Ford Flex, Lincoln MKS hit the streets - Blue Oval Connect

[Pages:24]NASCAR STAR CARL EDWARDS ANSWERS OUR QUESTIONS

June 2008

Ford Flex, Lincoln MKS

hit the

streets

WORKING TOGETHER

Powertrain and product teams use ONE Ford behaviors for success

FRIEND TO FRIEND

TV ad subject enjoys her test drive so much, she buys a new Edge

inside this issue news briefs

9 Flex, MKS debut

Ford releases two summer blockbusters ? the Ford Flex and the Lincoln MKS.

3 Sales report

The monthly sales figures show Ford's strengths, weaknesses in the market.

4 Ford responds

Company reacts quickly to changing market, will adjust production and staffing.

5 ONE employees

Teams demonstrate ONE Team behavior to help achieve the goals of the plan.

6 Happy convert

Customer appearing in new Ford commercials is so impressed, she buys one.

7 Drive smart

Ford engineers visit conventions, stores to get ideas for new product features.

15 Drive green

New transmission cuts emissions, improves fuel economy and acceleration.

17 Carl Edwards

NASCAR star for Ford answers questions about his racing, hobbies and team spirit.

18 Global notes

Focus boosts Euro sales, Ford rushes in aid, new Kuga set for splash.

20 Back page

New feature quotes reviewers, corrals nine-millionth Mustang, gets clipped.

Due to summer shutdowns, there will be no July issue of FORD World. The next issue will be the August edition.

New Focus Coupe debuts on American Idol

A sporty coupe version of the 2009 Ford Focus debuted on

the top-rated American Idol show on May 14. The new coupe

features new front and rear fascias, including a lower front fascia

with a larger opening that echoes the treatment on the coming

subcompact Fiesta. Also standard are new fog lights, a dark

2009 Ford Focus

chrome grille and dark chrome headlamp accents, 17-inch wheels and a sport-tuned exhaust.

Ford completes sale of Jaguar Land Rover to Tata Motors

Ford Motor Company has completed the sale of Jaguar Land Rover to Tata Motors. The sale, for U.S. $2.3 billion, is the culmination of Ford's decision to explore strategic options for Jaguar Land Rover as it accelerates its focus on its core Ford brand and its "One Ford" global transformation. It also allows Jaguar Land Rover to focus on delivering what is best for their business. As part of the deal, Ford will continue to supply Jaguar Land Rover with engines, stamping and technologies.

Kelley Blue Book names Flex a "Best Road Trip Vehicle"

The editors at Kelley Blue Book's have named the 2009 Ford

Flex as one of their "Top Ten Best New Road Trip Vehicles." Editors said

"the functionality, cargo capacity and interior space of the Ford Flex,

coupled with its high feature set, make it a pretty ideal cross-country

commuting vehicle.... It's the kind of vehicle that you could put lots and

lots of miles on in a day and then not feel fatigued in at the end." Turn

to page 9 for more on the Flex, which goes on sale this summer.

Ford Flex

Consumer experts rank Ford equal to best in total quality

Ford is neck-and-neck with Toyota in total quality, says a new report by San Diego-based Strategic Vision. The independent research firm found the two automakers tied for topping the most segments in its Total Quality Index (TQI). Top Ford vehicles are the Ford Edge, the Ford Mustang convertible, the Ford F-250/350 and the Mercury Sable. The Volvo C30 also topped its segment and the Land Rover LR2 tied with the Lexis RX 350 in its class. "Ford is back, establishing its vehicle quality in the hearts and minds of its customers," said Ford F-250 Alexander Edward, whose firm's index measured new vehicle satisfaction among 20,600 buyers.

Six Ford vehicles top the list in another quality survey

The Ford Edge, Ford Explorer, Ford Explorer Sport Trac, Ford Taurus, Mercury Milan and Lincoln Mark

LT topped or tied for first in six award segments in the 2008 Vehicle Satisfaction Awards (VSA) as

measured by the research firm AutoPacific Inc. The firm's VSA is an industry benchmark for objectively measuring how satisfied owners are

You can also get Ford World online

with their new cars or light trucks in 46 areas

Internally, visit:

related to operation, comfort, safety and overall fcn.

experience. The data was collected from buy-

Externally, U.S. employees

ers and lessees of 2008 vehicles acquired from and retirees can visit:

September through December 2007.

employees.

