Reckoning

by David Halberstam

  That confrontation with the Japanese—especially their obvious contempt for American workers and the fact that they believed it was the UAW that had weakened American industry—was extremely painful for Doug Fraser. As much as anyone in the union he had, in his own lifetime, seen the relationship between management and union come full circle, the workers go from utter poverty to blue-collar affluence. But now a variety of experts were criticizing the union for its very success. In their opinion the union had lifted UAW salaries too far above those of other industrial workers in America and of auto workers overseas. What had largely been applauded in the past as a symbol of true American economic justice had become almost overnight, because of the Japanese competition, a symbol of American wastefulness. He thought it unfair that many critics, looking for villains in the auto industry, blamed primarily the union. For to his mind UAW salaries had never been disproportionate in terms of the profits of the companies or the salaries and bonuses of the industry’s chief executives. What had once been a source of pride had now become a sticking point.

  PART TEN

  37. A MAN OF THE SYSTEM

  PHILIP CALDWELL SEEMED AT first an odd choice for the first nonfamily member to head the Ford Motor Company. Unlike Henry Ford and Lee Iacocca, he had no air of drama about him. He was careful and cautious—in the words of one contemporary, a man without a signature. In his early years at the company few of his colleagues had thought of him as a potential chief executive, but after his ascent they grudgingly acknowledged that the very qualities that had annoyed both his subordinates and his peers had commended him to Henry Ford as the ideal successor. Ford, anxious to lay aside his exhausting responsibilities but not entirely sure how much power he actually wanted to hand over, decided to retain a certain veto power, however invisible. In turning his company over to an outsider, particularly during a difficult era and immediately after the trauma of the Iacocca years, he did not want a swashbuckler. He wanted a conservator of the company and the family interest. Far from threatening to go outside the system, Caldwell was the system. The company was filled with talent—let the men of talent work a little harder to push their ideas and cars through a bureaucracy headed by Phil Caldwell, who would always play by the rules.

  His climb to the top had been opposed bitterly by his two competitors for the job, Iacocca and Bill Bourke; Bourke, later squeezed out, was executive vice-president for North America. They insisted Caldwell was too deliberate and pedantic for such a troubled company. “Plain vanilla” was what Bourke called him in private, which was the ultimate Ford Motor Company putdown, meaning blandness in style and manner. Caldwell’s relationship with Bourke was particularly sensitive, because they had worked together at Ford of Europe, Caldwell as chairman and Bourke as president. They had both been rising stars in Henry Ford’s best-loved duchy, and it was widely believed that Bourke had in general fought for product while Caldwell had delayed it. It was believed that somehow Caldwell, who had supported the Fiesta only at the very end, had gotten much of the credit for it.

  Caldwell’s position as chief executive officer was always ambiguous, and Ford did his best to keep it that way. Henry Ford might have moved his office to the Renaissance Center downtown, but it was his company. Caldwell, as one senior executive said, was free to do anything he wanted so long as Mr. Ford did not disagree with it.

  Caldwell had been extremely deferential to his bosses on the way up, and now that he had become a high executive, he expected nothing less from his subordinates. He took executive protocol very seriously. Before a Ford dinner he wanted to know exactly where everyone was to be seated, where the doors were, where the servants’ entrance was. He insisted on being escorted to the table first. His position had to be manifest in every detail, no matter how small. In the past senior people had usually been allowed to hitch their way aboard the company plane if it was going in their direction, but not under Caldwell. He preferred to travel with his own entourage or in imperial loneliness.

  When Caldwell became chairman, he even established a departure ritual. The moment he was ready to leave at night, his secretary would pack his attaché case and call down to his driver, who would be waiting in the garage of Ford headquarters. Then she would deposit the case in the executive elevator, in which it would travel down to the garage by itself. The chauffeur would enter the elevator, pick up the case, and put it in the car. A little later, Philip Caldwell would descend, empty-handed. He would then remove his suit jacket and pass it to the driver, who would spread it carefully on the seat so it would not get wrinkled. There was considerable speculation on the part of his senior colleagues about why the attaché case went first, and they eventually came to this conclusion: Caldwell thought that if people saw him going through the corridors with the attaché case, they would know he was going home and would no longer work as hard; if he left without it, they might think he was still in the building. That kind of thing, among other qualities, bothered his subordinates. They knew he hated them to smoke, and meetings under his leadership were tobacco-free. Nor did he drink. His notable abstinence had become obvious fairly early in his career when Henry Ford pressed some excellent red wine on him at an executive dinner in London.

  “I don’t drink wine, Mr. Ford,” Caldwell said. Ford gave him a puzzled look. “As a matter of fact, my wife and I don’t drink beer or any hard liquor,” Caldwell continued. Henry Ford, a man who enjoyed his own vices, looked even more baffled. “In fact, we don’t drink coffee or tea, and we don’t smoke,” Caldwell said.

  “Well, then,” said Henry Ford in disbelief, “what the hell do you do?”

