Ford Mtr Co Del · NYSE:F
Ford Mtr Co Del — Ford Motor — Corporate Update (November 2007)
27 slides from Ford Mtr Co Del's corporate update, Nov 15, 2007
Slide 1: 2007 UAW - Ford U.S. Hourly Labor Agreement
e ny in ng ll e, t is d y s ng of eir e, 2007 UAW - FORD U.S. HOURLY LABOR AGREEMENT t y se ng or or ee November 15, k r 2007 0-K
Slide 2: Overview
2007 UAW -- FORD U.S. HOURLY LABOR AGREEMENT OVERVIEW • Our plan remains the same: - Restructure the company; be profitable at lower volume and changed mix - Accelerate product development and reduce manufacturing complexity - Secure financing; improve the balance sheet - Leadership and teamwork • W
Slide 3: Agenda
2007 UAW -- FORD U.S. HOURLY LABOR AGREEMENT AGENDA • Overview • Retiree Health Care / VEBA Trust • Wages and Benefits • Job Security • Entry Level Wages and Benefits • Sourcing and Other Actions • Plants and Investment in New Products • Summary SLIDE 2
Slide 4: Retiree Health Care / VEBA Trust -- Overview
2007 UAW -- FORD U.S. HOURLY LABOR AGREEMENT RETIREE HEALTH CARE / VEBA TRUST -- OVERVIEW • The UAW and Ford have agreed that responsibility for providing retiree health care will permanently shift from Ford to a new retiree plan funded by a new independent VEBA trust • Incorporates 2005 Health Care
Slide 5: UAW-Related Health Care Obligation
2007 UAW -- FORD U.S. HOURLY LABOR AGREEMENT UAW-RELATED HEALTH CARE OBLIGATION Amount (Bils.) Total Worldwide OPEB at year-end 2006 $30.9 Less: U.S. Salaried OPEB (4.0) Remaining 2005 Mitigation VEBA Payments (0.1) U.S. Hourly Life Insurance (1.3) U.S. Non-UAW Hourly Health Care (0.3) Rest of World
Slide 6: Independent VEBA Trust -- VEBA Funding
2007 UAW -- FORD U.S. HOURLY LABOR AGREEMENT INDEPENDENT VEBA TRUST -- VEBA FUNDING Amount (Bils.) Transfer from Existing VEBA $ 3.8 Additional Up-Front Cash Funding 2.7 Convertible Note (Face value) 3.3 Second Lien Term Note (Face value) 3.0 Deferred Payments* 0.4 Total Contributions to VEBA $13.2
Slide 7: Independent VEBA Trust - Notes
2007 UAW -- FORD U.S. HOURLY LABOR AGREEMENT INDEPENDENT VEBA TRUST - NOTES • Terms of $3.3 billion convertible note: – 5.75% interest paid semi-annually – Five-year final maturity from issuance on January 1, 2008 – Callable by Ford after year three with contingent “make whole” payment – Convertible
Slide 8: Independent VEBA Trust -- Timing
2007 UAW -- FORD U.S. HOURLY LABOR AGREEMENT INDEPENDENT VEBA TRUST -- TIMING VEBA Trust • Temporary Asset Account (TAA) Established Jan. 1, 2008 • Effective Date -- District Court Approval Estimated and SEC pre-clearance review Third Qtr. 2008 • Implementation Date -- TAA Transferred Estimated to N
Slide 9: Independent VEBA Trust -- Accounting Treatment
2007 UAW -- FORD U.S. HOURLY LABOR AGREEMENT INDEPENDENT VEBA TRUST -- ACCOUNTING TREATMENT • The Agreement is subject to obtaining SEC pre-clearance of accounting treatment • We anticipate negative plan amendment accounting treatment -- obligation reduced and recognized in income over time • Accoun
Slide 10: Independent VEBA Trust -- Cash and Profit Effect
2007 UAW -- FORD U.S. HOURLY LABOR AGREEMENT INDEPENDENT VEBA TRUST -- CASH AND PROFIT EFFECT • Ongoing annual net cash flow benefit is about $1 billion, including health care savings of $1.6 billion • Excluding interest on the convertible note, the net annual cash flow benefits would be about $1.2
Slide 11: Agenda
2007 UAW -- FORD U.S. HOURLY LABOR AGREEMENT AGENDA • Overview • Retiree Health Care / VEBA Trust • Wages and Benefits • Job Security • Entry Level Wages and Benefits • Sourcing and Other Actions • Plants and Investment in New Products • Summary SLIDE 10
Slide 12: Wages and Benefits
2007 UAW -- FORD U.S. HOURLY LABOR AGREEMENT WAGES AND BENEFITS • No base wage increases -- lump sum payment of $3,000 in 2007 and annual payouts in 2008 through 2010 averaging $2,200 - $3,000 • COLA reduced -- with increased diversions retained by Ford to partly offset health care increases for act
Slide 13: Wages and Benefits -- Pension Fund Update
2007 UAW -- FORD U.S. HOURLY LABOR AGREEMENT WAGES AND BENEFITS -- PENSION FUND UPDATE Ford UAW Retirement Plan Funded Status Funded Status -- U.S. GAAP (Bils.) Pension Assets $ 24.2 $ 24.3 Benefit Obligations (24.4) (24.9) Surplus / (Shortfall) $ (0.2) $ (0.6)* * Reflects negotiated contract change
