Ford Motor Company announces
restructuring actions

January 12 2002 - Ford Motor Company [NYSE:F] today announced several restructuring actions as part of its Ford Revitalization Plan. 5 plants are to be closed : Edison Assembly, Ontario Truck Plant, St. Louis Assembly, Cleveland Aluminum Casting and Vulcan Forge. Also, new products have not been identified for two plants: Ohio Assembly and Cuautitlan Assembly. Woodhaven Forging Plant will be sold. Major downsizing and shift reductions will take place at 11 plants with line speed reductions and changes to operating patterns at nine plants.

"Our revitalization plan is based on executing the fundamentals of our business to build great products," said Chairman and Chief Executive Officer Bill Ford. "What we are outlining today is a comprehensive plan that builds for the future. It's going to take everyone in the extended Ford family - employees, suppliers and dealers - working together, over time, to make it work."

Actions include:-

New products: 20 new or freshened products in the U.S. annually between now and mid-decade.

Plant capacity: Reducing North American manufacturing capacity by about 1 million units by mid-decade to realign capacity with market conditions.

Hourly workforce: About 12,000 hourly employees in North America will be affected by actions completed in December and those to be taken in 2002 and beyond. 3,000 hourly employees were affected in 2001. The company intends to reassign as many plant employees as possible.

Salaried workforce: Voluntary separation for salaried employees and other actions led to a reduction of 3,500 in North American workforce last year. The program will be extended to produce a further 1,500-person salaried workforce reduction. "If necessary to meet this goal, an involuntary separation program will be used."

Global workforce: Since January 2001 about 35,000 employees will be, or already have been, affected around the world . These include 21,500 in North America - 15,000 hourly, 5,000 salaried and 1,500 agency employees - and 13,500 in the rest of the world.

Material costs: A squeeze on North American suppliers, with Ford receiving 65% of implemented cost reductions and suppliers receiving 35 percent in the first year.

Discontinued low-margins models: The Mercury Cougar, Mercury Villager, Lincoln Continental and Ford Escort to be discontinued this year.

Beyond North America: Revitalization plans beyond North American automotive operations including continued implementation of the European Transformation Strategy (including the end of production of Ford-badged cars in the UK).,

Divestitures: Proposed sale of non-core assets and businesses, realizing $1 billion in 2002.

Other actions include:
- 7% pay reduction to contract labor firms
- voluntary separation program for North American salaried employees
- elimination of bonuses and raises for senior managers
- 'sharing' of health care costs with U.S. salaried employees and retirees
- elimination of the company match for U.S. salaried employee 401(k) plans.

"Although the actions we're outlining today are difficult, they are necessary steps to lead Ford back to a strong financial and competitive position," said Nick Scheele, president and chief operating officer. "They will help us to address our problems, while at the same time permitting us to keep a sharp focus on delivering great products. Quality and value will be the hallmarks of our cars and trucks."

"In order to remain competitive and profitable, we must make some hard decisions to align capacity with our anticipated sales," said Scheele. "At the same time, the company is continuing its commitment to North American manufacturing operations with investments of about $20 billion over the next five years in new product programs and spending to add flexibility and increase our ability to respond quickly to changes in market demand."

"We are confident we can achieve these goals through the efforts of our dedicated employee team," Bill Ford said. "We know we have immediate challenges to face. It will be difficult, and in some cases, painful to turn things around. But we will turn things around."