March 27, 2002: Features
As Bill Ford 79 settles into the drivers seat at Ford, theres one question: Can he make the company run smoothly again?
By Tom Nugent
After Jacques Nasser was ousted as CEO of the Ford Motor Company in October 2001, William Clay Ford, Jr. 79 then chair of the companys board came home to his wife, Lisa Vanderzee Ford 82, to discuss taking over the position. If I take this job, he said, its going to be all-consuming. Its going to be really tough on you and the kids.
No, it wont, she said immediately. Itll be easier. Youve been so miserable during the past two years because you havent been in a position to do anything about Fords problems. Youll be a lot happier, even though youre going to have a tough daily struggle.
Ford listened to his wife, and soon after added CEO to his title at the ailing carmaker. Now, as veteran auto reporter Mark Truby, who covers the industry for the Detroit News, says, The most intriguing question in Detroit right now is whether or not Bill Ford has what it takes to turn things around at Ford Motor.
After flourishing for nearly a century as an icon of American industrial know-how (the company will celebrate its 100th birthday next year), Ford Motor Company, Americas second-largest automaker, is reeling from what Ford himself describes as a series of self-inflicted wounds. The company lost more than $5 billion last year. During roughly the same period, Fords common stock plummeted more than 50 percent from $32 last April to $14 in February. Swamped by huge losses stemming from recent tire recalls (in what many Ford executives freely call the Firestone disaster), and plagued by several recent lackluster model launches, Ford has also been struggling to shore up morale among its 350,000 employees worldwide.
Fords escalating problems made headlines last October, when Nasser, a former industry darling, was forced out, and again in January, when the company announced plans to lay off more than 20,000 workers in North America, while also closing five U.S. auto plants.
But the 44-year-old Bill still Billy to many of his friends Ford says hes not afraid of a challenge. A self-described idealist and avid environmentalist, Ford, who is not drawing a salary, is the first family member to take the helm of the company since his uncle, the blunt and no-nonsense (some said arrogant) Henry Ford II 56, retired as chair and CEO in 1979.
Although he received a standing ovation from hundreds of workers when he was introduced as Fords new CEO last October 30, Ford isnt kidding himself about the obstacles he faces. He is stepping into his leadership post during an extraordinary time of rapid change in the industry, and he faces huge risks in his attempt to redesign and rebuild his great-grandfathers now global enterprise.
But he also commands some powerful assets. Armed with a personal fortune that exceeds $90 million and with the enthusiastic backing of the entire family, the new CEO controls more than 40 percent of the corporations voting stock.
Ford is the first to point out that he is the son of privilege, and that he owes everything I have to this company. But even his harshest critics concede that he earned the right to the corner office of the Glass House, as Ford world headquarters is known, the old-fashioned way: by working arduously for many years in a dozen different Ford jobs everything from product planning to factory management to international sales and marketing.
Along the way, Ford was slowly assembling the key elements in his strategy to build a new Ford Motor by turning the company away from recent, huge investments in Internet-based commerce and financial services and back to what we do best, which is manufacturing high-quality cars and trucks. But Fords vision doesnt stop with returning the automaker to profitability. As CEO, hes convinced that he also must lead a paradigm-changing campaign to transform Ford from a smokestack-belching old economy enterprise to an environmentally friendly and socially responsible global leader of the 21st century.
I think hes smart enough to get it done, no question, says veteran auto industry analyst Wes Brown at Nextrend. He has the global knowledge base that will be required. Hes also got the family behind him, and most of the workers are happy to see that a Ford is once again in command. They know he cares about them. But is he tough enough to get the job done? That I dont know.
Lee Iacocca *46 thinks he is. Im sure that if Bill picks the right people to help him, hell do a hell of a job, says Iacocca, an executive at Ford Motor before he became Chryslers CEO in 1979.
Ford himself doesnt harbor any doubts. Can we win? he says, gazing out his office window at the distant smokestacks of Fords historic Rouge plant outside Detroit. Absolutely. Were in the midst of a fight here thats tough, and there arent a lot of victories to crow about right now. But Im in there swinging. We have to get back to running our core business, and creating great products, and then we can put most of these recent problems behind us.
If Ford sounds confident, its probably because hes already survived a nasty struggle: the battle for the CEOs office. There was a whole lot of intrigue and antifamily stuff going on for a long time in this company, he says. And there were some very powerful people lining up to try to wrest control from the family. The Ford family had cast a long shadow over this company for many years, and there were some people at the top they wanted that shadow gone. So it wasnt a lot of fun, coming up through the ranks.
