His own memory of that time was that it was eerie. He had believed all along that the company was genuinely divided over the issue, that there were two sides fighting almost equally. Then suddenly the word came down, and there was only one side. All during the final week, people whom he and Iacocca had regarded as allies bailed out. What he heard in the last days before the final meeting was the sound of silence—people not returning calls, not responding to memos. It was odd, he thought, how lonely you could be in a crowded dining room at moments like this. Right before the meeting, Ben Bidwell, who was sales group vice-president for North America, sent Iacocca a letter: He was withdrawing his support from the Tiger. That stung, because Bidwell was regarded as a good product man and an unusually independent executive, no one’s person but his own. There was no way, Sperlich was sure, that Bidwell could believe in the Panther. His defection, then, showed the power of the other side. If Bidwell could not stand the pressure, no one could.
The atmosphere just before the meeting was strange: Usually before a big meeting the company was filled with special energy; there was a flurry of preparation as each side consulted with its troops, working on its arguments, and tried to enlist new supporters. He had always liked that feeling, the excitement and the challenge. This time that feeling was gone. It was replaced by an odd stillness. No one was stroking anyone, no one was coming in for last-minute briefings so he could get his strategies right. It reminded him of the moment in the movie High Noon when all of the good townspeople who were supposed to help Gary Cooper disappeared.
Just before the meeting Henry Ford phoned Lee Iacocca and told him he could not go for the small car because there wasn’t enough money. That was probably a sign to head Sperlich off, but it did not stop him. For that day he saw himself as the surviving spokesman for product and for the future. If he was to be a martyr for small cars, a martyr he would be. He was the only man in the room who did not seem to know that the ball game was over. Both Iacocca and Bill Bourke, his principal allies, had become very quiet, but Sperlich plunged ahead. He was so tough and relentless in marshaling his facts that finally Henry Ford, enraged that Sperlich was fighting so hard when the decision had in fact been made, enraged that Sperlich was violating the unwritten law, turned to him in his fury and, in as hard a voice as anyone had ever heard from him, said: “I don’t want to hear another damn word out of you. Just shut up, dammit.”
That was it. The two-year fight was over. Ford had chosen to produce a partially downsized car. That car, as it would happen, would appear on the market in 1979 just as events in Iran came to a head and the price of gas went skyrocketing again, Iacocca would eventually say of the decision that with it Henry Ford had lost not just the battle but the entire-war, because he had left the company so ill prepared for so important a turn in the market. Later that day, when they all went to lunch, Ben Bidwell sat next to Iacocca.
“Lee,” he said, “the Panthers beat the Tigers in the Super Bowl today.”
“Yes,” said Iacocca. He seemed down and had little taste for Bidwell’s humor.
“They were lighter and faster,” said Bidwell, “and besides, they had a hell of a coach.”
Henry Ford’s friends thought that decision was one of the hardest of his life. He was keenly aware of its gravity and the possible consequences. The investment involved was massive, and although he did not for a minute underestimate the arguments that Sperlich had presented, they ran against everything he had learned about the industry. The only market he knew and trusted was the American market, where buyers wanted bigger cars. So at the moment of decision he had felt cornered. Two years later, talking about another, similar situation, he revealed the kind of thinking he had brought to the Panther-Tiger decision, the way he looked at things when torn between a new, changing, volatile market and the need to protect his family’s firm and its finances. This time, in the spring of 1978, he was under pressure to put out two front-wheel-drive cars, one a smaller car called Erica during the debate and eventually called the Escort, and a medium-sized car known as Monica in the in-house code. After one long meeting he spotted Ben Bidwell in the parking lot. Bidwell had been arguing vigorously for both programs, despite the chairman’s resistance. Ford walked over to Bidwell’s car and started to talk. It was Henry Ford as Bidwell had never before seen him—so disturbed about the matter that he felt he had to explain his position to someone, if only an underling. He chattered for a few minutes, then grew introspective, and because it was very hot, he got inside Bidwell’s car. “Listen,” he told Bidwell, “I’m going to buy the Erica program. I don’t want to do it, because it’s accounted break-even at best, but I’m going to do it because I have to. But I’m not going to buy Monica. I know it’s a good car, and it makes sense for someone like you to push it. But it’s too much for me and the family. Just too much money being spent. If I were a manager like you, I’d look at it the way you look at it, and I’d be for it. But I’m an owner, this is my family’s company. My grandfather didn’t go into big debt, and I’m not going to go into big debt. This is my family’s company. The stock represents our real wealth. I’m sixty-one years old, and I’m not going to take this company into big debt. We just don’t have the billions it will take to do both. I wish we did, but we don’t.” With that, having revealed much more than he ever wanted to, Henry Ford shook his head and walked away.
