Reckoning

by David Halberstam

  “Is that really the best you can do?” Petersen asked.

  “No, it’s not,” Telnack answered.

  “Would you really want to drive that car yourself?” Petersen persisted.

  “No,” Telnack replied.

  “Then show me what you can do.”

  That was what Telnack had always wanted. Forty-three when the Taurus program began, he was a true native son of Detroit. He had been born there, and the only thing he had ever wanted to do was design cars. As a boy he often went to the Ford Rotunda to look at the new models. When it closed during World War II, he would bicycle over regularly in the hope that it had reopened. After the war, he and his friends would sit on the wall of the Ford test track watching the new models until someone shooed them away. He went to high school in Detroit, still determined to be an auto designer, though his father, a musician, was less than pleased with the idea. Jack Telnack’s brother-in-law taught at the University of Detroit and knew people at Ford, so he arranged a meeting between Telnack and the auto designers, hoping that they would cure the boy of his irrational urge. The meeting had the opposite effect: He was introduced to Alex Tremulis, who was encouraging, and shortly thereafter Telnack headed off to the Art Center College in Pasadena, the leading school for auto designers. Upon graduation he joined Ford, where he began his somewhat frustrating career, never quite designing the cars he wanted. In his early years at Ford, Telnack exercised his creativity by moonlighting as a motorboat designer and even received a handsome offer to work full-time at a boat company. He decided in the end, however, that corporate restrictions or no, his true love was working on cars. Now he had his chance to create the car of his dreams.

  The design went smoothly. Everyone in the shop had wanted for some time to develop a car that offered less wind resistance and therefore not only looked better but got better gas mileage. It was the rising cost of fuel, Jack Telnack believed, that had forced the Europeans to address the most important issue of all, function. The Aero look was more advanced in Europe because fuel conservation was more important there than in America. When he first spotted the emerging Aero look in the French Citroëns, Telnack had not liked it. But gradually it grew on him, and he also knew that bending sheet metal in the right way could save the company millions of dollars. He estimated that a 10 percent reduction in the car’s drag could bring about a 3 or 4 percent improvement in fuel efficiency. In an industry where new government mandates had made the tiniest reduction so critical that companies were spending hundreds of millions to find a new carburetor that would save a tenth of a mile on a gallon of gas, this concept was rendered doubly important. Telnack estimated that Ford saved roughly two miles per gallon just from the design of the Taurus, even though two inches had been added to the wheelbase by the time it was finished.

  Telnack liked working with Lou Veraldi, the chief engineer on the program, who had been one of his colleagues in Europe, and his superiors remained encouraging. The only problem, Telnack thought, was the designers’ habit of self-censorship, born of hundreds of battles lost in the past. Sometimes Telnack detected a tendency to concede even before a meeting began. But morale was generally good. Although times were hard for the rest of the company, the crisis gave the designers a freedom they had always lacked.

  They finished the Sable, the Mercury version, in the spring of 1981 and then concentrated on making the Taurus, the Ford version, slightly different. They had worked hard to come up with a look that was new without being shocking. After all, these were mainstream cars, not part of a small, elite line. They wanted to be just far enough ahead of fashion to excite the average buyer, not jar him. Telnack was pleased with the response to the early designs within Ford. He was aware of the considerable danger in startling your own company.

  The product-planning sessions were as fraught with intrigue as the design shop was tranquil. The company was divided between those who wanted front-wheel drive and those who did not. What made the struggle particularly interesting was that the warring factions were represented by the two ambitious men who hoped to succeed Philip Caldwell as chairman, Red Poling and Don Petersen. At that time, Petersen was president of Ford; Poling, a rising star from finance, was the head of North American operations. Their roles were oddly reversed. Petersen, the product man, advocated rear-wheel drive, while Poling, the finance man, supported the more innovative front-wheel drive. Poling was distinguishing himself at the thankless job of trimming Ford’s fixed costs. No one doubted that he was particularly well suited for it; he had always been known as a hard man, unsparing of those who failed to meet his exacting standards. Of his ability to save the company money there was no doubt. He needed to prove, however, that unlike Ed Lundy, he could handle operations as well. Thus the Taurus became a means of putting his signature on an exciting new program. He argued that front-wheel drive was indispensable in the wake of the oil shock. Furthermore, he pointed out, GM’s massive advertising campaign for its new cars had led the public to expect front-wheel drive by identifying it with the mystique of new technology. It would be a mistake for Ford, said Poling, to bring out a car so radically different without reaching to every possible innovation.

