Reckoning

by David Halberstam

  Because business was so profitable, the one thing that no one in management wanted was a strike. The result of this was that the settlements with the UAW became handsomer every year. After all, the industry was highly profitable, and no one knew that better than Walter Reuther. While Nissan was crushing its troublesome unions, Ford and the other American auto makers were granting settlements so generous that doing business was becoming more expensive every year. That further helped the finance people, because it was their job to make a profit in spite of the rising costs.

  Besides, there were now fewer good product men coming along, fewer men who grew up experimenting with cars and loving the feel of machinery. The poor America of the Depression had generated a lot of tinkerers. Much of the tinkering had been involuntary, done on the farms because there was no access to a repair shop and the farmer had to fix things himself. But in the new America the small farms were dying, and there were not as many farmboys to watch their fathers hand-tool parts for a tractor or a car. There were fewer self-taught engineers in America now, men who could fix things in their garages. In the more affluent America of the postwar years, the people who as boys had played with engines did not go to college; the people who did go to college came from homes where when something wore out you went to a store and bought a replacement. Men were still showing up in Detroit with engineering degrees, but their hands were clean now. Rare was the new engineer who had ever actually built something. The nation’s technical knowledge was becoming more and more abstract. The brightest young men went to law school and business school; the best engineers wanted to work in the space program or in defense.

  So there were more people than ever from the business schools, and where they had once had only slide rules for their calculations, now they had computers, which greatly increased their capacity to quantify any concept and to put those numbers to use. Computers were a powerful new weapon for the finance people. Every year now they had greater access to financial detail and greater skill in using that detail within the company. With the coming of computers, the financial people were like prophets armed.

  The changing role of Wall Street was also having an impact on the Ford Motor Company, as on many other companies. The traditional blue-chip companies were no longer very interesting, because they had completed their principal growth; they were already big and rich. The trick now was to find a company that was just about to make it and catch it before everyone else got in on it, to ride it while it was hot and then get off just before it reached its plateau. That was the key to the go-go market. It was a far more speculative arena than the old Street. Profit was no longer enough now; superprofit was of the essence. This trend placed an exceptional burden on traditional companies, companies whose profits, no matter how considerable, had leveled out. For they were competing with all the sexy new industries in the country.

  Gradually the companies began to respond to what the Street wanted and tried to become hotter themselves in order to compete for capital. Some of those companies were like middle-aged women fighting to keep their husbands by putting on too much makeup and wearing clothes more appropriate for a twenty-year-old. As the companies changed their style, so too did they—almost imperceptibly at first—change their purpose. It was no longer enough simply to make a good product and a solid profit; now more and more the object was to drive the stock up. The stock was the point of it all, not the product. Gene Bordinat, the Ford designer, remembered being with Chrysler executive Lynn Townsend (who was credited by many within Chrysler with driving Chrysler to artificially high production in order to make the company’s numbers look better) and telling Townsend that he was worried about the declining level of quality in the entire industry, and Townsend said, “Hell, Gene, all the public wants is its splits [stock splits]. That’s all you have to give them.” The new American public to him was not the people who bought the car, the public was the people who bought the stock. Inevitably that preoccupation with the stock forced old-line companies to make short-range moves designed to make the present look good at the expense of the future. Research and development were chopped back because they were expensive and cut into profits and hurt the way the company looked on its books. So the pressure to slash expenses became intense. Since labor costs were constantly rising, the reductions were always accomplished by subtracting from innovation and product and factory maintenance. That approach, which was particularly hard on a mature industrial company like Ford, seeped through the entire economy. Without anyone’s realizing it, the maneuvering room within American capitalism was becoming more and more restricted.

  The change in the purpose of companies produced a change, sometimes hidden, in the disposition of power. Some thought, for example, that during the next two decades, the sixties and seventies, Ford belonged to Lee Iacocca—so visible was he, such a dominating force. Others assumed it was Henry Ford’s company simply because he bore the family name and could make the ultimate decisions. But others, who knew how things worked there, believed it was really J. Edward Lundy’s company.

