Reckoning

by David Halberstam

  After much consultation, Ford and the UAW chose the Rawsonville plant for a pilot program called Permanent Employment Guarantee (PEG). In exchange for a freeze in hourly wages and for giving the company quite a bit more freedom with job classifications, Ford said, it would protect the jobs of the Rawsonville workers during the three-year life of the contract. Under the proposal, through 1987, if Ford laid off workers, it would keep paying their salaries; a laid-off person might be required to contribute his time to public service, with the Red Cross for example. Goddard, wary of being laid off again, was thrilled to sacrifice immediate financial gain for security, and he became an early and enthusiastic supporter. To his surprise, however, most of his colleagues remained suspicious of the contract. Goddard knew that many of them were older and were concerned with retirement; since their pensions were based on their hourly wage at the time of retirement, they wanted it to be as high as possible. Although both the union and the company had expected the contract to sail right through, it was defeated almost two to one. The union’s mistake, Goddard thought, lay in its assumption that the pilot program was so good that the workers could not fail to recognize its value. They did not realize that the workers’ suspicion of both the company and the union ran very deep.

  By the time the proposal came up a second time, the UAW had lobbied much harder. The old Joel Goddard had never been a very strong union man; he had wondered why the UAW could not protect him if, for example, he had gotten written up for leaving the job five minutes early. The new Joel Goddard decided it was his own damn fault for leaving early. Somewhat to his surprise, he became one of the leaders of the movement to accept the agreement. He tried to describe what had happened to him to his fellow workers in the most personal terms and to convince them that it might happen again. This factory, he told them, is right in the line of fire of the new world economy; we workers are an endangered species. One of the factors that influenced the workers’ decision was Ford’s promise to spend $10 million on new diemaking machinery if the proposal was approved; the workers believed that while they themselves were disposable, the company would not buy millions of dollars’ worth of new machinery only to close down the factory. Eventually the proposal passed, this time by almost a reverse margin. Those who had sold it were men like Goddard who had seen the future and were terrified.

  Joel Goddard was excited by the prospect of the twenty-one new diemaking machines, but when they arrived, he decided they were junk. That they also happened to be Japanese junk angered many of the men even more. They were furious that Ford had bought these machines from the Japanese after it had made its great case against the Japanese and had enlisted the help of the union in seeking domestic-content legislation and voluntary restrictions from the Japanese. The workers felt it smacked of hypocrisy, and it aggravated their suspicions about Ford’s long-range intentions. They felt that the company would do what was good for profits and stockholders, even if it hurt the workers. Company officials held a series of meetings at which they tried to explain their actions, but the workers were not satisfied. One of the things Goddard sensed from the meetings was how diversified Ford was; he doubted Ford needed him as much as he needed Ford. In fact, he was not sure Ford and he were in exactly the same business. Ford had a connection to Mazda. Perhaps Mazda would soon make the parts currently produced at Rawsonville.

  The brief period of artificial prosperity ended in late 1985 when the voluntary restrictions on Japanese cars were relaxed. As Datsuns and Toyotas started flooding the country again, the increased demand of the last four years for American cars fell off, and so, of course, did production at Rawsonville. There were layoffs, but since the number of plant workers could not dip below the 2625 who were employed at the time of the PEG agreement, 500 men who would normally have been laid off were channeled into community service. They were guaranteed a minimum salary of thirty-two hours a week at their regular Ford wage. The shadow of the changed international economy hung over the plant, although even then not all of the workers perceived it. Goddard heard through the grapevine that Ford’s management was not pleased with the PEG agreement and that it might not be renewed in 1987. So much for permanence, he thought. Certainly the new machines, which he hated, were an argument for keeping the plant open, but Ford had just closed down a brand-new casting plant in Flat Rock. There was more and more gossip about transferring Rawsonville’s functions to Mexico.

  Goddard knew that Lee Iacocca was boasting about Chrysler’s advantage, that it could buy its parts cheaper than Ford and GM could because it was less vertically integrated, it didn’t make as many of its own parts and so wasn’t locked into expensive American suppliers. Goddard admired Iacocca a great deal, but words like those were particularly chilling. Still, Goddard was confident about the future, if not with Ford then on his own. He was sure the worst was over. He and his family had been tested, and they were better and stronger people now. If there was one lesson he and Joyce had learned in the last four years, it was that they had to depend on themselves and not on an institution that in his opinion cared first and foremost about profit.

  He remained somewhat uneasy about his job. The plant had stabilized by early 1986; the men who had been lent to different social service institutions under the PEG agreement had been called back. But it was a plant under constant pressure from foreign competition, both Asian and Mexican, and the very existence of that competition had all but neutralized the union, which operated now, if not out of weakness, then certainly out of acute vulnerability. Beyond that, it was a plant with an old work force. There were no young workers; they had all been let off. Joel Goddard, much to his surprise, looked around one day and decided that, at forty, he was one of the youngest men in the plant. Most of the men were in their fifties and had twenty-five years of seniority. That brought home to him the fact that he was in a business with a marginal future.

