DETROIT -- It was deja vu all over again last week as Ford Motor Co. announced its second major restructuring plan in four years. What went so wrong with the revival attempt launched in January 2002?
In short, a lot of it worked - until commodity prices soared and the SUV market collapsed. Ford swung from a combined net loss of $6.4 billion in 2001 and 2002 to a profit of $495 million in 2003. Thanks mostly to a stunningly successful turnaround at Ford Credit, the automaker stayed profitable in 2004 and 2005.
But despite new products such as the redesigned F-150 pickup and the new Ford Five Hundred sedan, the automaker lost market share at a disturbing rate. Competitors launched new products faster, and price competition spun out of control.
In hindsight, Ford's 2002 plan didn't cut overhead costs and assembly capacity enough.
That left Ford vulnerable to last year's market shift. Rapid increases in oil and steel prices unexpectedly increased costs. Then, when gasoline prices skyrocketed and customers lost their taste for high-profit big
SUVs in early 2005, Ford's North American business hit the skids.
Here's what worked in the 2002 plan, and what didn't.
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