  Caldwell was not an easy man for whom or with whom to work. Any project in which he was involved, no matter how simple, was attacked with infinite, painstaking thoroughness. As a young man rising in middle management, he had quickly signaled that he was different by the way he treated routine requests, the kind that had formerly gone right though his office to the next level. More often than not, after sitting on his desk for a week, they were sent back with a note asking for more information or bearing the words “See me.” The lesson was that nothing was routine, and nothing was going to get past his desk unless he thought it was perfect. A pattern was established: His superiors would value his work, but his subordinates would be drained in the process. It was management by exhaustion, one deputy thought, a relentless search for the one last bit of information that might yield the perfect car or truck. Some of his colleagues believed this approach was not a quest for truth so much as an evasion of decision-making; it was not, they thought, the method of a secure man. (When Caldwell rose to the top, some of his senior executives became convinced that his exaggerated caution was more than a fear of making mistakes; it was a form of wielding power, a way of keeping experienced men who felt more at home in the auto business than he did constantly on the defensive.)

  As a young executive in the truck division, he became known as the A-J Man because of his insistence upon having options A through J. On one occasion during these years a superior noticed he had not yet produced plans for the new model and began to press him. Weeks passed, and the deadline drew closer. Finally the superior went over to the truck shop; in the design room endless drawings of countless different trucks were pinned to the wall, with Caldwell in the midst, mired in indecision. “Phil,” the man said, “why don’t we just walk over and pick one before we leave the room today?” And so they did, the complex suddenly made simple. Even something relatively straightforward, like delivering a speech at an automotive seminar, became a monumental task—ten different men from ten parts of the company would sit around for three weeks making suggestions, canceling each other out, protecting their superiors’ territory, until they came up with a completely neutralized recommendation of the let’s-get-a-committee-of-the-best-minds-in-the-country-to-study-this variety.

  Caldwell’s meetings seemed to last forever. The joke went that it wasn’t bad enough that Caldwell kept them there for six hours at a time, but that bec
ause he never drank coffee or tea, he never had to go to the bathroom. Some men claimed he pissed chalk. Others said that if a colleague stubbornly resisted something Caldwell wanted, Caldwell waited until his opponent went to the bathroom and then called for a vote. When he was head of Ford of Europe his wife would occasionally return to the United States to visit their children. Then the meetings would be even longer, continuing late into the night. The theory among his subordinates was that he assumed that since he had nothing to go home to, they did not either. He was least at ease with the creative people, for whom decisions were almost a matter of instinct and reflex. Dealing with him, they in turn felt he regarded them as careless and facile. He had made it up the hard way and was wary of brilliance and impatience. The more creative the people he dealt with, especially designers and engineers, the more frustrated they were. They would come to a meeting filled with a vision for a new car, and he would respond in numbers, refusing to discuss it on their terms, to share their excitement even for an instant. Instead he would always find the weakness in their presentation and send them back to do more, letting them know of course, that they had failed him.

  Some of their passion and energy would die in that room. “You live and die product, you burn with excitement when you’re working on something new, and you were always dealing with a man who did not seem to hear a thing you were saying, and who could only answer in the most rigid numerical formulation,” said product planner Erick Reickert, who helped design the Topaz and Tempo cars and then resigned and went to Chrysler. “It was the ultimate frustration.”

  Hal Sperlich, eventually an enemy, had a similar reaction. “For a long time I thought we simply could not understand each other, that we were from such different backgrounds that we might as well use different languages,” he said. “And then later, when it was all over and I was gone, I realized it was more than that. It was a struggle between men for whom a car was an end in itself, an object of passion, and someone for whom a car generated no excitement but was a means to success and power. It wasn’t different languages, it was different businesses.”

  Caldwell reminded some of the bright young men at the Ford Motor Company of their fathers, possibly because he had more in common with men who were molded by lean times than with those raised in an affluence that encouraged risk-taking. His childhood had not been easy. The Great Depression of 1929 had hit the small farmers of America first, during the early twenties, and his father, Robert Caldwell, was one such farmer. Most men who have survived hard times and go on to great success tend to exaggerate the harshness of the past. Philip Caldwell, however, was guarded on the topic of his youth, seeming to regard his father’s reverses as an embarrassment. Caldwell’s wife, Betsy, would caution friends that Philip had had a very difficult and painful childhood, and it was not something he liked to talk about. Sensitive it was. Not only did he fend off all questions in interviews about his family’s hard times, but when a young reporter for the Detroit News, Michael Wendland, wrote a story about Caldwell’s childhood, a largely gentle and warm piece about Caldwell’s triumph over adversity, Caldwell was enraged, and some Ford employees tried to find out who had talked to Wendland. Wendland, thinking he had written sympathetically and unaware of Caldwell’s reaction, saw Caldwell a few months later and introduced himself, saying that he had written the article. Caldwell turned on him in instant fury. “That was going too far,” Caldwell said to him. “There was no need for that, no need to stir that up again.”

