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Ford Submits Plans to Congress: Mulally Ready to Accept $1 Salary, New Hybrid and EVs by 2012

Making a second bid for a $25 billion emergency bailout loan, Detroit's Big-Three are presenting Congress with plans today to restructure their struggling companies amid a global economic downturn. Ford Motor Company this morning submitted its business plan that includes a series of measures which detail the firm's plan to return to profitability and outlines a request for potential access to a temporary bridge loan. In particular, FoMoCo is asking for access to up to $9 billion in bridge financing, but reiterated that "it hopes to complete its transformation without accessing the loan should Congress agree to make the funds available."

"For Ford, government loans would serve as a critical backstop or safeguard against worsening conditions, as we drive transformational change in our company," said Ford President and CEO Alan Mulally, who will testify before Congress this week.

In the plan submitted to Congress, Ford will invest approximately $14 billion in the U.S. on advanced technologies and products to improve fuel efficiency of its fleet an average of 14 percent for 2009 models, 26 percent for 2012 models and 36 percent for 2015 models – compared with the fuel economy of its 2005 fleet.

The second-biggest U.S. carmaker said that at the 2009 Detroit Auto Show in January, it will reveal more details on its "accelerated vehicle electrification plan", which includes the introduction of a family of hybrids, plug-in hybrids and battery electric vehicles by 2012. Ford stated that it will have a full battery electric vehicle (BEV) in a van-type vehicle for commercial fleet use in 2010 and a BEV sedan in 2011.

In the new business plan Ford confirmed that it has decided to sell its five corporate aircrafts after the Big Three's CEO were harshly criticized by Congress for travelling to Washington D.C. separately by jets. In addition, Ford CEO Mulally announced that if the company needs to access the funds provided from the government, he would work for a salary of $1 a year

Ford also reiterated that it is canceling all bonuses to be paid in 2009 for all management employees worldwide and foregoing bonuses for all employees in North America. The company also will not pay merit increases for North America salaried employees in 2009.


Ford's submission to Congress included new details about Ford's future plans and forecasts, including:

  • Based on current business planning assumptions – including U.S. industry sales for 2009, 2010 and 2011 of 12.5 million units, 14.5 million units and 15.5 million units, respectively – Ford expects both its overall and its North American automotive business pre-tax results to be breakeven or profitable in 2011, excluding any special items.
  • As part of a continuing focus on building the Ford brand, the company said it is exploring strategic options for Volvo Car Corporation, including the possible sale of the Sweden-based premium automaker. The strategic review is in line with a broad range of actions Ford is taking to strengthen its balance sheet and ensure it has the resources to fund its plan. Since 2007, Ford has sold Aston Martin, Jaguar, Land Rover and the majority of its stake in Mazda.
  • Ford's plan calls for an investment of approximately $14 billion in the U.S. on advanced technologies and products to improve fuel efficiency during the next seven years.
  • Half of the Ford, Lincoln and Mercury light-duty nameplates by 2010 will qualify as "Advanced Technology Vehicles" under the U.S. Energy Independence and Security Act – increasing to 75 percent in 2011 and more than 90 percent in 2014. Ford said it has included these projects in its application to the Department of Energy for loans under that Act and hopes to receive $5 billion in direct loans by 2011 to support Ford's investment in advanced technologies and products.
  • From its largest light duty trucks to its smallest cars, Ford will improve the fuel economy of its fleet an average of 14 percent for 2009 models, 26 percent for 2012 models and 36 percent for 2015 models – compared with the fuel economy of its 2005 fleet. Overall, Ford expects to achieve cumulative gasoline fuel savings from advanced technology vehicles of 16 billion gallons from 2005 to 2015.
  • Next month at the North American International Auto Show in Detroit, Ford will discuss in detail the company's accelerated vehicle electrification plan, which includes bringing to market by 2012 a family of hybrids, plug-in hybrids and battery electric vehicles. The work will include partnering with battery and powertrain systems suppliers to deliver a full battery electric vehicle (BEV) in a van-type vehicle for commercial fleet use in 2010 and a BEV sedan in 2011. Ford said it will develop these vehicles in a manner that enables it to reduce costs and ultimately make BEVs more affordable for consumers.
  • The 2007 UAW-Ford negotiations resulted in significant progress being made in reducing the company's total labor cost. Given the present economic crisis and its impact upon the automotive industry, however, Ford is presently engaged in discussions with the UAW with the objective to further reduce its cost structure and eliminate the remaining labor cost gap that exists between Ford and the transplants.
  • As previously was announced, Ford plans two additional plant closures this quarter and four additional plant closures between 2009 and 2011. The company also has announced its intent to close or sell what will be four remaining ACH plants. The company said it will continue to aggressively match manufacturing capacity to real demand.
  • Ford will continue to work to reduce its dealer and supplier base to increase efficiency and promote mutual profitability. By year end, Ford estimates it will have 3,790 U.S. dealers, a reduction of 606 dealers overall – or 14 percent from year-end 2005 – including a reduction of 16 percent in large markets. In addition, Ford has been able to reduce the number of production suppliers eligible for major sourcing from 3,400 in 2004 to approximately 1,600 today, a reduction of 53 percent. Ford eventually plans to further reduce the number of suppliers eligible for major sourcing to 750.
  • Ford also confirmed today that it has decided to sell its five corporate aircraft. In addition, Ford CEO Mulally announced that, should Ford need to access funds from a potential government bridge loan, he would work for a salary of $1 a year – as a sign of his confidence in the company's transformation plan and future.
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