Reckoning

by David Halberstam

  His friends thought he was worn out. He was conservative in part because he was tired. There was, his friends thought, a certain inevitable erosion from that many years as the head of so large a company. Other chief executives, in the new managerial age, spent five or at the most ten years at the top and then were gone. The burnout rate was very high, and a man who gave a company ten years was considered unusual. The fatigue of running so big and complicated a company in so difficult an atmosphere was beginning to show. He was tired of dealing with the government and even more with the new consumer groups. Business was harder to conduct in the seventies than it had been in the fifties. There were more pressures, more claimants demanding to share his power, less room for him to maneuver in. That which had been fun was less fun; that which was exciting had all happened before. Gradually, Henry Ford had grown old running his own company.

  Within the company he became more churlish and contentious. His attention span seemed briefer. In the past at critical meetings he had always enjoyed playing the negative role, the devil’s advocate, making the younger men around him prove their point. That was fine, it placed them on the defensive, and they had to work that much harder to prove their cases. In the end he would come across, he would almost always say, Okay, but you’d better sell ’em. Now, however, he was becoming much more conservative, his opposition to innovation was stronger, and there was less play-acting in the querulousness. William Clay Ford, his brother, became worried about him. Because he had never divorced and never had had to split up his holdings, Bill Ford owned more stock in the company than Henry, but he had chosen not to be a power there on the theory that there should be only one Ford making decisions. Now he began to talk to his close friends about his brother’s drinking and impulsive behavior and wavering attention. He was in great anguish about it, but he could not bring himself to move against Henry or to use his stock as a genuine lever of power (despite the urgings of Iacocca, who at the very least later wanted him to use it to take out Philip Caldwell).

  Henry Ford, on his part, sometimes seemed now to resent the burden put on him, the responsibility not just for the company and his own immediate family but for all the Fords. Occasionally, with close friends, he would slip into monologues touched with self-pity. He was the one who was doing all the work, carrying the family, while his brothers and sisters did damned little except take their dividends. Everyone, he said, claimed he was the playboy, and that was unfair. He was the one who worked while the others played. The worst thing, he would say, was the next generation, which had more power than his. Thirteen grandchildren, seven of them girls, and only six boys. Women will fuck up everything, he said. Then he would enumerate companies which he believed had been destroyed by the ascent of women to power. A few minutes after one of these monologues, he would be himself again, the conservator, responsive to the call of duty. Although he had less grasp of the company’s day-to-day affairs, partly because he was not on hand as much, he nevertheless wanted to be as controlling a figure as in the past, when he had worked hard.

  Inside the company, both Iacocca on the car side and Lundy on the finance side were consolidating their power. They were strong men moving in a partial vacuum. They were very careful not to offend each other; Iacocca was especially careful, for he knew that Lundy spoke for Henry Ford’s real interests and those of the Ford family. Yet others watching them, knowing how different the two men were and how opposed their real interests were, Iacocca wanting to spend money and Lundy wanting to save it, believed there would be a time when their two armies would meet. Iacocca was unceasingly working to expand his authority, dominating the product side, becoming more visible all the time. He had never been a man to turn away from power and visibility, and now people checked things with him rather than with Henry. He had always been connected to the dealers, their man in Detroit. Then the production people, frustrated by the conservatism of finance, depended on him. Now even the board members, increasingly concerned about Henry, would take him aside and confide their doubts. There were more and more meetings where Iacocca was the central figure, in complete control of all aspects of the subject under discussion, and where Henry Ford seemed to dissolve into the background.

  In any real sense, although Iacocca and Lundy might struggle over product and investment, Lundy had already won. Iacocca was working not off norms that he set himself but off norms set by Lundy. The PIPs were a good example of that; they reflected almost perfectly a product man, working within ever narrower confines, carrying out finance’s mandates. Iacocca’s best cars in that period, even going back to the Mustang, were patched cars. He was at once frustrated and successful. He got on surprisingly well with Lundy on the personal level, and there were those who knew Lundy well and thought he was a man of divided loyalties as the tensions between Ford and Iacocca mounted. His nominal loyalty was to Henry Ford, whose behavior was bothersome and often unsavory, but he knew Iacocca was saving the company. Iacocca for his part was even more divided. He had the job he had always wanted, he was handsomely rewarded, and yet his power was in decline. From 1971 through 1973, before the first oil shock, even as his relationship with Henry Ford began to disintegrate, he averaged $800,000 a year in salary and bonus.

  That was also the period in which Lee Iacocca, who had prided himself on loyalty, began to feel scornful of Henry Ford. In Iacocca’s mind, he, not Ford, was running the company. This was confirmed to him regularly by everyone he knew, including members of the board and Ford’s own brother, Bill. Where once he had been grateful to Ford for reaching down and picking him out, now that gratitude had lapsed. There was some lingering bitterness over the Bunkie Knudsen affair, and that too had diminished Iacocca’s sense of obligation. Less and less did he think, as he had some fifteen years earlier, that he was lucky that the company had treated him so well; more and more he felt that the Fords were lucky—that he was there operating the company for them while they indulged themselves. He was carrying them, making them look good. In any other company save this one, he would tell close friends, he would have been running the show completely. Ford would be gone. No non-family-dominated company would tolerate behavior like his. The dynamic, to some observers, was not a happy one. For a variety of personal reasons Henry Ford was pulling back from the company, and the more he pulled back, the more dominant Iacocca became in its daily affairs. Then, when Ford noticed that everyone was checking with Iacocca, going to him for decisions, Ford became annoyed. Henry Ford was not going to stop Iacocca from running the company—he had come to depend on him—but he was not going to like him for doing it.