Ford world

Publisher: Karen Hampton Associate Publisher: Sara Tatchio Managing Editor: Robert Musial Contributing Editor: Jenn Corney Advertising Coordinator: John Ribbing Distribution: Tamara Neal, Neeley Edelman

Graphic Designers:Mike Mullen, Julie Yeiter Image Coordinator: Brian Wybenga Copy Editor: Floyd Opperman Writers: John Fossen, Chris Rahi Kassab, Rebecca Kavanagh, Robert Musial, Todd Nissen, Kristopher Spencer, Jessica Thiringer, Dan Zacharias Photographers: Keith Tolman, Sam VarnHagen

Fax: (313) 845-0179 Editorial: (313) 206-4679 Advertising: (313) 594-1840 Address Changes: (313) 322-2955

No portion of this magazine may be reproduced without prior written consent of FORD World. Many items advertised in FORD World are available through retail organizations and establishments not connected with Ford Motor Company. Availability, price, safety, quality and durability of these items rest solely with the respective manufacturers and their sales organizations. Ford assumes no responsibility for their use.

FORD World is available online at Employee Network, employees.. The magazine is available monthly in racks at all Ford facilities in the U.S. and Canada,

and mailed monthly to retirees. To save postage costs, retirees may opt out of mail delivery at FWINFO@.

FORD World June 2008 1

Technical perfection, automotive passion.

featuring

PREMIUM ATTITUDE

CONCEPT CAR

Faurecia Tech Day

JUNE 11 & 12, 2008 Ford PDC Showroom

+ MORE THAN 100 INNOVATIONS IN:

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Ford employees only, please. 2 FORD World June 2008



m o n t h ly s a l e s

Focus, Fusion sell strong in May, F-Series down

By Robert Musial

FORD World

U.S. sales of the Ford Focus soared to a record 32,579 units in May, up 53 percent over a year ago, as customers turned to smaller, more fuel-efficient vehicles.

The rise marked only the second time in the car's nine-year history that more than 30,000 units were sold in one month. The first time was in October 2001, in response to zero percent financing.

"This is a strong statement about demand for Ford's newest small car," said Jim Farley, Ford group vice president, Marketing and Communications. "Our dealers are selling the Focus at unprecedented rates, which puts it in the same league as the industry's best-selling small cars."

Ford Fusion sales were also the highest for any month ever, up 27 percent from a year ago. Its stablemate, the Mercury Milan, also posted higher retail sales as did the Mercury Sable.

"Our small and midsized cars are outperforming the industry, and we're only just beginning," Farley said.

Late this year, the redesigned Fusion, Milan and Lincoln MKZ go into production and the Fusion and Milan will also offer new hybrid versions. In addition, Ford's global B-sized car, the Ford Fiesta, will be produced in North America starting in early 2010. Two models, a sedan and a hatchback, will be offered here to meet the growing demand for small cars.

Ford, Lincoln and Mercury car sales to retail customers were up 20 percent in May. Total car sales, including those to fleet customers, were up 4 percent.

Sales of crossovers were lower last month but remained strong as the Ford Escape and Ford Edge, Mercury Mariner and Lincoln MKX helped the company's crossovers continue to outpace the industry. Once again, the Edge was the top-selling midsized crossover in the market.

The sales gains in small and midsize cars helped moderate the sharp declines in traditional SUVs (down 44 percent), trucks and vans (down 29 percent) and in sales to daily rental companies (down 30 percent).

As an indication of the rapid and seismic shift in consumer preferences to smaller vehicles, four cars outsold the Ford F-Series in May, though it remains the industry's best-selling truck. The F-Series sold 42,973 units to remain the best-selling vehicle year-to-date, though it was eclipsed by the Honda Civic (53,299 units), the Toyota Corolla (52,826), the Toyota Camry (51,291) and the Honda Accord (43,728) in May.

In total, Ford, Lincoln and Mercury sales were down 16 percent. General Motors recorded a 28 percent drop in sales in May while Toyota declined 4 percent.

