Reckoning

by David Halberstam

  Henry Ford had called Philco the principal management problem in the company when he had given the job to Caldwell, and the problems facing Philco in 1970 closely resembled those facing the Ford Motor Company a decade later. Philip Caldwell had proved himself to be a good manager for a troubled company. Not a brilliant or original man, it was said at the top, but a careful, relentless, and thorough man—good for cutting costs and shepherding a company through hard times. That he would now have to do, for by the time he took over Ford at the last moment of the 1970s, the company was in trouble again. Its costs were out of line, its products lacked quality, and they had lost their appeal. All the unfavorable trends had come together at once.

  “He held all the tough jobs,” Henry Ford once said of Philip Caldwell, “and he held them at the tough times.”

  On the evening of October 1, 1979, the day Caldwell took over as chief executive officer of the Ford Motor Company, Henry Ford rode down in the elevator with him and said, “I’m really sorry about leaving you with all these problems—it’s an awful time, and it doesn’t seem fair to dump this on someone else.”

  “Well,” Caldwell said, “you’ve been through it all yourself.”

  “Yes, I suppose so,” said Henry Ford, “but it was different then. Even at its worst, in 1946, we could sell everything we made. But you don’t have the market with you anymore. It’s changed on us.”

  The company was losing $1 billion a year. But that figure hardly reflected just how badly Ford was doing. In its North American operations, the traditional center of Ford’s strengths, the company was losing more than $2 billion a year; over the three most difficult years, from 1979 to 1982, it lost about $7 billion. Only Ford of Europe kept the company afloat. Decisions in those days were fraught with danger; in the newly inflated economy, mistakes were measured in billions rather than millions, and it seemed impossible not to make them. The Ford line was bland and full of heavy cars that customers refused to buy. Worse, there was ample hard evidence that Japanese cars were not only smaller but better. Hertz Rent-a-Car supplied Ford with its maintenance reports, which displayed the staggering fact that Japanese quality was almost twice as good as American.

  Caldwell had to restructure the Ford Motor Company under desperate conditions. The company needed to fend off the Japanese (which it did in part by throwing its weight behind protectionism), improve quality, get labor to consent to new, less adversarial agreements, develop lower-priced cars with front-wheel drive, and—most pressing—cut back its fixed costs. Nowhere did Caldwell show more skill or deserve more credit than in the last area, and no one was better qualified to do it. As a man of the system he knew how to trim the system. Harold “Red” Poling, the finance man in charge of North American operations, was his chief executioner. It was bloody work. In March 1980 they cut 250,000 cars out of the schedule for the following five months. That meant layoffs, reduced hours, closed factories. Eventually seven plants were closed, the decision to close each of them filled with the anguished awareness that great numbers of families were being devastated or, at the very least, dislocated. Thousands of middle-management workers were let go. Old friends were told to look elsewhere. Formerly prosperous men were suddenly unemployed and unable to sell their houses. Fewer and fewer managers worked ever longer hours. The company was filled with rumors of who was going next. A thousand people lost their dealerships in those years. Over a period of eighteen months in 1980 and 1981 Caldwell cut $2.5 billion out of Ford’s fixed costs. One high executive called that time the winter at Valley Forge. A year later the board of directors gave Caldwell a copy of the famous painting of Washington crossing the Delaware in the midst of the worst winter of the war—with his face substituted for the general’s.

  38. HARD TIMES COME HOME

  IN THE FALL OF 1978, thirty-three-year-old Joel Goddard, a die-cast diemaker for Ford at its plant in rural Rawsonville, Michigan, was aware that the company he worked for was in a depressed condition, and that his plant, which made housings for small parts like windshield wipers and carburetors, was cutting back its work force. A number of diemakers had already been laid off. At first Goddard did not take the layoffs seriously because he was part of an elite within an elite. Most diemakers made ordinary parts, but the diecast diemakers were the true artisans—they made the molds for the most important exterior auto parts, like the grilles. In the six years he had worked at the plant, his type of diemaker had always been immune from layoffs. When he heard union men from other companies discussing layoffs, he envisioned a world where unskilled workers in marginal industries worried about their jobs. By contrast, his position seemed strong and secure. The automobile industry was a powerful one, and he was a skilled artisan who had, if anything, too much work—at least forty-eight hours a week. His professional situation had never seemed better, and 1978 had begun as a very good year in the auto business. He was sure that he was quite all right. He worried about smaller things, such as whether he was working too much overtime.

