Reckoning

by David Halberstam

  No company in the country needed discipline as the Ford Motor Company did, or benefited from it more. Under McNamara, for the first time in more than twenty-five years, the company always knew where it was, how much it was spending and how much it was making, and it could project both costs and earnings. Soon it could readily tell where its faults were. In the past the men at Ford who used numbers were the accountants, and a few of them might have been powerful, but accounting had been an essentially passive trade. McNamara was different. He was the forerunner of a revolution. He was a manager who was also a genius with numbers. He could see their meaning, indeed their truth, long before others around him; he could see the relationships between numbers where others saw nothing. At his best he was dazzling, and the rigors of meeting his standards forced a generation of his subordinates to be far more exacting in their own use of numbers, to become experts who could scan a sheet and pick out the one number that was wrong. For those who could understand him and how his mind worked and who could phrase themselves in words he found acceptable, working for McNamara was exciting. For others as knowledgeable about cars or more so but clumsier in their presentations, dealing with him was nothing less than a nightmare.

  Inevitably he was too strong and too forceful to use figures in a passive way; he used them aggressively. He soon went beyond the limits of his knowledge, his critics thought, and intruded where numbers and figures were no longer applicable. For beyond the fact that he did not know about cars and did not pretend to know about cars, there was a suspicion among those who worked with him every day that McNamara regarded the auto business as a little unsavory—all those dealers skinning the customers, the company pressuring the dealers to sell as many options as they could. Yet this disdain, they felt, and his immunity to the pleasures that motivated other men in the industry, the love of turning steel into marvelous machines, made McNamara a more formidable figure in the relentless drive for profit. Because he preferred smaller and more utilitarian cars than those his company was making, he was under an even greater self-imposed pressure to prove that he could turn an ever greater profit. The Whiz Kids did not make the instant climb to total executive power that they had envisioned. The coming of the Breech team delayed their ascendancy some six or seven years. Still, their arrival soon transformed the internal norms of the company. The older car men who had looked down on them found out to their discomfort that if the Whiz Kids did not know cars, they most certainly knew a lot of answers. More unsettling to the old-timers, it became clear they were not just a financial force but a political force as well, and a dominating one. What the car men were offering was risk and the uncertainty that went with risk; what the financial people were offering was certitude. The Whiz Kids, it promptly turned out, despite their academic backgrounds and their high-mindedness, were extremely skilled in-house manipulators, and none more so than McNamara. At first it was hard to imagine McNamara as an adept politician at Ford; he seemed so cold, so devoid of charm. For Detroit’s charm was boisterous, it featured a certain self-conscious locker-room masculinity, and McNamara was almost austere. Detroit’s role models went out on the golf course and shot a good game and joked about their handicaps, and they hunted birds, and they fished at distant camps where they went unattended by women. McNamara’s contempt for those rituals was complete. He did not play golf, he did not tell Sammy Davis, Jr., jokes in the locker room, and he went mountain climbing on his vacations. He did not want to be buddies with the men around him. In fact, he did not want to ease the tension of a confrontation. The more tension, the more rigid the relationship, the better it seemed to serve him. His loyalty was not to cronies but to efficiency. Once when he was lecturing some of the men around him about the need for precision and exactitude, Charley Beacham, an old-time marketing man who was the polar opposite of McNamara in temperament, turned and said, “It’s too bad, isn’t it, Bob, that the place has to be run with people—they have so many flaws.”

  McNamara was a symbol of the rootless, educated American of the postwar era. He worked in Detroit and did very well there, but he was not a man of Detroit: He had been born on the West Coast and gone to school there and on the East Coast, and now he was working in the Midwest. He chose to live in Ann Arbor, to enjoy the state university’s intellectual climate and escape a social life where people talked nothing but shop. He and his men were a new breed, the forerunners of the Yuppies, young upwardly mobile professionals. They had far greater freedoms and possibilities than their parents, and thus they were far less tied, in the traditional sense, to locale and to job. Many of those who followed the Whiz Kids to Ford went not so much to make a career there as to use it as a springboard to another company. McNamara was aware of this and, in an interview in January 1960 with the staff of the historian Allan Nevins, who was writing an authorized history of Ford, bemoaned the lack of loyalty among these talented newcomers, whom he considered far more able than the old-timers (for whom he otherwise generally felt contempt but who, he noted, seemed to have a greater feel for the company). He spoke prophetically. Within the calendar year he would be made president of the Ford Motor Company, and within a few weeks of that most cherished appointment he would leave Ford to take the job of Secretary of Defense.