Vehicle Sales

2008 May Year-to-Date U.S. Top-Selling Cars and Trucks

Rank/Nameplate

Units Sold

1 Ford F-Series

235,924

2 Toyota Camry

198,309

3 Chevrolet Silverado 197,030

4 Honda Accord

166,158

5 Honda Civic

164,994

6 Toyota Corolla/Matrix 152,308

7 Nissan Altima

133,465

8 Chevrolet Impala

122,281

9 Dodge RAM

112,795

10 Ford Focus

105,499

11 Chevrolet Cobalt

93,362

12 Honda CR-V

89,017

13 Toyota Prius

79,675

14 Ford Escape

76,966

15 Chevrolet Malibu

74,925

16 Ford Fusion

73,197

17 Toyota Tacoma

72,704

18 Pontiac G6

71,062

19 GMC Sierra

70,765

20 Toyota Tundra

66,278

21 Ford Econoline

63,869

22 Toyota RAV4

61,919

23 Dodge Caravan

61,591

24 Honda Odyssey

59,987

25 Ford Edge

58,734

33 Mazda3

49,129

38 Ford Mustang

44,160

39 Ford Explorer

43,116

Source: Manufacturers' Reports

U.S. Market Share ? 2008 Year-to-Date

MARKET SHARE PERCENTAGE

0.5 25%

20

15

10

5

0 15.8%

Source: Manufacturers' Reports

1.8 21.1%

1.6 11.8%

0.9 16.5%

1.3 10.3%

OTHER

0.7

1.0

7.1%

17.4%

FORD World June 2008 3

Ford responds to fast-changing market

By Robert Musial

FORD World

Last month, Ford Motor Company became the first domestic automaker to respond comprehensively to a weakened U.S. economy, an accelerating shift to smaller cars and crossovers driven by soaring fuel prices and a rapid increase in the price of steel and other commodities.

To deal with what company leaders see as permanent changes in the business, Ford is increasing production of its hot-selling Ford Focus, Fusion, Edge and Escape models and their variants, cutting production of large trucks and SUVs and will make reductions in U.S. personnel and other salary-related costs.

President and CEO Alan Mulally believes the tipping point for the business came when the price of gasoline edged above U.S. $3.60 a gallon ? and kept going up ? causing a market shift to smaller vehicles in a few short weeks.

Along with rising fuel costs as oil rose from an average of $72 a barrel in 2007 to more than $133 a barrel in mid-May, manufacturers are facing skyrocketing costs for commodities, the raw materials used in production. Among the most striking of these are the spot prices for steel, which doubled in less than six months, from $531 a ton to $1,060 a ton in mid-May.

President and CEO Alan Mulally

Mulally noted that, due to worldwide demand, it was the first time in history that commodity prices rose as the U.S. economy slowed down. "It's our assessment that we are facing a structural change, not a cyclical one," he said.

By sticking to the ONE Ford plan and leveraging its global assets, Ford will come through this and emerge stronger, he said.

Detailed plans on staffing and production will be announced in July, with most reductions being completed by August.

The combined economic situation also forced Ford to back off its earlier promise to achieve profitability in 2009. It now appears that the company may break even next year.

Looking for new ways to stamped, a process known as material utilization development ? or MUD.

buy steel, commodities

In addition, purchasing teams are working to simplify Ford's commodity

By Todd Nissen FORD World

approach by establishing global steel specifications.

Meantime, work continues on

As steel prices surge to record levels, global Ford teams are finding new ways to buy steel. Steel

looking for new ways to reduce consumption, as well as buy prices are typically quoted on a

material more cost effectively. "With the rapid increases in steel prices across the industry,

floating "spot" basis, meaning the price for shorter term contracts. Large

Tony Brown

we are exploring how to reduce

users like Ford typically buy steel

the amount of steel we use,"

in big quantities at fixed prices.

said Tony Brown, group vice

Ford is actively working with

president, Global Purchasing.

international exchanges, such as

In some cases, that means

the London Metal Exchange, to

finding substitutes for steel.

further develop markets for steel

Work is underway to expand

buyers and sellers. This would

the use of plastic instead of steel

allow Ford to use risk management

in items such as fuel tanks and

tools like derivatives to lock in

oil pans. Savings: 10 pounds

future steel contracts and reduce

and about U.S. $10 per vehicle

price volatility.

for tanks, and four pounds or

And, with steel accounting for

$2 per vehicle for pans.

more than half of a typical North

There are also accelerated

American vehicle's weight, Ford's

global efforts in manufacturing

move to smaller cars will also help.

and product development to

"The faster we can make that

reduce the amount of scrap

transition vs. the competition ? the

metal left each time a part is The spot price of steel has doubled since 2007.

better," said Brown.

4 FORD World June 2008

Teams using ONE Ford save money, deliver results

By Jessica Thiringer FORD World

As ONE Ford becomes a part of our corporate culture, employees

are using its principles and behaviors to deliver business results.

Among those integrating ONE Ford into their workgroups are

Powertrain Controls and the Lincoln MKS Team.

Located in both Dearborn and at the Dunton Technical Center in England, the engineers and technicians in Powertrain Controls recently decided they were doing repetitive work designing separate software interfaces for engine control, transmission and vehicle system controls.