About six months after the battle over the Fiesta was finished, Sperlich was fired, but not as most senior executives had come to be—with a grander title, and a laudatory statement written in the public-relations office which obscured what had happened, or a golden handshake that took care of the departing executive for life. In Sperlich’s phrase, he was the beneficiary of an old-fashioned, hard-hearted firing. He had offended the chairman in the most personal way, so in November 1976, Henry Ford phoned Iacocca, who happened to be in New York. Ford told him that he wanted Sperlich dismissed by the end of the day. Iacocca argued briefly with him. Ford said that if Sperlich was not fired, then Iacocca would be too. Iacocca then called Bill Bourke in Detroit—Bourke was head of North America—and told him to fire Sperlich. Bourke told Sperlich he was fired, and Sperlich, innocent that he was, was stunned. The blood seemed to drain from his face. So Sperlich was gone, and now the entire company knew that Iacocca could not protect his favorite son. It was proof of his impotence within the company. Later that day Sperlich talked to Iacocca, and there was not much that either of them could say. “I’m sorry,” Iacocca told him. “There was just nothing I could do about it...just nothing.”
Sperlich very quickly became a nonperson. He cleaned out his desk and went to a distant office where he would not see old colleagues and embarrass them by his presence. He asked for a final meeting with Henry Ford, and a few days later it was granted. It was an odd, inconclusive encounter. Sperlich asked what he had done wrong. He had, he said, given twenty years of his life to the company, he had been a part of several of its most significant successes, and he had always been completely loyal to product. “I have never,” he said, “done anything I was not supposed to do.” Henry Ford looked at Hal Sperlich a long time, and then he said in words that echoed partings of executives past, “I just think it works out better this way.”
Lee Iacocca’s own days at the Ford Motor Company were now numbered. The firing of Sperlich had been an open humiliation. His authority had been thoroughly undermined. Though Ford was chairman and Iacocca president of the company, they barely communicated. Bill Bourke could not believe the enmity between the two men. He found himself relaying messages from one to the other, like a child whose parents are getting a divorce and no longer speaking. Henry Ford became more forthright than ever in his complaints about Iacocca. A friend told him if he felt that strongly, then he should let Iacocca go and end the turmoil.
But Ford still seemed to be looking for the right excuse. He had failed with the audit on the Fugazy connection. Now he hired a team of outside consultants, from the McKinsey company, to do a study on
the future requirements of the company. Iacocca understood the move from the start, and he loathed the McKinsey people from the moment they walked in the door. “What is this shit?” he asked. “What the hell do we need outsiders coming in to tell us who we are?” The consultants, he said, were stupid goddam double-domes who had never built a car in their lives, and they were advising the Ford Motor Company on what to do. Predictably, within a year, adopting a McKinsey recommendation, Henry Ford announced the creation of a new post, the Office of the Chief Executive. He gave that title to himself and gave the second-ranking job, vice-chairman, to Phil Caldwell. That placed Caldwell, whom Iacocca despised, over Iacocca. Henry Ford, very conscious of the importance of the smallest of social rites and amenities, now began to twist the knife into Iacocca. He was careful at major dinners to place Caldwell at table two (he himself was at table one) and Iacocca at table three. The signal he was sending to the company thundered out. Even so, Iacocca would not quit. Instead he searched desperately for allies; in the past he had feared Bill Bourke as a rival, but now, with Caldwell rising above both of them, he sought out Bourke’s friendship.
In the day-to-day exercise of authority, his power diminished. That had always been part of his real love of his job, the ability to move things and make them happen. Now he had lost that as well. The people in the bureaucracy knew that his strength was on the wane, and men who never would have challenged him in the past were suddenly standing up to him. Others who had once been his friends now put distance between them. He visited his daughter at Middlebury College, in Vermont, and while there he attended a football game and watched a man who headed an advertising agency that did millions of dollars’ worth of business with Ford come within ten feet of him and manage not to see him. He took careful note of who did and who did not come to his birthday party, which had always been an annual event among his buddies. He turned on a friend named Bill Benton, widely regarded as an Iacocca protégé, and accused him of betraying him and going over to Caldwell; among Benton’s sins was that he had just bought a house that happened to be on the same street as Caldwell’s. Now when Lee Iacocca wanted a company plane, he had to ask for it in advance and submit a manifest of who was going to accompany him.
At times, it seemed to his remaining friends, he was in a deep depression. Some told him to quit and get out, but he stayed on. After work he would simply go home and sit by himself in a room with the shades drawn, not talking to anyone, brooding in a world all his own, pondering how it had all gone wrong. His wife, who hated what this was doing to him, urged him to quit. Years later, talking about his last months at Ford, he admitted that his one regret was that he had not walked into Henry Ford’s office and told him to stuff it. But he did not. He seemed immobilized, unable to believe that he had lost control of a company that he had so completely mastered, and unable as well to give up the income of nearly $1 million a year.
For a year he stayed and took it, and then he made his move, in effect a frontal challenge to Henry Ford. He went to the board of directors. Over the years his power with the outside board members had grown; in their eyes during the last decade Henry Ford had not been particularly effective, and Iacocca had run the company well on limited resources. As Henry’s behavior had grown more erratic, these board members had confided their doubts to Iacocca. Among those who particularly liked Iacocca were George Bennett, a Boston financier, Joe Cullman, the head of Philip Morris, and Franklin Murphy, the chairman of the Los Angeles Times-Mirror company. In addition, Iacocca was close to William Clay Ford, Henry’s younger brother, who had even more stock than Henry. A reformed alcoholic himself, Bill Ford had misgivings about Henry’s drinking. Without knowing it, by confiding their misgivings to Iacocca, they had also fed certain fires within him. In 1977 and 1978, as Iacocca became more restless, he reflected on the misgivings that these men had voiced to him and the admiration they had expressed for his leadership, and he mistook what they were saying and what they felt, their sympathy, for what, in a confrontation with Henry Ford, they would actually do.
