December 23, 2005

Ford to save U.S.$650 million annually with new union health care agreement

Dearborn, Michigan – Ford Motor Company announced that its tentative agreement with the United Auto Workers (UAW) to reduce the Company’s health care costs has been ratified by the Ford-UAW membership.

The agreement, which is currently pending court approval, calls primarily for modifications to the Company’s hourly retiree health care plan, while continuing to allow Ford to provide a competitive benefits package for hourly employees and retirees.

Much like the recent General Motors health care agreement with the UAW, Ford’s agreement includes contributions to an independent Defined Contribution Voluntary Employee Benefit Association (VEBA) that will be used to subsidize the cost of retiree benefits.

Overall, the agreement is expected to provide an average annual net corporate savings of about U.S.$650 million on a pre-tax basis, including reduced health care expenses and the impact of the VEBA contributions. Cash savings are projected to be about U.S.$200 million per year. Ford estimates the agreement will result in an overall reduction in its retiree health care (OPEB) liability of about U.S.$5 billion.

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