Slide 14: Agenda
2007 UAW -- FORD U.S. HOURLY LABOR AGREEMENT AGENDA • Overview • Retiree Health Care / VEBA Trust • Wages and Benefits • Job Security • Entry Level Wages and Benefits • Sourcing and Other Actions • Plants and Investment in New Products • Summary SLIDE 13
Slide 15: Job Security
2007 UAW -- FORD U.S. HOURLY LABOR AGREEMENT JOB SECURITY • The UAW and Ford have negotiated a new Job Security Program (JSP) to allow the company to align employment levels with market demand: – The UAW has agreed to additional buyout programs to support the business going forward – Employees in pr
Slide 16: Entry Level Wages and Benefits
2007 UAW -- FORD U.S. HOURLY LABOR AGREEMENT ENTRY LEVEL WAGES AND BENEFITS • New Entry Level wage classification, starting at $14.20 and growing to $15.34 per hour (approximately 50% of current wages) • Initially, all new, full-time hiring will be at Entry Level, up to a maximum of 20% of the total
Slide 17: Entry Level Wages and Benefits
2007 UAW -- FORD U.S. HOURLY LABOR AGREEMENT ENTRY LEVEL WAGES AND BENEFITS • Entry Level wages and benefits represent an improvement of about 50% in our “All In” hourly manufacturing cost (excluding OPEB) Entry Level Base Wage $14.20 / Hour Active Health care 15% employee cost share, $300 - $600 fl
Slide 18: Sourcing and Other Actions
2007 UAW -- FORD U.S. HOURLY LABOR AGREEMENT SOURCING AND OTHER ACTIONS • Sourcing: – Housekeeping and janitorial functions at all facilities will be contracted out – Competitive Entry Level wages and other operational changes will enable the insourcing of new work, including sub-assembly and sequen
Slide 19: Plant Plans
2007 UAW -- FORD U.S. HOURLY LABOR AGREEMENT PLANT PLANS • The Company’s recovery plan assumed 16 North American plant closures; the following 10 of which have been announced: Plant Status – St. Louis Assembly Closed – Atlanta Assembly Closed – Wixom Assembly Closed – Windsor Casting Closed – Norfol
Slide 20: Plant Plans
2007 UAW -- FORD U.S. HOURLY LABOR AGREEMENT PLANT PLANS • The following five plants that we had previously planned to idle will remain open through the life of the contract: – Louisville Assembly – Wayne Stamping – Wayne Assembly – Rawsonville – Dearborn Diversified Manufacturing • The Company no l
Slide 21: Investment in New Products and Plants
2007 UAW -- FORD U.S. HOURLY LABOR AGREEMENT INVESTMENT IN NEW PRODUCTS AND PLANTS • The new contract builds on the success of our existing Competitive Operating Agreements • These agreements, along with a more competitive labor cost model, enable investment in our U.S. plants − Five new flexible bo
Slide 22: Assembly Capacity
2007 UAW -- FORD U.S. HOURLY LABOR AGREEMENT ASSEMBLY CAPACITY North America Straight-Time Manned Capacity Assembly Plant Cost (Millions - Annualized) Structure Pct. Target -- 100% Utilization • Hourly Labor 75% • Salaried Labor 10 • Spending-Related 5 • Overhead / Other 10 Total 100% 4Q 4Q 3Q 2008
Slide 23: Agenda
2007 UAW -- FORD U.S. HOURLY LABOR AGREEMENT AGENDA • Overview • Retiree Health Care / VEBA Trust • Wages and Benefits • Job Security • Entry Level Wages and Benefits • Sourcing and Other Actions • Plants and Investment in New Products • Summary SLIDE 22
Slide 24: Financial Summary
2007 UAW -- FORD U.S. HOURLY LABOR AGREEMENT FINANCIAL SUMMARY Impact on Present Recovery Plan Retiree Health Care / VEBA Trust + Wages and Benefits (Existing Personnel) Neutral Job Security Program Enabler Entry Level Wages + Sourcing and Other Actions + Investment + SLIDE 23
Slide 25: Summary
2007 UAW -- FORD U.S. HOURLY LABOR AGREEMENT SUMMARY • The new 2007 UAW-Ford contract will aid the delivery of our key priorities • Significantly improves Ford’s competitiveness and allows the Company to continue to pursue its restructuring efforts • The contract’s operational improvements will allo
Slide 26: Safe Harbor
SAFE HARBOR Risk Factors Statements included or incorporated by reference herein may constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based on expectations, forecasts and assumptions by our management a
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