MKS team members: (front row) Michael Sprague, group marketing manager; Pei-Wen Hsu, marketing manager; (back row) Gary Knoerl, pricing analyst; Kristen Smolen, retail training manager and a Sangria Red MKS.

They were also relying heavily on suppliers to create custom

In Marketing, Sales and Service, the Lincoln MKS Team in

software to make the subtle changes that make the performance of Dearborn took a fresh approach to accepting customer orders for

Ford vehicles unique.

the new MKS model.

Now, by coding more

Working together with Production Planning,

software in-house for global use

they opened the order bank for the MKS the

with existing supplier software,

moment the car was revealed at the Los Angeles

they've achieved significant cost

Auto Show last November, allowing vehicles to be

savings. Suppliers will continue to

ordered a full seven months before Job #1, instead

provide the hardware and provide

of just two or three months prior.

common software, thus leveraging Ford's economy of scale to their advantage, a win-win solution for both the company and suppliers.

"We used to have multiple strategies, but where we're headed in the future means we need one global plan that is easily maintained across the company and one that allows for updates as

Introduced in January, ONE Ford balances "One Team, One Plan, One Goal" and the Ford Expected Behaviors necessary to achieve the company's plan. For more information, please visit Ford's internal site, one..

These stories represent two of the many examples of employees using ONE Ford to deliver the business plan. To share a story,

please e-mail: oneford@.

Through careful coordination, the team was able to increase production of all the key features and options that dealers and customers wanted, said Michael Sprague, group marketing manager, Lincoln Mercury Marketing.

"From the start, we are building the right vehicles," said Sprague, adding that the team exceeded its goal of 5,000 orders sold before the Job #1 date.

In addition to building vehicles exactly as

technology increases," says Brian

ordered, the process provided early data on what

Wolfe, director, Powertrain Engineering. "For the first time in my options and features were most popular. That meant the team was

26-year career, we truly are working through strategies together as able to secure the correct number of parts from suppliers ? and

one team on a global scale."

closely plan production and capacity.

Powertrain Operations plans to include similar work in Brazil

"ONE Ford strengthened the thought that our team could work

and Asia Pacific and Africa.

together," said Pei-Wen Hsu, manager, Lincoln Car Marketing.

Huw Thomas (L), Alasdair Gillespie and Steve Rougier (R), product development engineers, Powertrain Engineering, at Dunton Technical Center.

Jahnavi Mehta (L) and Mike Murphy, product development engineers, Powertrain Engineering, collaborating on a powertrain control module.

FORD World June 2008 5

Advertising campaign participant trades Honda for Ford Edge

By Rebecca Kavanagh FORD World

Before she was approached to participate in Ford's new "Townto-Town, Friend-to-Friend" ad campaign, Christine Wall thought the only thing the company made was trucks. She had never even heard of the Ford Edge.

"When they showed me the car I'd be test-driving, I was shocked," says Wall. "I said, `That's a Ford?'"

But Wall, a Windsor, Calif., financial planner, was pleasantly surprised throughout her weeklong experience and loved everything about the Edge. When the week was up, she was sorry to see it go ? and told her husband Mike she thought they should get one.

They test-drove other vehicles in its class, including a Honda

CR-V, a Nissan Murano, a Mazda CX-7 and a Subaru Tribeca before deciding the Ford was their favorite.

In late April, Wall, who, with the exception of one GM vehicle, had always owned imports, traded in her 2006 Honda Civic on a brand-new Edge.

"I think I would have been perfectly happy to keep driving my 2006 Honda had I never tried the Edge...but it was just such a change in the driving experience for me," says Wall.

"Ford has truly helped me enjoy my time on the road," she said.

`Drive one' details

On April 8, Ford debuted "Drive one," a national marketing campaign that highlights the work of 400-plus Ford employees, thousands of hours of research and production, as well as dealer insights, to underscore to consumers its leadership in quality, safety, green and smart technologies.

Along with "Drive one," Ford dealers around the country are using a complementary series of television, print and digital ads built around the theme "Town-to-Town, Friendto-Friend." Those stem from earlier this year when Ford approached owners of competitive vehicles in Marietta, Ga., and Windsor, Calif., asking them to drive a Ford for a week and then pass it on to a friend to try.

Visit for more information.

Christine WAENa_lFl oarnddMuhsetarnng_eRwemnFaontrd2.pEddfge 6/2/08 10:26:32 AM

Employee Purchase Program

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6 FORD World June 2008

Visit eppstore/ford or call 1-877-EPP-MEMBER

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