  For he embodied much of the new era’s strengths as well as its weaknesses. He was far better educated than men he replaced, higher of purpose, more aware of a larger social responsibility. But he was also a driving new executive who had served no apprenticeship, and as such he represented knowledge without experience. His ultimate goals were different from those of the men around him, and different from those of the industry; in that sense he was always a partially compromised man. When Henry Ford looked at him, it was said by one man who knew them both, he saw Volkswagen.

  At Ford it was clear very early on that McNamara was not just a brilliant man but a formidable one as well. His special ability was using numbers to tilt a decision in the direction he wanted, which was almost surely the direction his superior wanted. McNamara was devastating in intramural arguments, so sure of his own facts that he seemed without bias, the ultimate rational man wanting only the rational decision. The arguments were often with the product men, who usually wanted to spend money that McNamara wanted to save. Anytime he and his disciples wanted to, they could make a product man feel inadequate, make him feel he had failed. With this gift, McNamara was precisely what young Henry Ford needed in those days; his command of numbers made him strongest where Ford, who had not finished college, was weakest. When Ford watched McNamara hold forth at a meeting, coldly analytical, he was seeing not only the first incarnation of the modern professional manager, but his very own business-school dean performing. In those years McNamara always seemed to be saying that yes, there were not merely answers to every question, but right answers to every question. This was not just a business but a science, he implied.

  During an attempt to build a new transmission for the 1958 cars it was discovered that the cost was $5 more than anyone had expected. That was a lot of money, and McNamara, annoyed, let the engineers in the room know that they had failed him. He assigned Sev Vass, one of his deputies, to find out what had gone wrong. Vass made his reconnaissance and at the next meeting announced that the increase in the cost had not, after all, been caused by a more expensive design, but rather by the finance people’s reallocation of overhead; more of it had fallen on the new transmission than had originally been calculated. It was a change not in production but in bookkeeping. “Well, Bob,” said Fred Hooven, one of the company’s most talented engineers, “I’m glad to see that accounting is no more an exact science than you accuse engineering of being.” McNamara, the precision of his order challenged, flashed red with anger, but let it pass.

  Such moments notwithstanding, in most conflicts between the product people and their counterparts in finance, the advantage lay with the finance men. For the product men were arguing taste and instinct, and the finance people were arguing certitudes. It was an unfair match.
McNamara not only had the numbers and thus the truth but was saving money as well, and the money he was saving was Henry Ford’s. To a young man unsure of himself, taking over the family firm that was also a great industrial company, wary of the excesses of the past and edgy about the future, there was comfort in the clinical new skills of these men. They were his support system, his guarantee that no one would slip something by him.

  Out of that need grew the immense power of the finance people. A powerful, confident, modern bureaucracy was being installed at the Ford Motor Company, sure of its skills, sure of its goals. It knew how to take care of itself, to help its own, and above all to replenish itself. For there was no easy way to replenish real car men, no graduate school readily turning out designers who were both creative and professional or manufacturing men who could run a happy, efficient factory. People of instinct and creativity, really talented ones, came along only rarely. The great business schools of America could not produce genius or intuition, but they could and did turn out every year a large number of able, ambitious young men and women who were good at management, who knew numbers and systems, and who knew first and foremost how to minimize costs and maximize profits.

  Inevitably the company’s hiring policies in the postwar years reflected this. Authentic car men were hard to identify young and took a long time to prove themselves. By contrast, smart financial people were easy to hire; it was relatively simple to tell how good they were from their records and recommendations. Theirs, after all, was a provable discipline. The Ford Motor Company was rich, and in those days it could offer earlier success and larger salaries than other companies. It also placed a high priority on recruiting; in the fifties it was getting the cream of the nation’s business-school graduates.

