Green Spot: Ford: Turning The Car Around

In the mind of John Viera, Ford's director of sustainable business strategies, green manufacturing is good business. For an old-line manufacturer in an industry not known for environmental sensitivity, Ford Motor Company has an uphill drive ahead of it to get to where it needs to go. However, with the progress shared below and a continuing executive commitment driving further changes in both manufacturing process and product, Viera hopes that Ford can get both its products and its practices turned around and headed in the right direction.

IW: How are you addressing energy efficiency?

Viera: We have set for ourselves several manufacturing management sets of goals, which for 2007 include:

1. Reducing global water usage by a 3% decrease from 2006 levels.
2. Reduce global facility energy use by a 3% energy efficiency improvement.
3. Reduce North American facility energy use by a 3% energy efficiency improvement.
4. Reduce North American landfill waste by a 5% decrease from 2006 levels
5. Reduce North American volatile organic compound (VOC) emissions, 24 gm/m².

During 2005, we began implementing an Environmental Operating System (EOS) at our North American assembly plants. The EOS provides a standardized, streamlined approach to maintaining compliance with all legal and Ford internal requirements. The EOS drives compliance responsibility to the operations level by assigning compliance-related tasks to the appropriate personnel and tracking their completion.

The EOS is integrated with other key management systems at the plant level, including ISO 14001 and the Ford Production System. EOS provides information, standardized tools and processes to support ISO 14001's requirement to identify and manage compliance issues. EOS is in place at all North American assembly and stamping plants, and will be rolled out to all North American powertrain plants by year-end 2007. Implementation of EOS has also begun in Ford of Europe.

Our progress:

1. We have strengthened the management of environmental impacts across our supply chain using the ISO 14001 framework. All of our manufacturing facilities and major suppliers' facilities have attained third-party certification to the standard.
2. We continue to improve the environmental performance of our facilities. Ford has reduced global energy use by 27% and global water use by 25% compared to 2000 levels.
3. The EPA recognized Ford's performance by awarding it the Energy Star Partner of the Year in 2006 and 2007, the first time an automaker has received this recognition in consecutive years.
4. Since 2000, Ford's North American operations have cut volatile organic compound (VOC) emissions associated with the painting process (by far the largest sources of VOC emissions) by 25 percent. In 2006, these operations emitted 26 grams per square meter of surface coated, beating their target of 29 grams per square meter. Because the control equipment used to reduce VOC emissions consumes significant amounts of energy, we have worked to identify innovative approaches to painting operations that meet cost, quality and production goals while allowing us to reduce energy use significantly.

We also have set of climate change-related commitments that include our manufacturing operations. This information, along with additional background can be found in our Sustainability Report. For examples of environmental initiatives and processes, please see attached "Energy Consumption" release.

IW: How are you addressing waste reduction?

Viera: In 2006, we began switching our data collection over to the European waste classification system, which is a good fit for our waste streams and will allow improved benchmarking and comparison. These enhancements are part of our overall Global Emissions Manager database launch. Our data-collection process improvements will help our facilities continue to develop new methods of reducing and better managing waste. More extensive results will be published in future reports when year-over-year trend data are available.

Our facilities continue to reduce waste and improve its management. For example, Ford's Livonia (Michigan) Transmission Plant eliminated virtually all regulated hazardous waste generation. The Livonia plant was regulated as a "small-quantity generator" due to its generation of wastes from solvent-containing paint and a waste from the plant's heat treat process.

With the help of Ford's environmental experts, plant managers and workers in the painting and heat-treating functions worked together to identify alternatives to the use of solvent-based paints and process modifications that would eliminate hazardous waste generation from the plant. Following a one-time effort to use up and dispose of solvent-based paint, Livonia switched to purchasing only water-based paints, working cooperatively with the paint vendor. The team conducted trials to ensure the alternative paint would serve the needs of the plant. The team also identified changes to the process of cleaning "salt quench" tanks that made the material removed suitable for recycling, rather than disposal.

The zero hazardous waste approach eliminates potential risks, reduces regulatory requirements and saves disposal costs. Other waste reduction projects include the following:

One example is implementation of a minimum-quantity lubrication system for machining at the Livonia Transmission Plant. An industry first in North America for high-volume powertrain production, the system uses a precisely dosed oil mist in place of multiple gallons of metal-working fluid. The metal chips created during the machining process are removed from the work zone by a vacuum extraction system and subsequently recycled. The system results in a cleaner work environment, reduction of the machining fluid waste and increased metal recovery. It also extends the life of the machining equipment and saves money compared to traditional processes.

Ford's Sharonville, Ohio, transmission plant provides an incentive to its waste management contractor to achieve at least 5 percent waste reduction each year. The Sharonville plant recycles dozens of waste materials. For example, the plant recently began recovering shot blast pellets, the small steel balls used to take edges off of metal parts, in addition to the steel dust created by shot blasting.