  At first the signs of tension between the two men were barely detectable even to those at the top level of the company. Only a few men who were unusually close to one or the other picked up on it. It was not much, perhaps just a quick cutting comment that one might make about the other in an atmosphere of total privacy. Soon the signs grew a bit more obvious. They were picked up by the respective retinues, those who not only worked with each of them but traveled with them. It was a change in body language—Iacocca no longer quite as much at ease with Henry Ford, straining to please him, working harder to be himself in Ford’s presence. In the past, when Iacocca had deferentially referred to the chairman as Mr. Ford in front of everyone else, it was deference born of confidence. Now when Lee called him Mr. Ford, there was a certain artificiality to it, as if he were somehow groping for the right tone. They seemed like men apart.

  Nothing emphasized this more than their trips to Europe. Ford of Europe was important to the company because it represented important revenues, but it was important as well because it was territory that Henry Ford enjoyed visiting and where his prestige and fame seemed more tangible. Within the company the jobs in Europe were always considered plums, because they provided exceptional access to Henry Ford, far beyond what comparable jobs in America might offer. In Detroit, Iacocca and Ford would work long hours and then at the end of the day go their respective ways; if there were great social differences b
etween them, they were largely invisible. Traveling abroad, however, where work and social life were mixed, the differences of class showed themselves. Ford went by commercial 747, which he considered safer; Iacocca took the customized 727, because he loved its elegance and loved being in charge, delighted in telling the friends who accompanied him that when he was a kid growing up in Allentown he would never have dreamed that he would be flying across the ocean in his own jet, being served a perfect steak and a perfect drink by his own steward. In that moment it was his plane, not Henry Ford’s.

  Once they were on the ground, the differences were even more sharply drawn. Henry Ford would sit night after night at dinner in various Ford company dining rooms with his favorites from Ford of Europe, who, the Iacocca people complained, tended to be tweedier and more social than the American executives and who, because of Ford’s love of Europe, seemed to have his ear more than they did. At the same time and often in the same dining room Iacocca was having dinner with his buddies from Detroit—Hal Sperlich, Gene Bordinat, and Bill Benton—whom he had brought along, and as often as not, with the pilot and the crew of the plane. It was as if Lee had taken his own slice of Detroit with him to Europe. Iacocca, so formidable at home, went to Europe with his own troops because he was ill at ease there. For him it was an alien place, and he was oddly shy, once again the little Italian kid and thus in need of the reassurance of his own men. But that irritated Henry Ford, for it raised again the issue of a company within a company. The sight of these two men with their two separate retinues, sitting apart in a Ford dining hall in Europe, was, thought one Iacocca friend, a reflection of a split between the men of function and the men of class. Ford and Iacocca, who shared responsibility for one of the greatest industrial empires in the world, seemed at these moments two strangers who had been thrown together by chance. It was clear only in retrospect, the Iacocca friend noted years later, that Henry Ford wanted to spend as little time with Lee Iacocca as possible and that Iacocca, highly sensitive to any slight, realized he was failing some kind of social test.

  The first shot in what was to become an increasingly bitter seven-year struggle between them was fired in 1972. At issue was the question of who would head Ford of Europe. It was an important job within the company, especially since Iacocca, now reigning in Detroit, regarded Europe as a rival and as yet unconquered principality. Iacocca tried to put in his own man. It was an aggressive move and an exceedingly political one, for it showed that Iacocca was not content with the status quo and wanted even more power. Iacocca’s choice for the job was Hal Sperlich. Sperlich, with the departure of Don Frey, was the most important product man within the company. He was fiercely committed to making good cars and equally committed to Iacocca, willing to take on anyone, including the chairman, in the passion of his cause. He was a good, sound engineer who did little in the way of original engineering (he had almost no patents to his name), but he could talk with the engineers and could visualize a car as readily as they; at the same time, he was at least as much a businessman as a product man. Sperlich had played an important part in the birth of the Mustang, watching over it day and night as it neared production, living in his office, seldom going home. He had always been boyishly eager and ambitious. In 1957, relatively new to Ford, he worked in product planning with a man named Jim Cappolongo under him. Cappolongo came in at seven-thirty one morning only to find that Sperlich had arrived at seven twenty-five. The next morning Cappolongo arrived at seven only to find that Sperlich had gotten there at six fifty-five. The next morning Cappolongo, determined to beat him, arrived at five forty-five only to find that Sperlich had come at five-thirty. Finally they made a truce, agreeing on a joint arrival time, and they joked about it for years, the zeal of the young.