  In the words of one critic, the financial people were cloning themselves. They were brilliant networkers. They were connected through professors they had had at Harvard or Wharton; having been sent on to Ford by a particular professor, they naturally fell in with the professor’s other protégés at Ford. As they themselves became senior, they too became mentors. They took good care of their younger men, placing them in critical slots throughout the company, a practice that inevitably helped both protégé and sponsor. The sponsor got credit for having bright young assistants, and the assistants, in the new dynamic of the company, were sucked upward by the success of their sponsors. Starting in the late forties with the Whiz Kids, the financial people built up the single most powerful faction of the Ford Motor Company. In fact, it was so strong, so finely tuned to its own values and to its own leadership at every level, that it was not really a faction but a cadre. As that cadre sought and accumulated power and redefined the company by its norms, winning battle after battle, it inevitably transformed both the company and its purpose.

  Its first great victory was over the manufacturing people. In the past, manufacturing had dominated the company, for manufacturing was the great love of the old man, the thing he cared about the most. In the plants reposed the culture of Ford Motor Company, and it was a culture in which uneducated men held power by dint of physical force. After the war, Ford had to change. Henry Ford and Ernie Breech wanted no brutality in their workplace, and there was a union now to protect the workers. The governance of the company changed. It was natural, then, that the manufacturing men became the first targets of the finance men. The finance people saw the factories as the worst of the legacy of the old man—crude but also wasteful and inefficient. Faced by this challenge from the new political clique in the head office, the manufacturing men, predictably, fought back in a stubborn and primitive way. They intended to do things as they always had. They knew cars, and they knew production, and their plants were their fiefdoms. No one was going to tell them what to do, certainly no shiny-ass Harvard bookkeepers, as the newcomers were called at first. (“Bean-counters,” or just “beanies,” came later.)

  There was an old-timer named Bill Singleton who ran the Chester, Pennsylvania, plant, and his hatred of the new business-school recruits was fairly typical. At bonus time he would go through the list of his people, and he would say, “This guy is a real manufacturing guy—give him a real bonus....This is a shiny-ass bookkeeper—cut his bonus....This is a goddam crew-cut clerk—cut his bonus....Here’s a car guy—give him a good one.” The plant men fought to keep these bright young men off their staffs, which turned out to be easy enough to do; the reputation of the plants was so appalling that few of the new finance men wanted any part of them. The plants were not just backwaters but likely to be hostile backwaters. When Dearborn nevertheless sent one of the young men to a plant, the plant men made him feel as alien and misplaced as they could.

  Between the factory men and the Whiz Kids lay a chasm of class. The factory men typically were blue-collar men who had risen by dint of energy, zeal, and shrewdness. They were elemental men, physical in any confrontation, often heavy drinkers after hours. They knew what they knew but seldom could articulate it except in the crudest way, with the aid of anger and obscenity. Few of them had finished high school. The Whiz Kids had been to college, had received graduate degrees, and might even have taught at great universities. They were the vanguard of the new meritocratic American middle class that, in America’s postwar affluence, was ascending to become the upper middle class. Their world could not have been more different from that of the manufacturing men. In 1956 a top manufacturing man named Ward Folsom went to New York for a meeting along with McNamara and Jim Wright, a Whiz Kid who was somewhat of a McNamara protégé. McNamara and Wright and their wives had gone out to dinner and then to see Long Day’s Journey into Night. They had not asked Folsom to accompany them either to dinner or to the theater. When he returned to Detroit, Folsom was bitter. “Those sons of bitches—I never wanted to see their goddam play, and I didn’t want to have dinner with them, but the least they could have done was ask me. That’s all, just ask me.”

  The idea that in order to defend their terrain they would have to adapt and blend some of these bright young men into the service of manufacturing came to the factory men far too late. In the brief time during which they might have made some accommodation, they were too arrogant to try; by the time they realized what had happened, it was too late. Power had been taken away from them and centralized in Detroit. Their response was resentment. If they could, they tried to keep the finance men out of their plants; they were not above making someone like McNamara, so obviously a rising power, cool his heels for several hours when he came to visit.