  That spring his seventeen-year-old son Scotty, a junior in high school, had come home with his college aptitude test scores. They were good but not as good as they could have been, and that night father and son talked about what Scott Goddard would do with his future if his marks were not good enough for college.

  “I can always do what you do, Dad,” the boy said. “That would be fine with me.”

  “No, you can’t do what I do,” Joel Goddard replied. “Those jobs aren’t going to be there anymore.”

  44. BONUS TIME AGAIN

  ALMOST THE HARDEST JOB in front of him, Philip Caldwell decided, was that of improving quality. For more than twenty years the company had paid lip service to the concept; now, its back to the wall, its customers disenchanted, Ford had to prove to its workers and the public that quality was important at Ford. It had to accept that production totals had on occasion to suffer for it, and short-term losses had to be absorbed in order to gain long-term benefits. But Ford soon found that it was easier to coin the slogan “Quality Is Job One” than it was to change so large an operation.

  Manufacturing men like Marvin Runyon had complained that in the past, when Ford had a hot car, it always pushed too hard, to the detriment of both men and machinery. Now that was proving to be all too true. John Betti, who was in charge of manufacturing the power trains, reported that some of the lines were operating at only a 60 percent yield because the machinery was constantly breaking down. He asked for $25 million to improve the operation. Once a request like that would have been chopped up; now, emphasizing the seriousness of the issue, Caldwell pushed for immediate approval of Betti’s request, and it was done. For almost two years, through 1981, there was no discernible improvement in quality. It was immensely frustrating to spend money and make no headway. Then, in 1982, they perceived from their own tests that things were improving. The warranty reports got better. Letters from owners became more positive. Soon Caldwell came to believe that he had rescued the Ford Motor Company.

  That belief became evident after 1983, a year when Ford and GM made mild recoveries. Both companies rewarded their top executive
s handsomely, but Caldwell benefited most. In addition to his regular salary of $520,000, he received a hefty bonus of $900,000 and, even more startling, took some $5.9 million in delayed stock options, for a total package of $7.3 million. No one disputed that the stock options were rightfully his or that he and other executives had gone without bonuses for several years, but the timing could not have been worse. Auto executives at Ford and GM became targets of a firestorm of criticism. Many Americans believed that for an unstable industry that had asked for and received protection (and that had raised the price of cars), such behavior was obscene. Some who had bought American cars partly out of patriotism, by no means sure they were as good as Japanese models, felt duped. Some economists and politicians called it an egregious mistake. They were certain that the American auto industry could become competitive with Japan only if its wages came down, and that an industry that awarded such large sums to its senior executives lacked the moral right to ask anyone else—the UAW, for instance—for long-term sacrifice. The senior American trade official, William Brock, publicly criticized the auto executives for their actions. In Tokyo, Naohiro Amaya of MITI, who had negotiated the voluntary tariff restrictions on behalf of the Japanese, ran into an American reporter who was an old friend. Amaya shook his head and said, “They have betrayed people like me.” Japanese auto executives beamed. Someone who was with Marvin Runyon at the Nissan plant in Smyrna, Tennessee, the day the news broke sensed he was barely able to conceal his glee.

  It astonished outsiders that so little thought had been given to the public reaction to these decisions. No one had tried to talk Philip Caldwell out of collecting his stock options. Walter Hayes, Ford’s chief of public relations, had written Caldwell a memo beforehand suggesting there might be a problem, but he had by no means anticipated the virulence of the public’s response. His memo was at best a light warning. Caldwell, however, far from regretting his actions, was enraged by the criticism he received. In his mind he had earned every cent. Angry at the press, angry at Brock, he called a press conference to vindicate himself. It was not a success. Unlike Henry Ford and Lee Iacocca, Caldwell was not a figure of great personal magnetism, and the sight of him saying he deserved the money, when he did not look as if he did, was not the pinnacle of corporate public relations. To some of his colleagues the incident helped to reveal just how seriously Caldwell took himself. A year after he left the company, old friends lunching with him were stunned to hear him begin to reminisce about how he had “saved the Ford Motor Company,” a phrase that cropped up regularly during the meal. He had been so carefully controlled in the past that they were surprised at the extent of the ego now revealed.

  Part of that was because Caldwell had given off no smell of power. A serious and scholarly figure, he seemed at first glance better suited to be dean of a small Midwestern liberal-arts college than head of a giant industrial corporation. He was, thought one of his friends, a good man placed in an almost unbearable position, heading so vast an industrial enterprise. He found himself in a job that tended to emphasize the conservative nature of his personality. When colleagues railed against him, they were really railing against Henry Ford. Caldwell’s values were simple: He believed fully in the Protestant creed that if you work harder than anyone else, don’t advertise yourself, and the right people will know and reward you. That had, after all, worked for him. Then and only then was he ready to accept the accolades due him. Unfortunately, he was neither respectful of nor comfortable with the press. He expected it to accept his success and worthiness as a given. The media men, however, failed to comply. They saw him as a cautious man of the system and much preferred more charismatic figures like Iacocca and Caldwell’s own deputy, Don Petersen, who enjoyed a reputation in the Detroit press as a “car guy.” Caldwell seemed to resent those executives trumpeted by journalists. “I don’t like the cult of the personality,” he would say, “men who think they are bigger than the company....I don’t like managers who feel they have to pound on the table and be colorful.” When an emerging star in the Ford firmament named Bob Lutz came to Dearborn after great success in Ford of Europe, he quickly became the subject of considerable media attention. A man who loved to ride to work on a motorcycle, Lutz was so successful and popular in Europe, Don Petersen later liked to say, that when he himself was president of Ford and visited Europe, car buffs would come up to him and ask if he worked for Bob Lutz. Petersen was amused by incidents of this kind, but Caldwell was not. Soon he ordered Lutz to stop talking to the press.