The Michigan Truck Plant has run tests using paint waste as a filler in a liquid sound-deadening material that helps keep vehicle interiors quiet.

Another specific example is our fumes to fuel paint shop. (Editor's note: Read "Ford Paints The Plant Green")

IW: How are you addressing supply chain management?

Viera: ISO 14001 certification is expected of Q1, or preferred, non-production supplier facilities if the supplier has a manufacturing site or a non-manufacturing site with significant environmental impacts that ships products to Ford.

In 2006, we attained our goal of having 100 percent of our Q1 production suppliers gain ISO 14001 environmental management system certification for facilities supplying Ford. We also encourage our suppliers to extend the benefits of improved environmental performance by implementing similar requirements for environmental management systems in their own supply base.

IW: Out of all these, which is your company's priority?

Viera: Addressing Climate Change as a whole is a priority for us, whether it relates to our products or our manufacturing. We are working to provide effective environmental solutions that continuously reduce the environmental impacts of our business, but also in line with our commitment to sustainable development. These efforts are all encompassing and not independent of one another. We are able to treat sustainability this way because we have integrated sustainability into our business; it's in every aspect of our business from manufacturing, to our products, to our supply chain, to our day-to-day business activities. Our manufacturing operations in particular have integrated sustainability into their scorecards to drive results against our goals. We continuously measure, understand and responsibly manage our resource use, especially materials concern and nonrenewable resources and work to eliminate waste.

IW: How do you see sustainability fitting into core business strategy?

Viera: In April, we created a new position (senior vice president, sustainability, environment and safety engineering Sue Cischke) responsible for setting strategy, establishing goals and integrating sustainability across our company. Our progress in these areas will be reviewed regularly at meetings of our most senior executives.

Additionally, we will continue to work as a team to build on existing examples of integration, which include the following:

1. Our North American product development function includes sustainability and vehicle safety as "innovation pillars," used to guide the development of future products. For example, our product planning explicitly considers long-term emissions reductions that represent our contribution toward climate stabilization.
2. Our procurement organization works with our suppliers to help them align their practices with the Code of Basic Working Conditions. During 2006, the Code was revised to include additional commitments on community engagement, corruption, the environment and sustainability.
3. Our manufacturing operations have integrated sustainability goals and indicators into their scorecards to drive progress.

IW: How do you see the regulatory environment changing, and how will it impact your business?

Viera: As a global auto manufacturer, regulations related to greenhouse gases (GHG) affect many areas of our business including our manufacturing facilities. The GHG landscape is changing rapidly. For example, in Europe GHG emissions from manufacturing facilities are regulated through a combination of emission limits and market-based mechanisms. To address these regulations, we have established global roles and responsibilities, policies and procedures to help ensure compliance with emissions requirements and participate in trading initiatives worldwide. We expect regulation to increase in the future, and it is in the interest of our company and society to reduce the uncertainty and increase the predictability of policy frameworks and market conditions around the issue of climate change. We are committed to being a constructive participant in the formulation of policies to reduce GHG emissions across the entire economy and promote energy security.

IW: What are you the most proud of that you've accomplished so far, and why?

Viera: From a manufacturing standpoint, we take pride in a number of accomplishments. For example, our Rouge Center Redevelopment was a major undertaking and a model for sustainable manufacturing. The $2 billion redevelopment of the Ford Rouge Center resulted in lean, flexible and sustainable manufacturing at one of the world's largest and oldest industrial icons.

Some examples of what's been accomplished at the Rouge include:

• Designation as a wildlife habitat by the Wildlife Habitat Council.
• The world's largest living roof on an industrial building, turning the roof of the Dearborn Truck Plant (DTP) Final Assembly building into a 10.4-acre garden. (This will reduce storm water runoff, insulate the building, create oxygen, and more than double the life of the roof.)
• The 600-acre center also uses several ecologically advanced methods for storm water management and air quality, along with a soil restoration method called phytoremediation.

Other accomplishments include the completion of the London area's first large-scale wind power project in 2004. It is located at Ford's Dagenham Diesel Center. The two 120-meter-tall turbines meet all the electricity requirements for the Center (equivalent to 3,000 homes).

And, as mentioned before, since 2000, we have cut global energy use by 27% and water use by more than 25%.

IW: What's the best piece of advice you can give to companies considering "getting with the program"?

Viera: Accepting the fact that growing weight of evidence holds that man-made greenhouse gas emissions are starting to influence the world's climate in ways that affect all parts of the globe. That's the first step.

Second, is recognizing that this realization has caused the business climate to change. Governments, companies, investors and consumers have tackled climate change in ways that present new risks and opportunities. We see a clear relationship between our company's business challenges and global sustainability challenges. But with these great challenges comes great opportunity. The companies that make the high-quality products and services that consumers really value, and do so in ways that limit harm to the environment and maximize benefits to society, will be preferred in the marketplace.

Visit Ford's online 2006/2007 Sustainability Report at www.ford.com/go/sustainability.