  Petersen’s political position was quite different. There was no more supple player of the Ford system, no product man in the last twenty years who had shown as delicate a sense of which way the wind was blowing and as deft a knack for managing to be on the winning side. With the departure of Iacocca and Sperlich, he became the company’s senior product man, and he knew how to take advantage of the legitimacy that position gave his opinions. He was eager to show, however, that he was not someone who spent money blindly. He argued that front-wheel drive was of little advantage in a midsize car and that skipping it could save a billion and a half dollars. For a company taking on the most expensive project in its history while in the throes of a financial crisis, that was a persuasive argument. Red’s a good guy, went the line put by Petersen’s proxies, and he’s doing a damned good job getting the fixed costs down. But does he really know product?

  It was probably the sales and marketing people who tilted the decision to front-wheel drive. They had loved Telnack’s designs from the start and they wanted a completely modern car, not one that looked new but had an old-fashioned drivetrain. As the date of Poling’s June 1982 presentation to the board neared and it became clear that the Taurus was going to go through—and go through as a front-wheel-drive car—Petersen’s objections disappeared, and he embraced the project wholeheartedly.

  The launch was delayed for several months, because there were still some manufacturing bugs to be worked out. That of itself, some product people felt, was the sign of a new era at Ford. In the old days, bugs or no, the cars would have been forced through. The actual introduction came in late December 1985. The Taurus and Sable were immediate successes. Auto writers were thrilled with them. Customers were, as promised, excited, and it was hard to keep them on the lots—they stayed there, on the average, only four or five days before being sold, compared to thirty days for the average American car. The factories simply could not turn them out quickly enough. By March 10, Ford had sold a total of 41,163 of both models, with back orders for 168,000. It was the company’s most successful launch since the Mustang. There was a lesson in all of this, some of the more disgruntled product men felt—that the combination of hard times and severe competition had finally forced Ford to do what it should have been doing all along, use its immense reservoir of talent to build the best cars imaginable, instead of conservatively sitting on the sidelines, figuring out how to take the minimum amount of risk in a business where true success came only with risk.

  Philip Caldwell was due to reach the retirement age of sixty-five in January 1985. That would give him a five-year tour as chairman. As that date drew near there was some talk that his term would be extended, and it was known within the company that Caldwell hoped to stay on. He had even suggested that he was available, but Henry Ford quickly dispatched the idea. Instead
, he named Don Petersen chairman, and on February 1, 1985, Petersen replaced Caldwell.

  When the news reached the Ford design and product people, the relief was visible. For despite Caldwell’s support of quality and of the Sable and Taurus program, Petersen was considered more sympathetic to product, more innovative, and quicker to make decisions than anyone else in the upper echelons of the company. Petersen himself was relieved, since it was well known that he was not Caldwell’s choice as a successor. The two men had never gotten along. The tension between them was constant, although it seldom showed in public. Petersen was careful not to let it. At a press conference held to celebrate Ford’s 1983 comeback, some reporters saw a quick flash of their animosity. As Petersen, who then was president, prepared to enter the dais from one side, he saw Caldwell, the chairman, entering from the other. Noticing simultaneously that there was only one chair on the platform, Petersen deftly slipped into the audience. After the press conference a couple of reporters went over to ask Petersen some questions, but he waved them away, saying, “I’m sorry, this is Phil’s show.” In private and away from the office, however, it was clear that he had no love for Philip Caldwell. To close friends he would complain about how maddening it was to try to move Caldwell ahead on decisions.