Early in June 1978, more than a year and a half after Sperlich had been fired and a year after the McKinsey people had. institutionalized his decline, Iacocca was treated to one more increment of humiliation. Caldwell was made deputy chief executive, and Iacocca was ordered to report through him. That change had caused some reverberation on the board, and a three-man subcommittee of the board composed of Cullman, Bennett, and Murphy had been formed to look at it. A few weeks later, frustrated, depressed, Iacocca did the unthinkable. He took the company plane and flew first to Boston to see Bennett and then to New York to see Cullman. He talked with Murphy over the phone.
Going to the board was the act of a desperate man, for Henry Ford would take it as the ultimate act of defiance. To Henry Ford the board was, in the most personal sense, his. The Ford Motor Company might be publicly held, but in his mind it was still a private family company. The outside board members were not to challenge him; they were to show up, be wined and dined, receive their annual free cars and their fee—up to $50,000 a year—and make no untoward noises. He carefully monitored who went on, lest there be the possibility of a future challenge to the family. In going to the board, Iacocca was crossing a sacred line, and it was probably the mistake Henry Ford had long been waiting for, the act of disloyalty he wanted. The very act displayed the hopelessness of Iacocca’s position, for he was forcing a confrontation he had no chance of winning. The outside board members might like him better than Henry Ford, they might think him an abler and more effective auto executive, but unless Ford’s misconduct became considerably more egregious than it had been so far, they were not going to allow an executive, no matter how able, to challenge the sitting head of the family.
Iacocca was very careful in what he said to the board members. He did not talk about Henry’s personal problems. He said that the company was in deep trouble, that he was the only one who could put it back on its feet, that Henry had not been the same since his heart trouble, and that the company was now leaderless. Most of them agreed with him, at least privately. Henry Ford, however, knew exactly what had happened within hours of Iacocca’s moves. A few days later when the board convened again, Henry Ford said that he intended to get rid of Iacocca, because they were not comfortable with each other. This time, some of the board members, notably Bennett, argued with him. Bennett was a State Street Boston financier, and he believed not only that Iacocca was the most capable man in the company but that his value was reflected tangibly in the company’s stock. Both Wall Street and State Street respected Iacocca’s stewardship. If Iacocca was fired, he told some colleagues, it could affect the stock, for the action could undermine investors’ confidence in the Ford Motor Company.
The firing was headed off the first day. The next morning the pro-Iacocca board members worked frantically to find some sort of compromise that would allow him to stay on. It was a peculiar scene. There was Henry Ford in his office, waiting to hear from the board, cool and aloof, the game now very much in his hands, and there was Iacocca down the hall in his office waiting to hear the results, and there were the board members, pulled between these two men, trying to put the fragments of the company’s leadership back together. The board urgently wanted some kind of compromise, and only as the minutes passed and they shuttled back and forth between the two offices did they realize that Henry Ford did not want compromise, he wanted Iacocca out of his company. More, it was clear that Ford was underwhelmed with the part that the directors were playing. He did not, as they did, consider their role helpful. He believed that they had placed themselves above his law, and as a result he treated them with a certain disdain. He was perfectly polite, but he did not bend at all. They kept coming back to him with compromises, such as one that would switch some of Phil Caldwell’s duties and give Iacocca more line responsibilities, and Ford smiled and said, “No, it’s him or me.” Then he added: “Look, I’ll leave the room and you can figure it out without me.”
“
No, Henry,” Franklin Murphy said, speaking for them all, “you don’t need to do that.”
They were members of the Ford board, and in any showdown they were not going to challenge the sitting representative of that family, who was, in his own way and most particularly in moments like this, as tough as his grandfather. So they folded. Not even Bill Ford could help Iacocca. He, even more painfully than the other board members, was caught between loyalty to the company and loyalty to the family. Blood was stronger. That afternoon he sat in on the meeting when his brother fired Lee Iacocca. Iacocca asked what he had done wrong, and Henry Ford answered, “I just don’t like you.” At the end Iacocca told Ford he was making a mistake, that they had just earned $1.8 billion after taxes in the previous year. “You’ll never do it again,” Iacocca said. The meeting was short. As Bill Ford, by now in tears, walked out of the office with Iacocca, he turned to him and said, “I’m sorry, Lee. I’m sorry.” It was all over. At the end of the work day some of the other top executives, who had known vaguely of the meetings, went to the parking lot and found on their steering wheels notes that said they would now report to Phil Caldwell instead of Lee Iacocca. “He finally did it,” Bill Bourke told Don Petersen. The Iacocca era was finally ended.
Reckoning Page 70