  Ed Lundy was the quiet man of the Ford Motor Company. As treasurer, then controller, and in 1962 vice-president of finance, he was heir to the power that McNamara had accumulated. Outside of Ford, except for his fellow chief financial officers almost no one knew his name. Within Ford his name was not only known, it was the name. (In the upper echelons of the company at that time there might have been hundreds of Edwards, but there was only one Ed. When someone said “Ed wants to know...” or “Ed thinks...” he meant the Ed, Ed Lundy.) He specialized in collecting the brightest young men from the nation’s business-school campuses and turning them into a professional cadre, and if Ed Lundy said that a particular young man had the right stuff, then the young man was home free.

  He never married, and he lived a monastic life. The Ford Motor Company was his real family, and those fine young men whose careers he guided were his sons. Sometimes he would even try to be one of the boys with them, might refer affectionately to one of them with light profanity—“Bob, you little turd,” or, “Steve, you little bastard, you”—remarks that sounded odd and stilted from this formal, old-fashioned man but were treasured nonetheless by the young men themselves not just as proof that Ed Lundy knew their names but as a sign that he liked them and they had been in some way anointed. Those he liked became part of his extended family, and he was uncommonly generous to them and their families. The basement room in his handsome condo in Dearborn was like a well-organized gift shop, from which he sent out hundreds of presents every year. There, neatly laid out on a huge table, were the wrapping paper and the ribbon with the legend “A gift of J. Edward Lundy” repeatedly printed on it, and, in a drawer, that new plastic bubble-filled material designed to keep glassware from breaking. In cabinets were the gifts themselves, leather datebooks, gold cufflinks, Steuben glass. The gifts went out not only at Christmas but in a constant stream, and children of former Ford employees, long after their fathers had left the company, might receive something from him at a graduation or on a birthday.

  Ford was his life, that and the Roman Catholic Church, of which he was a devout member. When his men were to get a statistical report to him over the weekend, often they were told to leave it at St. Joseph’s Catholic Church in Dearborn, where he spent much time. When he moved into his apartment at the Fairlane complex near the company headquarters, he even had a special chute installed, like the depositories outside banks, for nighttime deliveries. That way the bright young men in finance could drop off their late-night reports, which he in turn could read before going to bed. He was at work before anyone else in the company each morning, eating a Ford breakfast. Ambitious young financial officers learned that one of the best times to talk with Ed Lundy was at breakfast at six-thirty, and they scheduled their breakfast time to match his.

  In a city where success usually involved a certain amount of ostentation, Lundy lived a rare ascetic life—St. Thomas Aquinas in Motor City, thought one Ford colleague, Don Frey.
Most of his colleagues loved the gratifications provided by the company; Lundy did not. The fact that Ford had its own airline (the seventeenth largest airline in the world, they called it) meant a certain amount of free travel was available to the deserving. Ed Lundy hated to travel, hated going to meetings on foreign soil. Work for him was being in Detroit, playing with the numbers, making them come out right.

  His apartment was not really a home. Elizabeth Bourke and her husband, Bill, a high-level Ford man, lived nearby during the seventies, and one day she came over to give Lundy—who had a sweet tooth—some small tinned cakes from Nieman Marcus. The cakes needed to be heated. Elizabeth Bourke put them in Lundy’s oven and nothing happened. The oven didn’t work. A repairman from the company was called and was astonished: The oven was four years old, and this was the first time it had ever been used. Stories like that added to his legend among Lundy aficionados; they seemed to complete the portrait of the ascetic, totally selfless man. But there were others, men outside the clubby world of finance and wary of both Lundy and his legion, who believed that his life-style was a calculated aspect of his legend, as if he was proving again and again that he was someone for whom there was no existence save Ford, for whom hours off duty were the same as hours on.

