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How Ford Works


2006 Ford Sales Decline

By 2006, Dearborn counted five straight years of declining sales representing over a million units lost -- Detroit's worst performance by far. Market share, which had been sliding for a full decade, was down to 17.4 percent, the lowest since 1927, and seemed likely to go lower still.

The Economist in Britain observed that the '02 plan "failed to anticipate rising competition from [import brands] and the impact of soaring health-care costs." Ford was also being squeezed by escalating raw materials costs and -- the big hit -- a sharp drop in demand for its most profitable SUVs, triggered by a spike in gas prices during 2005 to over $3 a gallon in many places.

This "perfect storm" was also battering General Motors. Like Ford, GM still relied too much on truck sales and was trying to "shrink its way back to profitability" in the face of market changes it hadn't foreseen. But more downsizing wasn't the answer.

Aside from enormous pension and health-care expenses, both companies had to contend with "job banks" of laid-off workers who still drew most of their former pay, thanks to lush contracts negotiated with management in palmy days. And there was still the thorny problem of weaning buyers off the costly purchase incentives they'd been used to for years.

A final indignity for Ford was an exodus of talented people, a "brain drain" the company could ill-afford in this new crisis. Though not unexpected amid so much turmoil, the constant personnel shuffling only added to the perception that Ford -- GM too -- was heading toward bankruptcy. As one example, Ford went through no fewer than four executives in five years in the position of president of North American operations.

With all this, Ford was in a fight for its life. As The Economist noted: "Now the struggle is simply to make the car business profitable. This could be the last chance to fix Ford this side of the bankruptcy courts." Defiantly, Ford said Chapter 11 was not an option and announced a new restructuring effort in January 2006.

Though light on many specifics, this "Way Forward" plan called for closing 14 North American plants by 2012, thus erasing some 30,000 jobs and cutting build capacity by more than a fourth.

Ford also promised new vehicles that "people will ­really want." To execute the plan, Ford installed Mark Fields, the architect of a recent turnaround at Mazda, as president of the Americas, with Anne Stevens as his chief operating officer. "We lost our way," Fields admitted. "We lost touch with our customers, particularly our car customers." One result was that Chevrolet became America's top-selling nameplate in 2005, finally wresting the crown from Ford after 19 years.

Though increasingly eclipsed by the likes of Honda and Toyota, several Ford cars did well in the early 2000s. Despite too many recalls, the front-drive Focus was an unqualified success, drawing more than 389,000 orders in debut 2000 and around 300,000 each calendar year from 2001 to '04.

This "big and tall" subcompact had a big job, being assigned to fill the market shoes of the Escort, ZX2, and Contour. But Focus was a masterpiece of space utilization, offering more passenger and cargo space than those earlier small Fords, as well as most of its rivals.

Initial engines were the proven 2.0-liter Zetec fours -- 110-bhp single-cam and 130-bhp twincam -- but most everything else was appealingly different. Start with the "New Edge" styling, a parting gift from corporate design chief Jack Telnack. An avant-garde mix of curves and creases, New Edge didn't work on every car, but it did here, lending a visual personality that set Focus apart from every rival.

Engineering was no less artful, especially the all-independent suspension that drew rave reviews for delivering both a smooth ride and class-leading handling. It was the sort of small car one expected from Europe. Sure enough, the Focus was developed "over there" and brought to North America with minimal change for local production.

For more on the amazing Ford, old and new, see:

  • Ford New Car Reviews and Prices
  • Ford Used Car Reviews and Prices