  Caldwell became increasingly irritated with the media’s portrait of him, which appeared all the worse when compared to that of Iacocca—whose commercials were running at the time—and other media heroes. The press’s portrayal of him confirmed his suspicion that it was shallow and concerned only with trivia. When journalists tried to ask him questions about himself, he immediately expressed not only impatience but disrespect for what they did: What he was was not important, he said, lecturing them; what he did was. That there might be some connection between the two was not something he considered relevant. That was just stuff for People magazine. Ironically, he left many journalists who interviewed him with the impression of a man who was unusually defensive. These sessions often ended with disappointment on both sides. During his years as chairman, he came to loathe the press. For a time he considered hiring a public-relations expert to bring him together with the media titans and straighten out his image. Headhunters were sent forth to look for a man like Herb Schmertz, who had orchestrated a highly successful campaign with the press, and against it, for Mobil. Some of the candidates suggested that Ford already had the ideal person on its staff in Bill Sheehan, who had in the course of a distinguished journalistic career served as head of ABC News and who knew both print and broadcast journalism. To Caldwell, however, Sheehan’s value was diminished by his already being at Ford. His candor did not help his case either. Soon Sheehan was pushed aside, and the idea of a public-relations czar was put aside too.

  One of the first steps Philip Caldwell had taken as chairman of Ford, along with improving quality and changing the company’s attitude toward free trade, had been to go for a look that would make Fords radically different from other American cars. It struck many in the company as supremely ironic that it was he who was responsible for such a sharp break with the past. As one Ford man said, it was as dramatic a departure as Richard Nixon’s decision to visit Communist China after using it for so long as a whipping boy. Caldwell’s decision to venture into uncharted waters was a measure of exactly how bad a state Ford was in. When word first reached the design shop in early 1980 that top executives, including Caldwell, wanted a more modern look, the designers were understandably suspicious. One of the best of them, Jack Telnack, was ordered to put together a special team and create a completely new car, but he knew that management’s desire for something new had always been more theoretical than real. Confronted with innovation, Ford executives always became nervous about straying from their own conventional patterns and, more important, from the patterns so safely established by GM. The result was constant disappointment in the design shop, a sense that it perpetually ended up with “compromised cars.” The Ford designers displayed a mordant humor about their inability to escape convention: “We’re no worse than anyone else,” they said.

  The Ford shop, Telnack thought, was filled with gifted young men who were as capable as any designers in the world of jumping into the future but whose ideas generally failed to go beyond sketches or, on occasion, clay. Instead, they were forced to imitate the boxy, hard-edged cars of GM, which were neither attractive nor aerodynamically sensible. He liked to recall a remark made by Alex Tremulis—an early innovator at Ford who favored a softer look—who had once asked a conference of designers, “When are all of you going to stop this torture of innocent sheet metal?” Telnack was quite sure he wanted a more rounded look as well, what became known among designers as the Aero look or, to some, the eggshell look.

  As the weeks
passed in 1980 and he and his team advanced on the design for what was to become the Taurus and Sable program, Telnack slowly became more optimistic; perhaps his superiors really had given him the freedom they had promised and withheld so many times before. It was, he decided, the perfect time for innovation, because the company had no choice. In the past the creative men at Ford would discuss among themselves the question of who was the enabler of a particular car—as Iacocca had been with the Mustang and Lewis Crusoe had been with the Thunderbird. In this case the enabler was disaster. The company hit rock bottom in April 1980, the month it instituted the Taurus and Sable program. The largest gamble in the history of the company, the program was initially budgeted at $5.7 billion, although in the end the figure was closer to $3 billion for a five-year plan.

  Nowhere was Ford’s changed attitude toward innovation more evident than in Caldwell’s support of the Aero look. Telnack had never dealt with him personally, but he knew his predecessors had been wary of him; in the design shop the very mention of his name caused grumbling. It astonished the product planners and the men in the design and engineering shops that Caldwell backed Telnack and his colleagues. If anything he pushed them to go further, to outdo themselves. Very early in the program he took Telnack aside and asked, “Are you reaching far enough? Are you really different?” Telnack said he thought so. “Be absolutely sure you are,” Caldwell said. “Don’t hold back.” Later Caldwell resumed his normal distance and seemed more neutral about the car, but he had made it clear that he wanted a real departure. So had Don Petersen, the top product man and then president, who startled Telnack in 1979 when he came into the design shop and looked at some models Telnack was making of the 1983 Thunderbird.