  Goddard also worried about the quality of the apprentices in the diemaking shop. He was sure it had fallen off. In the past, diemaking had been a closed world into which entry was gained only by family connection. Being a diemaker was considered a privilege. Then the government became involved, pushing minority members into the program (Goddard was convinced they were being coached on how to pass the certification exams). The work done by these new apprentices, he believed, was not as good, and neither was their attitude toward their seniors. Before, the word of a journeyman had been law, but the new apprentices, in his opinion, lacked the proper respect, often challenging and criticizing the more senior men. Joel Goddard was not amused by the attempts of less experienced men to correct him. Still, that was Ford’s problem, not his. In general he was feeling good about his life. That year he went out and bought a new Thunderbird for $10,000. But already the company was beginning to respond to events in Iran, and because the diemakers did the molds for other Ford factories, they felt the early shock waves before the men on the line. Since the prognosis at the top of the company was that 1979 was likely to be a bad year, the company quickly began cutting back among the die casters. Had Joel Goddard known a little more about the international economy, he often reflected later, the last thing he would have done was buy an expensive new car.

  There were sixty people in his department, in a plant that had fifty-two hundred workers. The layoffs started in the spring. In April about ten of his fellow diemakers were laid off by reverse seniority, those hired most recently being the first to go. Although he knew the seniority of every man around him and thus knew that his own number was coming up, Joel Goddard refused to worry. He was quite sure that even if he was laid off, it would be for only a brief time, part of a short downturn that would soon end, whereupon he would be one of the first called back. The idea that he and others like him were living on the edge of an abyss never occurred to Goddard. He even looked forward to being laid off. In his mind it was going to be an extra paid vacation, long overdue.

  Since he had gotten out of school some thirteen years earlier, Goddard had worked hard to live like a proper member of the middle class. To afford the life-style that others seemed to attain working only five days a week, he often had to work on both Saturdays and Sundays; he had to work while his neighbors were out barbecuing hamburgers or cutting their lawns. Unlike them and most other members of the middle class, he went to work at odd hours, more often than not at midnight. So he felt entitled to the time off. For all those years, he had paid out some $30 a month in union dues, and now finally he was going to get some return on his investment. The money in benefits would be only what the union owed him. When, just before Thanksgiving, he was told that he was laid off, the twelfth in his department to go, he was delighted. He had carefully planned a six-week vacation in Florida, where his wife’s parents lived. His children would miss about a week of school, but that was all right; this was a once-in-a-lifetime opportunity. Soon it would be over and he would be back a
t work—in about six weeks to two months, he figured. Three and a half years later, in March of 1982, he was called back to work. He returned a different man.

  Thus began the real education of Joel Goddard, born on July 5, 1945, a true child of postwar American affluence. Until the layoff, Goddard later said, he never realized how fortunate he had been. Nothing had ever really gone wrong for him. Neither he nor his wife had ever had any sense of what genuine poverty and genuine fear about getting a job meant. He was good at his work, and he liked it. He was a highly skilled man whose talents were greatly in demand, and he was well compensated for them. In the last year before the layoff he had made about $35,000. This figure, which was close to Goddard’s norm for the few previous years, compared quite favorably with what the men on the line at Ford made, $22,000, which in turn compared nicely with what other American workers earned. As a die-cast diemaker he was a member of the blue-collar aristocracy, more nearly middle-class than most of his colleagues. He had gone to college for two years, and he had never spent a day on the line as a production worker. He owned a handsome split-level house about thirty miles from the factory, in Pinckney, a lovely town in southern Michigan. He commuted that far because he liked living in the country and living on a lake. Rich in the toys favored by American adults, he had two cars and a boat and four snowmobiles. His wife, a college graduate, did not have to work and busied herself with raising their two children. Although the cost of education was rising at an alarming rate, Joel and Joyce Goddard never considered the possibility that either of their children would not go to college. By 1978, some seven years before Kim, their older child, was to enter college, they already had more than $10,000 in savings accounts marked for education; furthermore, Joel was confident that if he needed to borrow additional money all he had to do was walk into a bank and utter the magic words “I work for Ford,” which almost guaranteed a loan. Until the fall of 1978, as far as Goddard was concerned, his was an American success story.

