Ford 2010 Annual Report Download - page 27

Management’s Discussion and Analysis of Financial Condition and Results of Operations
Ford Motor Company | 2010 Annual Report 25
Trends and Strategies
We remain firm in our belief that our continued focus on executing the four key priorities of our One Ford plan is the
right strategy to achieve our objectives:
• Aggressively restructure to operate profitably at the current demand and changing model mix;
• Accelerate development of new products our customers want and value;
• Finance our plan and improve our balance sheet; and
• Work together effectively as one team, leveraging our global assets.
Despite the external economic environment in recent years, we have made significant progress in transforming our
business.
Aggressively Restructure to Operate Profitably
Brands. In recent years, we have eliminated a number of brands from our portfolio in order to devote fully our
financial, product development, production and marketing, and sales and services resources toward further growing our
core Ford brand and enhancing Lincoln. We have sold Aston Martin, Jaguar and Land Rover, and most recently Volvo.
In addition to completing the sale of Volvo in the third quarter of 2010, we discontinued the Mercury brand at the end of
2010. We also reduced our stake in Mazda to 3.5 percent from 11 percent in the fourth quarter of 2010. All of these
actions allow us to increase flexibility as we continue to pursue growth in key emerging markets, while also continuing
our cooperation in areas of mutual benefit, such as key joint ventures and exchange of technology information.
Manufacturing. We are committed to maintaining an appropriate manufacturing footprint in markets around the world,
both in the more mature markets in which we have an established presence, and in fast-growing emerging markets. We
also are committed to ensuring that our assembly plants have flexible body shops that allow us to respond quickly to
changing consumer demands. We have announced substantial investments in emerging markets over the last few
years, including in China and India, to increase our production capacity with flexible new manufacturing plants. We also
announced substantial investments in North America, including efforts to ensure that nearly all of our U.S. assembly
plants have flexible body shops by 2012. We also have converted two North American assembly plants, and are
converting a third assembly plant, from production of large utilities and trucks to small car production to support the
increasing demand for smaller, more fuel-efficient vehicles.
Suppliers. We continue to work to strengthen our global supply base. As part of this process, we have been
reducing the global number of production suppliers eligible for new product sourcing from 3,300 in 2004 to about 1,600
suppliers in 2009 and about 1,500 suppliers in 2010. To date, we have identified specific plans that will take us to about
850 suppliers in the near- to mid-term, with a further reduction to about 750 suppliers targeted. We believe that our
efforts at consolidation will result in a stronger and healthier supply base, with which we are working closely to anticipate
and address any near-term capacity constraints as we ramp up production. In addition, our move to global vehicle
platforms should increase our ability to source to common suppliers for the total global volume of vehicle components, so
that a smaller number of suppliers will receive a greater volume of purchases we make to support our global vehicle
platforms.
Ford and Lincoln Dealerships. Our dealers are a source of strength in North America and around the world,
especially in rural areas and small towns where they represent the face of Ford to the community. We are adding
dealerships rapidly in markets in our Asia Pacific Africa region where industry volume is growing at a rapid pace,
including the addition of 100 dealerships in China during 2010. Our total dealership network in China is about 340, and
about 170 dealerships in India, and we have plans to continue our expansion of these networks. We also continue to
work with our dealers in the United States to rightsize the number of Ford and Lincoln outlets, particularly in our largest
130 metropolitan market areas. Reduction of overcapacity includes not only rightsizing the number of dealerships, but
ensuring the right locations and appropriate branded facilities to satisfy current and future demand. Our goal is to
achieve a sustainable and profitable dealer network. As part of these efforts, we have reduced the number of outlets in
our U.S. Ford and Lincoln network in the United States from about 4,400 at the end of 2005 to 3,430 at the end of 2010.
As announced, we discontinued the Mercury brand as of December 31, 2010, and we have successfully resolved
Mercury franchise agreements for 96% of Mercury franchise holders.