Ford 2011 Annual Report Download - page 31

Management’s Discussion and Analysis of Financial Condition and Results of Operations
Ford Motor Company | 2011 Annual Report 29
Trends and Strategies
We remain firm in our belief that our continued focus on executing the four key priorities of our One Ford plan enables
us to go further for our customers, dealers, suppliers, employees, shareholders, and other key constituencies:
• 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 newly-developed and
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 are making substantial investments in newly-developed and
emerging markets over the next few years, including in China, Thailand, and India, to increase our production capacity
with flexible new manufacturing plants. We also are making 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 three North
American assembly plants 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 1,350 at year-end
2011. We have identified plans that will take us to about 850 suppliers in the near- to mid-term, with a further reduction to
about 750 targeted, and we are confident that our consolidation efforts will result in a stronger and healthier supply base.
We also are working closely with our suppliers to address any near-term capacity constraints as we continue to ramp up
production. In addition, our move to global vehicle platforms increases our ability to source to common suppliers for the
total global volume of vehicle components resulting in a smaller number of suppliers receiving a greater volume of
purchases to support our global vehicle platforms and allowing us to gain greater economies of scale.
Ford and Lincoln Dealerships. Our dealers are a source of strength in North America and around the world,
representing the face of Ford to local communities. Our goal is to achieve a sustainable and profitable dealer network by
rightsizing the number of dealerships, identifying the right locations, and ensuring the appropriate branded facilities to
satisfy current and future demand. We are adding dealerships rapidly in markets in our Asia Pacific Africa region where
industry volume is growing at a rapid pace. Our total dealership network in China is about 400, and about
150 dealerships in India. We have plans to continue our expansion of these networks, in addition to the dealership
networks in our growth markets of Brazil and Russia. 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 markets. As part of these
efforts, we have reduced the number of outlets in our U.S. Ford and Lincoln network from about 4,400 at the end of 2005
to about 3,340 at the end of 2011. We believe our U.S. dealers are positioned to profitably grow business in 2012, as they
invest in their facilities, employees, and communities while continuously striving to improve the experience of retail
customers. As previously announced, we discontinued the Mercury brand as of December 31, 2010, and we have
successfully resolved Mercury franchise agreements for 99% of Mercury franchise holders.
Product Development. Our One Ford global product development system is fully operationalized, utilizing global
platforms to deliver customer-focused programs rapidly and efficiently across multiple markets. Through our hub and
spoke approach, one lead product development engineering center - the hub - is assigned for each global vehicle line,
thereby ensuring global scale and efficiency through common designs, parts, suppliers, and manufacturing processes.