  The first indication that his layoff might be something grimmer than a paid vacation was word of another major layoff of die casters shortly after his departure. That shattered his illusion that he was going to be the first to be called back. Now men with considerably more seniority were also out of work. So it went over the next weeks; every bit of news from the plant was bad. Once bustling with three shifts, it was already down to two and soon would be down to one. A few months after his own layoff, he was number fifteen among die casters waiting in line for a recall, and it was clear that things were going to get worse before they got better. Goddard’s department, once sixty men strong, was cut to about twenty people of high seniority before it stabilized, which meant the economy and the company were going to have to improve dramatically before he returned to Ford.

  Goddard was aware, however, that he was luckier than many other Ford workers who had been laid off. His skill as a diemaker was a marketable commodity. A number of his friends from the production line had nothing comparable. In a state where the unemployment rate was soaring, they had no skill to offer. Goddard could sense their desperation. The official unemployment rate for Michigan was around 20 percent, but Goddard was sure it was much higher, probably well above 25 percent. He was better prepared than most for the hard times ahead. He owned his house, and, since it was not in Detroit, he had a better chance, in a soft market, of selling it. The house payments were not that great (soon, as the price of oil rose, the heating bills were greater than the house payments). Even so, his world, so carefully pieced together, came unglued. At first the strain came from not working, and then from working at jobs he did not like and for men he did not like. He did not realize until then how important his job had been to him, his success in it representing a victory of considerable proportions within his family.

  When Joel Goddard was growing up, his family had been among the elite of Lakewood, a suburb of Cleveland. His father, a banker, with what Goddard assumed was the natural class prejudice of a successful small-town businessman, had looked down on blue-collar workers as a lesser species. He constantly chided his teenage son to work harder and achieve more, lest he end up with a wasted life. Blue-collar people, men who worked with their hands, were different, his father seemed to be saying, almost like garbage. When Goddard was in his teens, the father of one of his friends worked in an auto plant, and Joel spent a lot of time at their house, much to the displeasure of his own father. “You want to be careful—you don’t want to end up like that,” his father often said. It was clear that Joel was supposed to become a banker too. The problem was that he had no affinity for it. During the summers of his high school years he worked in various office jobs and hated them; in particular he hated wearing a jacket and tie. He disliked businessmen, who seemed to feel that because they wore suits and ties they were more important than other people. Offices seemed sterile and boring to him. One summer an uncle who worked for Inland Steel got him a job working on its boats, and he had loved it—it was a wonderful, crummy, humanly rich world.

  He went off to Bowling Green College in Ohio and did fairly well there, but he was still somewhat rebellious, not in the way much of the youth of America was, dissenting from the war in Vietnam and wearing its hair long, but pulling away from the life of a banker’s son. His first real act of rebellion was leaving college to elope with Joyce Ford, a college classmate from Toledo. His parents were furious, and not just because he had quit college. Joyce’s people were blue-collar. The senior Goddards barely sanctioned the marriage. Their son was marrying below them. Then Joel told them he was looking for a job as a blue-collar worker. “You might as well go to Toledo, because there’s nothing here for you now,” his father said, and to Joyce Goddard those words seemed to mean that she and her new husband were now a social embarrassment to his parents.

  Married now and with a child on the way, Joel needed a job. Joyce’s father, a diemaker for Doehler-Jarvis in Toledo, suggested that Goddard try to get work there. Goddard had no known mechanical skills. Nonetheless he went to Doehler-Jarvis. The personnel office, seeing that he had been to college, tried to push him toward a white-collar position, precisely what he did not want. Fortunately, he scored well on his mechanical tests. He argued for a chance to be a diemaker, and they gave it to him. He did not even know how to spell the word “die,” spelling it “dye” on his application. His father was furious over his choice of job, and their relationship was for a time all but severed. “You’re stupid and you’re arrogant,” his father told him. “You don’t listen. The worst thing is, you’re throwing away all your advantages.” His father-in-law said that the job would at least get him by a hard stretch in his life.