  If there was resentment on one side, there was snobbery on the other. The finance people did indeed look down on the manufacturing men. They were contemptuous of the old order of which these men had been part, and they believed in their hearts that many of them had gotten rich by exploiting the company, a practice they intended to halt. They knew which way the company was going, they could see their own superiors ascending, and they did not think the manufacturing people representative of the new Ford Motor Company of which they themselves intended to be an important part.

  It was evident by the early fifties that the finance people were seizing power, and that the decisions would be made in Detroit more and more, and made to finance’s specification, not the specifications of the plants. Enraged by an edict from Detroit which limited to $5000 the amount a plant manager could spend without authorization, Emil “Duke” Duquette, who ran the Somerville, Massachusetts, plant, decided to find a way around them. The Massachusetts winter was hard, and Duquette had no paved storage space. That meant that a lot of his material was covered with ice in the winter and mud in the spring. Frustrated by Detroit’s deaf ear to this problem, he approved $250,000 worth of $5000 vouchers to pave the yard. The finance people back in Detroit were not aroused. Duquette was soon gone from the company. He was not alone. Systematically the old-timers were taken out, their fiefdoms annexed. Only a few were smart enough to adjust.

  In 1952 a young finance officer named Don Lennox walked into the Chester, Pennsylvania, assembly
plant and immediately found himself caught in a war between the home office and the men around him in the plant. Lennox had joined Ford after college and business school, and he was proud to be one of the bright young men on the financial staff. Everyone in Detroit had told him when he first arrived in Detroit how lucky he was, that he was a part of the right team at the right time. Then he had been called in by Ted Rickard, who was in the controller’s office and was one of the key deputies to Ed Lundy, an original Whiz Kid himself and a rising power in finance. Rickard offered him a job in the Omaha parts depot. That had not been the kind of assignment a bright young man with a brilliant future like Lennox had in mind. The doubt must have showed in his face, because Rickard immediately said that he would give Lennox a substantial raise and, even more important, guaranteed a major bonus, one far larger than anything Lennox had dared consider. “Can you really guarantee it?” Lennox asked. Rickard nodded and picked up the phone and called Ed Lundy. “Ed, I’ve got Lennox here,” he said, “and I told him I wanted him to go to the Omaha depot. I’ve told him we would guarantee his bonus.” He then named both the salary and the bonus. “Thanks a lot, Ed,” Rickard said and hung up. He turned to Lennox. “It’s all taken care of,” he said. It was the first example Lennox saw of the financial side at work. They really have it down, he thought admiringly. Thus initiated, he was delighted to go to Omaha as part of this elite group which took such good care of its people and had such an impressive capacity to deliver instantly. Lennox did well there, and in 1955 he was assigned to be the controller at the Chester plant, one of the oldest of the company’s assembly factories. Lennox had already been made aware that the bright young men of finance were not welcome in the factories. One of his first assignments after joining Ford had taken him to the Buffalo assembly plant for an early-morning appointment with Sam Simmons, who ran the plant. About fifteen minutes after Lennox arrived, Simmons came in, walked by him, and then shouted out from the inner office to his secretary as loudly as he could, “Who’s that stupid-looking son of a bitch sitting out there?” Welcome to Buffalo, Don, Lennox had thought. So when he arrived in Chester he was prepared for the likelihood that George Vincent, the plant manager, would be equally happy to see him. In that expectation Vincent and the men around him did not disappoint Lennox. “The college boy” was what the top men called him, and not in a flattering way. For as controller, he represented the central finance office, and he was outside Vincent’s authority. A plant manager could control everything in his territory except the controller; he could fire anyone on the premises except the people in the controller’s office. The controller’s loyalty was to Detroit and to the now dangerous financial staff, so in the mind of the plant manager, the controller was nothing less than a spy, the one man who might see through all the little tricks that a plant manager used to protect himself from Detroit’s mounting surveillance and pressures.