customer demand quickly. Nearly all of our U.S. assembly plants will have flexible body shops by 2012, to enable rapid responses to changing consumer demands. And, nearly half of our U.S. transmission and engine plants will be flexible, capable of manufacturing various combinations of transmission and engine families.

By 2013, we expect that more than 85 percent of our global volume will be built on nine core platforms.

Virtual Manufacturing

What is virtual manufacturing? Think of it as a key enabler to quickly launching new products. Virtual manufacturing technology allows us to quickly add various models into an existing facility – or to reconfigure an existing facility to produce a new model. Every new product is first “built” in a virtual manufacturing plant, which contains every tool, station, robot and conveyor, all created via three-dimensional CAD data. We were the first automaker in North America to use a new virtual technology that allowed engineers to “see” unwanted sounds and eliminate them during vehicle development, to further reduce in-vehicle noise. Thanks to virtual manufacturing, product development time is approximately 14 months shorter than it was in 2004.