  Of the two men, Donald Petersen was certainly the more interesting. Caldwell was the conventional administrator who had been produced by the system, Petersen the creative product man who had made his peace with it. He was an ambitious, creative man who had come to terms with the organization and adapted himself to its dictates for over twenty-five years. His personal discipline was remarkable; he was ever the good soldier. He was a product man, and a good one, but he was a skilled survivor as well. He had negotiated his way through Ford with great agility and had never been bloodied in one of those interior struggles that took so many casualties at the high levels of the company. He wasted no energy on lost causes, no matter how strongly he believed in them. His self-control was absolute, his colleagues thought: He never at any meeting said anything he did not intend to say or later regretted saying. He had always been apart at Ford, a member of no clique. Though he was a friend of many of the Iacocca people and had, like many of them, worked on the Mustang—which at the Ford Motor Company was like having a PT 109 tieclip, a sign of having joined the winning side early in the game—he had never been a member of Iacocca’s group, nor had he been an anti-Iacocca man. He had done something nearly miraculous: He had managed to be a friend of Iacocca’s but not his satellite. Nor was he connected with the finance people or the Ford of Europe people. Because he was not a member of any clique, he did not rise with the clique and—this was more important in the volatile world of Ford—did not fall when that clique no longer pleased Henry Ford. He was, thought one friend, simply more astute politically than most of his contemporaries. He knew that factions came and went, and therefore he stayed deliberately outside them.

  He was rationally for product, but he was not going to put his life down in any meeting for it. He was not an engineer—his graduate degree was from Stanford Business School—but almost as soon as he joined Ford, he became a product planner. He was about the same age as Hal Sperlich, and his talents were seen by many people as potentially at the same level as Sperlich’s. But Sperlich remained almost ingenuous; he wore his talent and passion on his sleeve; he was exuberant, joyous, almost incorrigible in the pursuit of product. Petersen was the reverse. He was cool, distant, disengaged. If, unlike Sperlich, he made few friends, then, unlike Sperlich, he also made few enemies. His nickname within the company was the Smiling Cobra. At meeting after meeting he spoke for product, reducing whatever issue had been before them to a question of product. He had done that at a time when it was not fashionable, and he had thus created a reputation for himself as a car guy. Even so, although it was understood that Petersen was for product, it never got him into battles. If in some critical meeting an underling was being defeated by the finance people, Petersen had a way of signaling if not his support at least his sympathy. He was not a risk-taker himself, but he was on the side of those who were. It was as if he, better than almost anyone else of his generation, understood the Ford Motor Company and accepted it the way it was, with its conservative tilt because of finance, and, having decided to spend his career there, did not intend to fight dragons that could not be slain by mere mortals. The company was that way first because it was big and second because Henry Ford intended it to be that way, and so the best thing to do was work within the system, waiting for the moment when it would be possible to push product.

  The quintessential Don Petersen story was about the time in 1983 when Erick Reickert, one of the best designers, frustrated by his failure to get a position he wanted, announced that he was thinking of leaving the company. Petersen checked out Reickert’s position and reported back to him that though Reickert had done well in all his jobs, he had a problem: “You don’t seem to have any supporters.” Since that presumably included the president of the company, Don Petersen, Reickert decided to go to Chrysler.

  He was very smart—the ablest executive to run Ford since Ernie Breech, in the opinion of his old colleague Don Frey—yet there was something just a little self-conscious to his intellectualism: He wore his Phi Beta Kappa key quite publicly and he not only belonged to Mensa, an organization for people with unusually high IQs, but listed the membership in his Who’s Who in America sketch.

