Ford Motor Company today announced plans to further reduce its capacity and work force, and ramp up new product introductions as it accelerates its North America “Way Forward” turnaround plan:

• Operating costs to be reduced by approximately $5 billion, including:
• Salaried-related work force reduced by a third, the equivalent of about 14,000 positions.
• Ford, UAW leadership agree on buyout offers for all U.S. Ford and ACH hourly employees.
• Further manufacturing capacity reductions planned.
• All ACH operations to be sold or closed by the end of 2008.
• More products to be delivered faster, including:
• 70 percent of Ford, Lincoln and Mercury products by volume will be new or significantly upgraded between now and the end of 2008.
• Ford’s truck leadership is fortified.
• Growth segments, including crossovers, are prioritized.
• All-new Ford full-size crossover to go on sale in 2008.

Ford Motor Company’s financial outlook is revised:

• Full-year automotive profitability in North America not expected before 2009.
• South America and Ford of Europe still expected to be solidly profitable in 2006. However, full-year operating losses now expected in 2006 for Asia Pacific and Africa, and the Premier Automotive Group.
• Ford Motor Company’s 2006 year-end liquidity is expected to include automotive gross cash of about $20 billion, including the effects of $3.4 billion of VEBA.
• Ford Motor Company’s Board indicates that it will suspend payment of the quarterly dividend on its common and Class B Stock beginning in the fourth quarter of 2006.

Product-Led Turnaround

• 70 percent of Ford, Lincoln and Mercury products by volume will be new or significantly upgraded from today through the end of 2008. The new lineup builds on Ford’s strength as America’s truck leader while expanding in growth segments, such as crossovers.
• Ford will introduce an all-new full-size crossover based on the Ford Fairlane concept. The seven-passenger vehicle for modern families goes on sale in 2008 and will be produced at Ford’s Oakville ( Ontario, Canada) Assembly Plant.
• Ford will continue to lead the American truck market with a new Super Duty pickup confirmed to go on sale in early 2007 and an all-new F-150 pickup confirmed to go on sale in 2008. The vehicles boast powertrain, design and feature upgrades.
• Ford will continue to lead America’s sports car market with new Mustang derivatives each year.
• The new Lincoln MKS flagship sedan will go on sale in 2008 – packed with more technology and features than any prior Lincoln, including all-wheel drive. Current plans are to produce the vehicle at the company’s Chicago Assembly Plant.
• Lincoln will continue offering the Lincoln Town Car to meet ongoing demand. After assembly ends at Ford’s Wixom ( Mich.) Assembly Plant in 2007, Ford intends to move Town Car production to Ford’s St. Thomas (Ontario, Canada) Assembly Plant. St. Thomas will be reduced to one shift of production, as previously was announced.
• Product development work is intensifying through 2008 on creating new small cars and even more crossovers that will go on sale in the future. These vehicles will be based on the company’s global vehicle architectures, including “B” and “C” platforms not presently used in North America.
• Major investments continue in new gasoline, flexible-fuel, diesel, hydrogen and hybrid powertrains, including additional E-85 ethanol-powered and hybrid vehicles on the road by the end of 2008. In addition, two out of every three Ford, Lincoln and Mercury vehicles will be offered with fuel-saving 6-speed transmission technology by the end of 2008.
• The new products and a voluntary consolidation of the Ford and Lincoln Mercury dealer network are designed to significantly improve the dealers’ through-put and profitability by the end of 2008.

Accelerated Cost Savings, Leaner Structure, Improved Efficiency

• Compared with 2005, annual operating costs will be reduced by about $5 billion by the end of 2008.
• Salaried-related costs will be reduced through the elimination of the equivalent of about 14,000 salaried-related positions, which represents approximately a third of Ford’s North American salaried work force. The reduction includes the equivalent of 4,000 positions eliminated in the first quarter of 2006. The additional reductions will be achieved through early retirements, voluntary separations and, if necessary, involuntary separations – with most employees expected to depart by the end of the first quarter in 2007.
• An agreement with the UAW will expand early retirement offers and separation packages to all Ford U.S. hourly employees, including Ford employees at the company’s ACH plants. Employees will begin receiving details by mid-October, and those accepting offers will leave the company by September 2007.
• Ford will accelerate by four years its previously announced goal of reducing 25,000 to 30,000 North American manufacturing employees by the end of 2012. The reductions now will be completed by the end of 2008.
• The sale or closure of all ACH facilities by the end of 2008 will result in additional employee reductions.
• Ford continues to work with the UAW to improve the competitiveness of its U.S. manufacturing facilities. As a result, new competitive operating agreements have been ratified by UAW locals in 30 different U.S. Ford and ACH facilities – and nearly $600 million in annual savings is projected to be realized.

Capacity Further Aligned with Consumer Demand

• North America manufacturing capacity is being adjusted to 3.6 million units by the end of 2008, down 26 percent versus 2005 – in line with consumer demand and as announced earlier.
• Nine facilities will be idled and cease production through 2008, including seven already announced. The two additional plants are the Maumee ( Ohio) Stamping Plant and the Essex ( Ontario, Canada) Engine Plant.
• Ford’s Norfolk ( Va.) Assembly Plant will be idled a year earlier than planned, and a shift reduction, in advance of idling the facilities, now is planned at Norfolk and Twin Cities ( Minn.) Assembly.
• Facilities affected by the end of 2008 include the following:
• Atlanta Assembly – to be idled in October 2006
• Batavia Transmission – to be idled in 2008
• Essex Engine – to cease operations in 2007
• Maumee Stamping – intended to be idled in 2008
• Norfolk Assembly – to be idled in 2007, a year earlier than previously planned, with a shift reduction planned in January 2007
• St. Louis Assembly – already idled in March 2006
• Twin Cities Assembly – to be idled in 2008, with a shift reduction planned in 2007
• Windsor Casting – to be idled in 2007
• Wixom Assembly – to be idled in 2007
• Dearborn Truck Plant will add a third crew, beginning in 2007, for F-150 truck production.
• All ACH operations will be sold or closed by the end of 2008.
• Including Maumee Stamping and Essex Engine, Ford has announced plans to cease production at 16 North American manufacturing facilities by the end of 2012, including seven assembly plants.

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