But that negative feeling was only in a handful of people. And what kept me going was the tremendous reservoir of goodwill for me in the middle management and lower management and the plants.
Theres no doubt that tens of thousands of Ford union workers were pleased to hear last October that a Ford family member was back in charge again.
Bill Ford is gonna put a face on this company, says Jerry Sullivan, the colorful and powerful president of UAW Local 600, which includes 10,000 auto workers at the Rouge plant. Its true that the last couple of years have been very difficult at Ford. But Bill is a member of the family, and thats what this company needs right now. The men and women who work in the plants theyre real happy to see a Ford running the show again. They know hes there because he wants to be there. I think hes going to be the next industrial visionary.
he son of former Ford board member (and owner of the Detroit Lions football team) William Clay Ford, Henry IIs youngest brother, Bill Ford was raised in and around the exclusive Detroit suburb of Grosse Pointe Woods, where he early on realized that he would have to prove himself again and again in a world that assumed he had it made because of his family name. (Make that two family names: his mother, Martha Parke Firestone, is the granddaughter of tire magnate Harvey S. Firestone, namesake of Princetons main library, and the daughter of Harvey S. Firestone, Jr. 20.)
As a rough-and-tumble youngster who loved football and ice hockey, Billy was determined to show people that he could compete without relying on his name or his connections. Example: When it came time to join a youth hockey team, the 12-year-old decided that he didnt want to play in the Grosse Pointe league. Instead, he traveled a few miles down the road to compete with working-class boys in many cases the sons of workers at Ford Motor who lived in the very different community of St. Clair Shores.
That decision set the pattern for the remainder of Fords school years. Intensely competitive but also soft-spoken and low-key, he arrived at Princeton in 1975 without fanfare, telling nobody about his family background without being asked to do so. (Similarly, he spent his first year or so working at Ford Motor under the pseudonym of Bill Clay, in an effort to avoid being recognized as a Ford.)
Many of Fords classmates were startled to learn that Bill was one of the the Fords. Bill certainly didnt display his family badge at Princeton, says rugby teammate Howard Lewis 79, today a cardiologist in Seattle. He didnt try to hide it, but he was very quiet on the subject. It was obvious that he wanted to be known for his own accomplishments. And he attacked everything he did with enormous intensity.
Like Lewis, classmate Steve Wilson, today an investment banker at J. P. Morgan, remembers Ford as eager to show the world what he could accomplish on his own terms. I never met anybody who was so good at moving between two worlds, says Wilson. Billy was able to shift between the world of Ford and privilege and the world of the garbage collector without missing a step.
According to Wilson, Fords ability to shift gears in this way has not declined in the years since he left Princeton. I visited him in Dearborn a while ago, recalls the New Yorkbased banker, and we went out to lunch. Billy drove his own car hes never been driven anywhere. As we were pulling away from his office building, he rolled down the window. There was a guy out there mowing the lawn, and Bill yells at him: Hey, Frank how you doing? Listen, you gottta come out to the house again, and throw the football around! Thats how he is with everybody. And thats why those Ford Motor employees were overjoyed to hear that he was taking over the company.
Wilson says he has seen a deeper, more profound side of Ford in recent years, when one of their closest friends, José Berrocal 79, was stricken with a brain tumor. José came down with a rare form of cancer, says Wilson, and when Billy found out about it, he flew a plane down to Puerto Rico. He had José flown to Henry Ford Hospital in Detroit, and he waged a war on his disease. José died last October, which
was very tragic, but what an extraordinary friend Billy was to him. He set the gold standard for friendship, as far as Im concerned.
Bill Ford remembers Princeton mostly as a place where he could prove himself both academically and athletically without relying on his identity as a crutch. I wouldnt have traded that four-year period in my life for anything. I met people who have become lifelong friends, and frankly more than friends theyre people that I count on now for advice. Because you never will replicate the quality of discussions and the quality of people that you had there. I joined the Board of Trustees because of my affection for the school. Ive turned down numerous boards in the last few years. But this was one that I absolutely couldnt wait to join.
Bill Ford says he was delighted to be able to tell the story of Ford Motor in his senior thesis (Henry Ford and Labor: A Reappraisal). Still, like many another college grad looking back at his classroom years, Bill wishes the paper had been better written. I wrote it in four days, he groans, then laughs out loud: It was spring term, senior year and oh my God, what a disaster!
fter a brief stop at MIT to earn his masters degree in business management, Ford headed back to Dearborn and began trying to answer the toughest question of his life. Should he dedicate himself to Ford Motor and begin the long, steep ascent to the higher levels of management?