  He had been extremely frustrated during the Caldwell years, and there had been long periods when he and Caldwell, president and chairman, barely spoke to each other. Near the end Caldwell complained to friends that Petersen was deliberately trying to embarrass him by posing for the media as a car guy. But by then Petersen’s restraints had also worn thin. He too had begun to complain rather candidly, less cryptically, claiming that Caldwell’s conservatism was damaging the company, making it stagnant. Some six months before the final announcement was made, Petersen told a friend, “I think I’m going to get it. It just depends on Henry Ford.” But what about Caldwell? the friend asked, knowing of the bad feeling. “Decisions like this are still made by Henry Ford,” Petersen replied, “and I think he feels the company needs to be more product-oriented.” If anyone could run a top-heavy, overly bureaucratized company in the modern era and at the same time champion product, many believed, then it was Don Petersen.

  45. THE SCION

  THE YOUNG MAN HAD gone to the Detroit Tigers baseball game with a few friends, and under normal conditions he might have attracted considerable attention, being as he was the heir to an exceptional tradition, the most prominent male member of the fourth generation of Fords. But no one seemed to recognize the heir, a pleasant young man of modest height with a slight tendency to put on weight—though he no longer, as he had when he was a boy, kept his own secret supply of the powder to make chocolate malts. Suddenly there was a stir, a VIP was arriving, and photographers and television cameramen rushed through the box seats toward the celebrity. People were pushed aside, including the young heir himself, as the photographers scurried to chronicle the arrival of Lee Iacocca. So it was with Edsel Bryant Ford II, son of Henry Ford II, grandson of Edsel Ford, great-grandson of Henry Ford, possessor of a name that reeked of automotive history. Not knowing who he was, the photographers did not bother to capture the moment when he and Iacocca greeted each other, awkwardly but politely.

  It was fitting. He was both a marked and an unmarked man. To the world at large he was a figure of marginal fame, barely recognizable. In the world of insiders, however, of auto aficionados, his life and career were topics both fascinating and important. Sometimes it seemed that inner Detroit put him and his wife, Cynthia, under too much scrutiny. That was particularly hard on Cynthia, who was uncomfortable with any kind of public role. By the standards of Grosse Pointe’s young matrons she was not as important a player as Edsel Ford’s mother, Anne McDonnell Ford, had been since she was of a new generation and disliked the charity-ball fund-raiser work that had traditiona
lly been assumed by the wives of the city’s most powerful men. Cynthia Ford wanted to stay home and raise her children. Recently she and her husband had gone to a dance for the Children’s Hospital; she had worked hard in the preparations, and she and Edsel had been proud of the part they had played. They stayed on through a good deal of the evening, but because their children were young, they left a little early. They were both stunned the next day when they were chided in one of the city’s newspapers for their premature departure. No good deed, they were learning, if you were a Ford, would go unpunished.

  Edsel Ford was the most visible family heir to what was no longer entirely a family company. His father was the last family autocrat. Some thirty years after it had gone public the Ford Motor Company was an odd mixture of family blood and family stock, on the one hand, and on the other, outside managerial talent and outside power. It was becoming a more corporate place all the time. That raised the inevitable question: Would the family power last long enough for yet another Ford to head the empire? “There are no crown princes at the Ford Motor Company,” Henry Ford II said in 1979, hoping, of course, that there would be at least one more. He himself, strikingly ill prepared, had had to take over the company at twenty-six; by contrast his son Edsel, much admired by true auto buffs, well trained in every aspect of the business, was making his way far more slowly up the corporate ladder, a ladder that his family no longer entirely controlled. There was always the sense of his father deftly moving levers behind the scenes to enhance Edsel’s chances, while saying publicly that there were no guarantees about his son’s ascension. “It’s very difficult in the total scheme of things to make predictions about a young man who is thirty years old, as to what his situation is going to be when he’s fifty,” Henry Ford had said a few years earlier. When a friend remarked to Edsel how hard it must have been for his father, taking over so chaotic a company at so young an age, Edsel smiled and said with surprising vehemence, “I would have loved to have done it.”