  Sperlich came from a family where hard work was a given. His grandfather had been a skilled carpenter, his father a plumber, good Germanic men of tools. Sperlich himself had been born on the east side of Detroit, but the family had moved to Saginaw, Michigan, when he was young. His mother had been orphaned when she was very young, and she was a conservative person who, having known difficult times, was leery of anybody who promised an easier life. She was strong, diligent, and careful; a nickle was to bring five pennies’ worth of value and nothing less. His drive, he suspected, came from her. She might have married a plumber, but her son would be more than that. The most basic premise in her strict Lutheran household was that her son Hal was going to do very well in school so he could go to college. “I knew that I was going to go to the University of Michigan and become an engineer,” Sperlich once said, “before I knew where the University of Michigan was and what an engineer did.” He had fulfilled the ambitions of his parents in no small part because he did not dare fail this woman who had invested so much in his life and who monitored his progress in meeting her standards so carefully. Upon graduation he had taken a job with Alcoa in New Kensington, Pennsylvania, and then he had gone off to the navy for three and a half years. When he returned, he had tried Ford.

  Sperlich’s rise meant that Iacocca was protected on the technical side. His connection to Iacocca served both of them well. Sperlich’s skills shored up Iacocca in the area where he was weakest, the actual engineering of product, and Iacocca offered Sperlich the best chance within the company to turn new ideas into automotive reality. It sometimes seemed as if there was a father-son relationship between the two of them, even though Sperlich was not that much younger than Iacocca. Sperlich, at once so talented and so loyal, was almost singular in the company in that he was allowed to argue openly with Iacocca. The others, even those in Lee’s own gang, if they wanted to dissent, did so privately, but Sperlich, fearless and impetuous in everything, did it openly and joyously. He was even, upon rare occasion, allowed to make fun of Iacocca. One morning Iacocca walked into the design room wearing an unusually loud checked suit. Sperlich turned and said, “What kind of a clown wears a suit like that?” The others in the room shivered, for no one talked to Lee like that. But Iacocca even managed to smile. It was impossible for the other product men to get angry with him. He was simply too enthusiastic. Even as a young man he had a special ebullience, the pure pleasure of someone who is doing exactly what he wants to do. Once, coming upon two subordinates arguing over whether to go ahead on a particular part, he had asked them what the cost was. Fifty thousand dollars, one of them said. “That’s nothing but pocket change,” he had said. “Go ahead.” All good designs, his and those of competitors, excited him. “Look at that,” he once said, pointing to a new hot GM car. “Lovely, just lovely—like a bowl full of tits.”

  Sperlich sometimes even seemed to mimic Iacocca: If Iacocca was angry with a colleague and cut him off, then Sperlich did too; if Lee began to warm a little again, so did Hal. Sperlich was Lee’s favorite, and his trust in Iacocca was complete. He had been protected in the past, and, he presumed, would be protected in the future. Because he was shielded by Iacocca and because he was so gifted, Sperlich was an anomaly at Ford. Ford was a corporate place, and Sperlich was the antithesis of the corporate man. The company was filled with more and more bright young men from the nation’s business schools, careful and cautious and able, who knew how to play the game and knew when to talk and when not to, who never made mistakes and above all avoided combat. They could destroy a car or a career without any confrontation, without even raising their voices, while in fact seeming to praise the car or its architect. Sperlich was different. He argued with everyone, spoke when he had not been spoken to, and seemed to have no respect for the pecking order. He did not modulate his voice if he was addressing superiors, including Henry Ford. The finance people, almost to a man, hated him, not only because he fought with them but because he did not fight in the modern style, as they often did, deftly and coldly, behind closed doors; he fought openly and furiously. The exception was Lundy, who, far above Sperlich in rank, seemed almost amused by his combativeness. He took, however, a small revenge by pretending he could never quite remember Sperlich’s name. �
��I like that young man of yours, Lee,” he would say. “You know the one—tell me his name. He’s certainly feisty.”

  Warnings failed to moderate Sperlich. He believed that if the Ford Motor Company was to be truly open and regenerative, it had to be receptive to ideas, and that meant people should feel free to push ideas that might seem strange as well as the orthodox ones. Unless the company at least considered them seriously, no one would know which had been the good ideas and which the bad. (Once years later, after Sperlich had left Ford, David E. Davis, the auto writer, mentioned his name rather positively to Don Petersen, a top Ford executive. Petersen sneered. “Sperlich,” he said. “I protected Hal Sperlich from hundreds of mistakes. When he was leaving Ford, I called him in and I showed him a desk drawer filled with ideas that I had saved him from, bad ideas, and I told him wherever he went next he’d better be more careful, because there would be no one to protect him from his own mistakes.”) Sperlich was combative by nature, and when it was clear that a certain idea was dead and that the subject was closed, Sperlich would pursue it—almost, his friends thought, for the pleasure of provoking the finance people. It was as if, although he knew they were going to win and the dice were loaded, he nonetheless liked to taunt his opposition and expose the weakness of their positions.