  When Goddard started work in 1965, diemaking was still an old-world occupation. Some of the diemakers were German immigrants who still wore white shirts and ties under their aprons, just as their fathers and grandfathers had done before them, as a sign of their craft and the status that went with it. There was a certain amount of hazing, and Goddard was aware that he was being doubly tested because he was merely an in-law and not a blood relation, and, more important, because he had been to college. In his first week, not looking where he was going, he walked into a crane. Everyone laughed. “Get your head out of your ass, college boy,” someone yelled. Another time he did not know how to throw the switch to turn on a machine. “How goddam dumb can you be?” someone asked. The hazing also included pranks, such as putting spotting blue, a kind of blue dye, on his toolbox, which he got all over his clothes and hands. His apprenticeship lasted four years. Apprentices cleaned out the bathrooms, swept up the shop, and never challenged the word of a journeyman. Goddard went to night school two days a week to acquire the technical skills that had not been available to him as a child in a white-collar home.

  He found to his surprise that he was good at making dies. Doehler-Jarvis had its own system of raises. Every three months, a diemaker received a raise of 7 cents an hour, but if he was doing well he might get a double or triple raise. From then on doubl
es and triples were normal for him. He was gradually accepted by his fellow employees. He loved working with the metal, loved the fact that he was actually creating something. The dies might be huge, bigger than men, but they had to be made as precisely as Swiss watches. On his first job, he was apprenticed to an old-timer to work on a zinc grille for the Ford Thunderbird. They spent six months on it, and the pleasure he derived from converting a drawing, nothing but lines, to something made of metal was almost indescribable. More important to him was that there was no room for phoniness: He did it right or he did it wrong. He liked the camaraderie of the shop, the fact that the men encouraged and praised each other. This was a world of shared triumphs. He spent seven years at Doehler.

  Doehler was a union shop, organized by the UAW, and while the pay was not as good as it was at the Big Three, it was better than that at most industrial plants in the region. When he had started, he made $1.81 an hour, almost $80 a week. (Years later at Ford he took pleasure in showing his old paycheck stubs to the apprentices assigned to him, who were starting out at $12 an hour.) By the time he finished his apprenticeship he was making $9 an hour. Even that did not appease his father. When Joel Goddard told him in the late sixties that he was now making $10 an hour, his father said: “You guys are all paid too much. That’s why everything costs too much.” It was, thought Joel Goddard, the classic response of the small-town Midwestern banker to the UAW worker.

  Nevertheless, Goddard was making a living. He and Joyce rented an apartment in Toledo for $65 a month, and within a year they bought their first house. They paid $16,200 for it and, on a salary of about $90 a week, had to make payments of $110 a month, which required close budgeting. Four years later he and Joyce sold the house for $25,000 and bought a larger one. Goddard was proud of the success he was making of his life, the respect he had at the plant. Unfortunately, there were signs that Doehler-Jarvis was cutting back on its diemaking operations. The equipment at Doehler’s, he realized, was getting old, and the company seemed reluctant to invest in new machinery. The company was hiring fewer and fewer apprentices. Just a few years earlier, when Goddard had joined it, there were some ten or twelve apprentices for forty journeymen, and now there were only two or three. The trouble, Goddard learned, was that creating dies was getting more and more expensive, and Doehler’s old customers were now giving the work to smaller, nonunion shops. In the old days Doehler, as a supplier company, had made dies for Ford; now Ford brought Doehler already completed dies to do minor work on. The diemakers felt they were being used as repairmen rather than skilled artisans. There was, Goddard thought, less pride around the shop, because the diemakers got little satisfaction from repair work. Goddard felt that way himself. When he was working on a new die, the full range of his talents was called upon, and he became excited and positive; when he was repairing a die, a job that challenged him far less, he became irritable. His wife could always tell whether he was doing new work or old. The future at Doehler’s looked bleak, and it was time to get out. (He was right in his assessment: The die shop closed in 1976, four years after he left.)