  If he was an ascetic, he nevertheless loved good clothes and spent a considerable amount of money on them. He was not much given to modern fashions—well into the seventies he still sported the same brush haircut that he had brought to the Ford Motor Company as a young army major fresh from the war—and his clothes were conservative, the suits almost invariably from Brooks Brothers. Indeed his look, traditional Ivy League, became almost the uniform of the finance people and thus the upper class of the Ford Motor Company. He dressed in a very careful, precise way. A certain suit was always worn with a certain shirt and a certain tie. A certain pair of shoes went with dark suits; another pair went with lighter suits. None of the combinations was venturesome; everything blended. His dress was virtually his signature. Invited by friends one summer Sunday to come to their patio for a cookout and told the guests were dressing informally, he showed up in one of his suits—but without a tie; that was informality.

  In sharp contrast to Iacocca, who found personal publicity irresistible, Lundy hated all publicity. He never gave interviews, and he avoided any public role. He was shy, but it was more than that; he knew it was not considered a good idea to draw too much attention to oneself at Ford. It inevitably backfired, and it could only make you a target for critics. In a company known for powerful men of robust egos—Ford, Breech, Thornton, McNamara, Iacocca, Frey, Caldwell, and Bourke—Lundy seemed curiously mild and modest. He wanted only what was good for the Ford Motor Company. He wanted nothing for himself. He had no taste for self-aggrandizement. In his earlier years he had pushed not his own career but that of his closest friend, Arjay Miller. Lundy was too diffident to be out front, but Miller, he believed, was perfect for the top job—good with people, the perfect manager, skilled in numbers. What could be better than Miller as the top man and Lundy quietly in the background lending his support? Lundy became a sort of adopted member of the Miller family, an extra uncle for the Miller children. The Millers and Lundy took their vacations together, and as deftly as he could in the critical years when they were all going up the ladder, Lundy talked up Miller and made sure that his own people made Arjay look good. When Miller was made president in 1963, Lundy was delighted. But a few years later, in one of those frequent power shifts that made Ford such an interesting and terrifying place to work, Henry Ford surprised everyone and replaced Miller. Miller himself took the news with some equanimity, but Lundy was devastated, and some friends worried about his health. Eventually he reconciled himself to what had happened and stayed on.

  When the Whiz Kids first arrived in Detroit, Arjay Miller had decided that Ed Lundy was the one who would probably stay the shortest time, that the automotive world was too harsh and crude a place for him. Ed, thought Miller, was more likely to end up in academia or one of the foundations, slightly sheltered from the more predatory qualities of American business. He was, Miller thought, the brightest of them all, though McNamara from the start was clearly the most ambitious. When they all first arrived at Ford, they had undergone three days of extremely difficult tests. It had been hard on all of them; the tension and stress had been evident. Only Lundy had seemed immune to the pressure; he would finish his exams long before the others and then calmly leave the room while everyone else still struggled.

  Born in Clarion, Iowa, and a graduate of Iowa University, he had taught at Princeton before the war, a popular professor there. During the war, as he and the others did statistical control for the air force, there had always been the feeling that he was intellectually the most superior of the group. Lundy’s first job was to brief General H. H. Arnold, chief of the Army Air Forces, every morning at four-thirty. The young statisticians were aware that in having Hap Arnold as their boss they were blessed, for he listened to them carefully and trusted them and did not make fun of them, as he might have, for being a bunch of green kids who had never flown a fighter or a bomber. When Tex Thornton decided to take his team and sell it to industry, Lundy went along, somewhat to the surprise of the others, who assumed that he would return to Princeton. Arjay Miller was sure Lundy had merely come as a favor to the rest and would quickly tire of Detroit. What the others had not yet understood, and perhaps not even Lundy, was that at Ford he had found a home.

  He emerged over the years as the secret power in the Ford Motor Company. No one knew that it was happening, that he was accruing that much power, until it had happened. One reason he was so successful at what he did was that there was an absolute ceiling on his ambition. He never longed to be president of the company. Being chief financial officer was enough. He never professed to know public taste or anything about styling. He had his beloved numbers and that was enough. He knew how to use them. But the main reason, the basis of his empire, was his control over the company’s hiring and personnel policies. Year after year Ed Lundy and his deputies went out and hired the top graduates of the nation’s best business schools and brought them to Ford. Then, if they passed his own tests, if they were the right type, he worked to guide their careers, moving them into better jobs in the most critical areas.