  The Caldwells had come to America in the middle of the eighteenth century and settled rich Ohio farmland a hundred years later. Some stayed and farmed, and others ventured forth, people with broad vision who traveled to far places and did romantic things. A cousin had been the first dean of the humanities at MIT. Other Caldwells had been prominent missionaries in China, one of them president of Nanking University. A college education had always been an assumption, and despite the family’s straitened circumstances, Philip Caldwell and all three of his brothers went to college. The family traditionally sent its youngsters to Wooster, an excellent church-connected college in Ohio, but Philip, something of a rebel, went to Muskingum, another small church-related school. It was not, he said on one of the rare occasions he spoke of it, a deprived childhood. It was, instead, one in which there was a fierce sense of the priorities of life and no luxuries.

  As a boy, Caldwell dreamed of being a businessman. He loved the early issues of Fortune, which were filled with stories about the country’s foremost industrialists by the nation’s best writers. He spent the end of the Depression in college, and in 1940, aided by a scholarship of $300 a year provided by a Harvard club in Cleveland, he went off to Harvard Business School. That was the beginning of his real life. He loved the school from the beginning, years later clearly recalling his first day there and the nice second-year student who offered to carry his suitcases up the five flights of stairs to his room (and thereupon sold him laundry service). He enjoyed the classes and admired the professors, who knew the most influential business executives in the country. George Doriot asked the students at the start of the year whom they would like to have lecture and produced everyone they requested. A speaker of another kind, a naval recruiter, spoke to his class on Monday, December 8, 1941. The entire class, it seemed to him, enlisted.

  Caldwell loved being in the navy too. It was a fascinating war, and his task suited his talents. Sometimes, he liked to say, positive things can come out of terrible ones. Certainly it was true in his case that the navy opened up vistas for him. When he talked about those years, he became a different person. The man who could barely recall a detail of his childhood remembered each experience in all particulars even though he was far from the field of battle—the lessons learned, the men to whom he was apprenticed, the excitement of being near the center of command. He had been assigned at first to a captain named Radford Moses. It was Moses’s job to preassemble the bases and men required by the forces as they conquered a succession of islands held by the Japanese. The bases were miniature cities with military functions, complete not just with hospitals but with fuel depots and ordnance areas as well. They needed to be ready to be shipped from Oakland, complete with men, at the moment each island was liberated. In due course Caldwell became Moses’s man in Pearl Harbor. His war was not one of combat but of learning to make a giant institution function like a small one. The work was exacting but provided the thrill of being connected to great men in charge of great events. Caldwell remembered Admiral Chester Nimitz calling in the top officers on D-Day to explain what Overlord, the invasion of Europe, was really about. When Curtis LeMay took over command of the B-29s in the Marianas and implemented the stunningly successful low-level bombing of Japan, Caldwell’s job was suddenly to make sure there were enough bombs. LeMay went through so many of them they had to stack them right on the beaches.

  Caldwell was doing staff work on the invasion of Japan, set for November 1, 1945, when the war ended. Because he did not have enough points to get out immediately, he had to stay in the navy until May 1946. He loved it so much, however, that he stayed on and worked as a civilian officer for eight years, eventually becoming the country’s highest civilian executive in military procurement. In 1953 he joined Ford, a decision that had nothing to do with cars but with his experience in ordering, moving, and tracking vast quantities of supplies in a giant organization. When he arrived at Ford, procurement methods were remarkably primitive—the division was still run, in his words, by glorified shipping clerks. Jim Wright, one of the early Whiz Kids and a McNamara protégé, needed support in bringing systems to the procurement operation and quickly reached out to him. Caldwell did very well there. Though he was not a member of finance, his roots and viewpoint were similar and he soon had finance’s support in internal political struggles.

  He had held many different jobs in the company and seemed to do well at all of them, although there were those, like Sperlich, who claimed that he was just lucky, and that he had opposed or delaye
d the very products that made his reputation. He became a vice-president when, as head of the truck division, he went to Bunkie Knudsen in 1968 and mentioned, first, that Ford did not seem to be taking the truck business too seriously, and second, that he had a very good offer from Rockwell. “I’ll go talk to Henry,” Knudsen had said. Iacocca, master of the same kind of move, later said that Caldwell blackmailed the company into a vice-presidency.

  But the largest factor in Caldwell’s rise was probably what he did for Philco. A company that mainly made radios, Philco was a notorious disaster area within the Ford Motor Company. Unaccustomed to corporate expansion outside its own business, Ford had bought Philco in 1961 and had never been able to run it properly. A series of managers had ruined their careers trying. At Ford it was known as Siberia. Its reputation was so bad, in fact, that Caldwell’s teenage daughter Desiree knew from the school grapevine how dangerous a job it was. “Daddy,” she asked her father, “if it doesn’t work out, will Mr. Ford throw you in the discard pile?” In one sense Caldwell was fortunate, however; by the time he was sent to Philco Henry Ford’s expectations for it had diminished. Caldwell was not required to be a miracle worker so much as a terminator. “Either fix it up or get rid of it,” Ford told him. Caldwell quickly streamlined the company. He improved its car radios so that skeptical Ford engineers would accept them, unloaded a number of underused older factories in the United States and Europe, and began to expand overseas production in places like Taiwan and Brazil. Costs soon came down, and the company became profitable enough for Ford to have little trouble selling it after Caldwell went on to run North American manufacturing.