It was an agonizing choice, and Ford admits openly that he doubted his abilities at the start of his career. I think that was a period in my life where I felt, Gee, I can never live up to this legacy, and I just wanted to push it in the background.
But Ford finally decided that he owed it to the family to enter the fray in Dearborn and to build a career for himself there. Fundamentally, everything I have in life is due to the Ford Motor Company. And for me to take what it gave me, in terms of income, and then go sit on a beach somewhere to me, that never sat well. I felt like I owed this company a lot everything and if I was
in a position to help, I would do so.
Once the decision had been made, he gave himself completely to the task, while also juggling, with Lisa, the demands of raising four children. You know, he says with another light-hearted chuckle, describing his 22 years of 10- and 12-hour workdays before finally becoming CEO, there are many days here where I wonder if Ive lost my mind. But I really believe because I dont need to be doing this; I could be doing anything else I wanted that Im not a prisoner of this system. Theres nothing they could give me, in terms of compensation or power or prestige, that I havent already experienced. And thats quite liberating. I think it can help this company because I really am only interested in the best interests of Ford Motor and all the employees here.
uring most of Bill Fords climb through the ranks, he watched while the gifted and charismatic Nasser led the company through one record-breaking sales performance after another. As recently as 1999, Ford Motor was enjoying the greatest profits in the history of the auto industry, and Nasser appeared to be an indomitable titan whose magic would never fade.
But behind the returns, Nasser was sinking huge amounts of money into Internet-linked ventures, financial services, and other tangential lines of business. Then came the Firestone disaster, which exploded into headlines in the summer of 2000, when scores of Ford Explorer owners filed lawsuits contending that Ford Motor was responsible for the unreliable tires that caused accidents resulting in injury or death.
The tires were Firestones, and what followed was a brutal name-calling contest in which the two companies blamed each other publicly for both the accidents and the expensive recalls. In a scenario that seemed to prove how truth is often stranger than fiction, Bill Ford found himself in the supremely ironic position of belonging to two families that were also high-powered brand-names and that were now engaged in all-out public relations warfare (although the tire company changed hands more than a decade ago).
Increasingly distracted, Fords top management began to neglect the basics. Suddenly, industry experts were describing the latest new-model launches as mediocre and uninteresting, and some traditional Ford customers were beginning to look elsewhere. When Ford Motor lost $5 billion in 2001, the board finally realized they were facing a full-scale emergency.
What took the directors so long? Our board was looking at a company with record profits, says Ford, and with a vision [Nassers] that was being hailed by many observers as visionary and breaking the mold of a typical car and truck company. You have to remember that the facts i.e., profits, and the stories that were being told were all very positive. And so I think people perhaps felt that maybe I was crying wolf. And that things really couldnt be the way I was seeing them. Because if you were just a little step removed, everything looked great.
In reality, Ford says, We underinvested in our core business. And then Firestone hit, which had a tremendous effect financially, but I think a much greater problem was the distraction effect for all of our management. And then all of a sudden, we started to go bad on quality. Quality and launches and everything that we need to do in this business really require minute-to-minute attention to detail. And if your management is distracted by something else, it happens like that like the snap of a finger. And thats exactly what happened to us.
Wes Brown, the Nextrend analyst, has a different assessment. Why did things go bad at Ford so quickly? No one knows for sure. But they could have had a brain drain some top people in engineering may have left. Also, when youre on top like they were, its very easy to become cocky and complacent. But one thing seems clear. For them to survive, theyre going to have to fix North America. They need to go back to what they do so well the SUVs and the pickup trucks. And they also need to expand sales of their luxury brands, which will go a long way toward increasing their revenues. I think that if anyone can do it, Bill Ford can. But I also think its going to be a long, hard road to recovery.
Bill Ford says he couldnt agree more. Things fell apart very quickly, he points out, and to rebuild that cant be as quick. Its a painful, step-by-step rebuilding that will take us a few years. But thats what were embarked upon. Were going back to our core business back to what made Ford Motor a great company.
And it is likely that no one understands better than Bill Ford just what it is that made Ford great.
Im often more comfortable in one of our plants, Ford says, than I am in one of our offices. And thats because they [the workers] have the same stories that I have. We share so much common history. Maybe the scale is different, maybe the experiences are different, but so what? It doesnt matter whether youre a pipe fitter in a plant or youre the CEO at Ford Motor Company. Their history, their family life, everything they have in their lives was also due to Ford Motor Company.
Their family is just like mine.
Tom Nugent is a Michigan-based writer.