  He liked to test his new men very early. If he called one on an interoffice squawk box, that man had sixty seconds to be in Lundy’s office. When a young man joined the company, Ed Lundy looked him over very carefully. It was one thing to examine the scores and recommendations from his old friends at the business schools, but it was another thing to see for himself what the young man was like, whether there was the proper mix of both ambition and self-control. Would he be confident but not cocky? Would he believe in the company and readily accept its systems, or was there too much ego there? Would his wife be an acceptable adjunct member of the team? So it was that, early on, a new man was informed by Lundy’s secretary that it was considered incumbent upon him and his wife to invite Lundy to dinner. There was, the secretary explained, a certain regimen to this. Mr. Lundy would arrive at a specified time. He would have one drink. Then he would sit down to dinner. He would leave, she explained, at a certain time. Those evenings would be filled with small talk which was not really small talk at all, but chatter of the most consequential sort. For Ed Lundy was testing out the young families, trying to find out what he had gotten for the Ford Motor Company. The highest compliment of all was if Lundy, a few days after a newcomer and his family had endured the dinner test, told the employee’s superior, “I like the cut of that young man. I’m going to keep my eye on him.”

  He did indeed keep his eye on those who had impressed him. If he liked something that someone had done, he would take a three-by-five card and on it inscribe a short message of praise, each word carefully chosen. These cards were cherished. The Lundy eye was also quick to discern an offender. He was a somewhat stern chaplain, a kind of farm-belt Catholic moralist, as one friend pu
t it. When one of his young finance men started an affair with a woman in the office, Lundy was furious. He called the young man’s boss and said very evenly, “Get him out of here,” and the man was sent to a distant place. That Lundy was passing on a morality to those below him not necessarily observed by the man he worked for did not seem to matter. To him, Henry Ford’s occasionally erratic behavior was a practical problem. If one of Lundy’s protégés was going to take a job with Ford overseas, he would take the man aside and impart the most sacred and secret of warnings. This was difficult for Lundy, because it involved a conflict of loyalties; in order to protect his progeny he had to be critical of his superior. Before he gave the warning, his eyes would go to the door to be sure that no one could hear. Then he would speak, almost sadly. “Mr. Ford likes to come and visit the foreign offices,” he would say, “and Mr. Ford, as you know, is a very fine man. A very fine man. But the moment he lifts his first glass with liquor in it is a very good time for you to disappear as quickly as you can.”

  The young MBAs just starting out knew that the best jobs were those that brought them in daily contact with Ed Lundy. One of the most coveted positions was handling Ed Lundy’s personal clipping service. The job required that the young man be at work by six-thirty each morning so that a complete digest of that morning’s press was on Lundy’s desk by seven-thirty. The task was prized not because the work itself was interesting—it was just clip-and-paste—but because it offered daily access to Lundy. The privilege was passed on annually to another bright acolyte, and when a young man was so anointed, his envious and stricken contemporaries had to be assured by their superiors that their failure to get this job did not mean that their careers were damaged; there was still hope for them.

  An equally prized job was that of the young man who ran the projector. He would be at all the critical meetings, he would see how the top executives dealt with each other, he might easily make powerful connections. “He who runs the projector runs the company,” went the saying at Ford, and finance always ran the projector. The down side of that job was that Lundy was, of course, a taskmaster, and he demanded perfection in a presentation. A typo in a slide or a flub during a presentation was unacceptable. Thus the night before a major presentation was a nerve-shattering time, as the projectionist sweated to make sure there would be no slip-ups. Once one of them put a slide in upside down, and the fallout lasted for weeks. It was spoken of not as a mistake but as a potentially ruined career.