By Daniel Gross for Slate
Last week, Ford Motor Co. showed all the signs of a once-great company in
distress: a sharply reduced earnings forecast, a credit-rating cut, and a
sliding stock. Ford has been here before, most recently in early 2003. The
latest run of bad news may represent either the next stage in a long decline
or the point at which a miraculous comeback begins. Regardless, it has ended
the hopes that CEO William Clay Ford Jr., the youthful great-grandson of
Henry Ford, would quickly restore the nation's second-largest automaker to
its former glory.
Bill Ford, the first recognizable personality at the top of an American car
company since former Chrysler head Lee Iacocca, is a hybrid executive, a
postmodern synthesis. Although he came to the CEO's post in the fall of 2001
with no great accomplishments, his lineage and his ιlan gave him instant
credibility. A humanist among gearheads-Ford is a self-confessed
guitar-strumming tree-hugger, though he also professes a deep affection for
muscle cars-he promised to build an intellectual and managerial bridge
between Ford Motor Co.'s glorious 20th century and its uncertain 21st.
"There is an air of nonchalant enthusiasm about Bill Jr., a man clearly
comfortable in his own skin," Douglas Brinkley wrote in the definitive
Wheels for the World. But while the miserable run of numbers is obscuring
some of the genuine good Ford has done, it seems like the bridge is
Henry Ford pronounced history bunk. Bill Ford wallowed in it. Born in 1957,
he grew up in exclusive Grosse Pointe, prepped at Hotchkiss, and enrolled at
Princeton. From an early age, Bill had "an intense infatuation with American
history, particularly Abraham Lincoln, Thomas Edison, the Plains Indians,
and his own ancestor, Henry Ford," as Douglas Brinkley put it. Bill worked
one summer at Greenfield Village, his great-grandfather's nostalgic
reproduction of a pre-automobile America. At Princeton, he wrote a thesis on
Henry Ford's labor policies.
When Bill went to work at Ford after graduating in 1979, the company was
both a supercharged global corporation and a fourth-generation family
business. Henry Ford's descendants controlled the company through a class of
special voting stock, and the presumption was that the males among them
would find their way to the top. Bill rotated through different departments
and joined the board of directors in 1988. But when it came to executive
ability, he was more like the young Franklin Delano than like Theodore
Roosevelt. According to Brinkley, his boss, Don Peterson, thought him "the
most likely fourth-generation Ford to rise to the top" but not because he
had "any remarkable skill." "What he had was a fine manner," Peterson
explained. "He never became fully knowledgeable of any particular aspect of
the company. But he was naturally bright and that can compensate for a lot."
In January 1999, Bill Ford was named chairman of the board at the age of 41.
And while Jacques Nasser ran the company as CEO, Ford engaged in big-think.
Other American car manufacturers planted new facilities in low-cost foreign
countries; Bill Ford advocated investing in domestic manufacturing. His
signature project involved investing $2 billion to turn his company's vast
River Rouge complex outside Detroit into a technological and environmental
showcase. As his competitors feverishly opposed any efforts to boost fuel
efficiency, Ford proclaimed in 2000 that he could increase the fuel
efficiency of his company's SUVs by 25 percent in five years. The next year
he unveiled the design for the Escape Hybrid SUV, billed as the car that
would occupy a happy middle ground between the new Japanese hybrid putt-putt
and the masculine Hummer.
At the same time, however, Ford Motor Co. continued to stamp out hundreds of
thousands of gas-loving Expeditions, Explorers, and Lincoln Navigators.
Sales of these land yachts boosted Ford's top line, but the bottom line
suffered. Distracted by investments in technology and services, and intent
on maintaining too many brands, the company was caught short by the
2000-2001 downturn; it lost $5.5 billion in 2001, and Nasser resigned that
Assuming the role of CEO, Bill Ford made a series of tough decisions. In
2002, he pushed through a major restructuring, eliminating 35,000 jobs, five
plants, and the Lincoln Continental. Spurred by ultra-low interest rates and
0 percent financing, Ford Motor Co. recovered quickly. Results improved
markedly in both 2003 and 2004. Future strategy rested on relentlessly
seeking efficiencies and pumping up the volume of key products, pickup
trucks and SUVs. Pretax profits would rise to $7 billion by 2006, Bill Ford
promised. These profits would enable the company to make the investments
needed to transform it.
But then Ford the company's drive for profits ran right over Ford the
humanist's eco-friendly vision. Bill Ford's promise to boost fuel standards
for SUVs was abandoned in 2003 as too costly and impractical. Meanwhile, the
Escape Hybrid remained trapped on the drawing board until last fall, even as
the Toyota Prius became a status symbol. Environmentalists turned on Ford,
somewhat unfairly. The River Rouge plant, which was opened to the public in
May 2004, is an environmental showcase. And this is a guy whose "distaste
for nonbiodegradable materials" is so powerful that the curtain and
carpeting in his office "are all made of hemp," as Brinkley noted. Still,
Ford's image continued to take a beating, especially after it was revealed
he had been allocated 400,000 shares of Goldman Sachs in a 1999 IPO. Ford
was a major Goldman Sachs client, and Goldman president John Thornton sat on
Ford's board. Ford's own board absolved him of wrongdoing, but he sold the
shares and gave the profits to charity nonetheless.
Ford Motor Co. turned around enough to have a good year in 2004. But its
profits came mostly from its financing arm. And there were signs of trouble.
In the 2004 fourth quarter, vehicle sales fell far, and Ford's U.S. auto
operations lost $470 million. And in recent months Ford and General Motors
have been getting the tar kicked out of them by Toyota, Honda, and other
companies that specialize in smaller, more fuel-efficient cars. Aside from
the F-150 truck, Ford lacks big hits. As this March report shows, in the
first quarter of 2005, sales of the Excursion, Explorer, Expedition, and
Navigator-the big vehicles that sport far higher profit margins than the
Taurus-have all declined sharply.
The environmentally friendly products that Bill Ford said would be integral
to the company's future also now seem peripheral at best. But it's one thing
to overpromise and underdeliver to the Sierra Club and quite another to do
the same to Wall Street. In April, just one month after reaffirming its
profit projections, Ford reduced its estimate for 2005 by nearly 30 percent
and rescinded the promise of $7 billion in pre-tax profits for 2006. The
market responded by driving Ford's stock down to $10. And last Friday,
Standard & Poor's lowered Ford's credit ratings-it has $173 billion in debt
outstanding-perilously close to the dreaded junk level.
To be sure, this is a very difficult time, perhaps an impossible one, to be
the chief executive of an American auto business. The factors that are
making it difficult to turn a profit-expensive steel and oil, a weak dollar,
rising health-care costs, aggressive foreign companies-are likely to be with
us for awhile. And the government certainly isn't in any mood to help. But
Bill Ford no longer appears to be what the Ford family and the company's
324,000 employees needs. His job isn't in jeopardy, since his family still
controls the company. Ford Motor Co. might be best served, however, by a
sharp break from the past. It needs someone to bust things up, to make
difficult choices about its many brands, about its relationship with labor,
about the basic nature of its business. In short, it needs an executive who
more closely resembles relentless Henry than sensitive Bill.
Yet another $.02 worth from a proud owner of a 2001 Ford Ranger 4x4 and a
1970 Mach 1 351C @ http://community.webshots.com/album/18644819fHAehGJAjt