American Icon

by Bryce G. Hoffman

  But Ford was still bigger, and Laymon hoped to use that as bait for the ambitious executive. Bill Ford told Laymon to offer Ghosn the position of COO with the promise that he would be promoted to CEO or become a very rich man if he was not. Laymon told his boss that Ghosn would never accept anything less than the top job, but agreed to try.

  A few months later, Laymon stood on the sidewalk in front of a trendy Tokyo restaurant wondering why Ghosn had insisted on meeting him outside. That became clear a few minutes later when he noticed a rare commotion down the street. A huge crowd was swarming around an unseen figure, thrusting pens and pieces of paper at the celebrity in the hope of getting an autograph. It was Carlos Ghosn.

  I don’t know if we have a suite big enough for this guy, Laymon thought as the superstar CEO broke free from the crowd to shake his hand.

  It had taken Laymon three trips to Japan to get Ghosn to this restaurant. In the middle of dinner, he reached into his pocket, pulled out an envelope, and slid Ford’s offer across the table. Ghosn took a quick glance at it, shook his head, and handed it back to Laymon. He was not interested in working for Bill Ford. He would come to Dearborn. He would save Ford Motor Company. But he wanted to be CEO from the start—and chairman.

  “I can’t do that,” said a stunned Laymon.

  Ghosn smiled. “Just tell Bill that I’m his man—provided I’m CEO and chairman,” he insisted.

  Laymon excused himself and went out to call Bill Ford.

  “Good news, bad news,” Laymon told his boss. “The good news is we got him. The bad news is he wants your job.”

  Ford told Laymon to get on the plane and come home.

  Dieter Zetsche may not have been a rock star, but by the spring of 2003, the mustachioed German was being heralded as a Teutonic Lee Iacocca. In 1998, Daimler-Benz had acquired Chrysler through what the Germans insisted was a “merger of equals.” Things did not go well once the Americans recognized the takeover for what it was. In 2000, Zetsche was sent in to save the day and restored Chrysler to profitability after years of losses. Now Chrysler was regarded by many as the strongest of the Detroit Three and was making enough money to offset the growing losses back in Germany.

  Laymon’s daughter went to school with Zetsche’s at the prestigious Country Day prep school north of Detroit. Through that connection, he learned that Zetsche and his family liked living in the United States. He also learned that there was growing discord between the Chrysler chief and DaimlerChrysler’s CEO, Jürgen Schrempp. After a couple of meetings at Chrysler’s headquarters in nearby Auburn Hills, Laymon persuaded Zetsche to come to Dearborn and meet Bill Ford.

  Ford offered Zetsche the COO job, too. He also turned it down. News of the meeting was soon leaked by one of Zetsche’s operatives, but with the added twist that Bill Ford had actually offered the German the CEO’s position. It turned out that the wily Zetsche had no interest in either job; he was playing Ford to strengthen his hand back in Germany. A few years later, Schrempp was out and Zetsche had his job.

  A year after Zetsche turned Ford down, another of the German automaker’s top talents was in Laymon’s crosshairs. Wolfgang Bernhard was Zetsche’s COO at Chrysler. He was only forty-three but was credited with spearheading the cost-cutting effort in Auburn Hills and improving Chrysler’s products. Laymon was still trying to convince his boss that he was the right man for Ford when DaimlerChrysler announced that Bernhard would take over its Mercedes-Benz division at the end of April 2004. Laymon shrugged and began looking for the next candidate. But Bernhard was fired a day before he was due to start his new job, the victim of an internal power struggle in Stuttgart. Laymon caught the next flight to Germany, hoping to catch Bernhard on the rebound. He offered Bernhard a similar deal to Ghosn’s, albeit less lucrative. The young German was interested and came to Dearborn to meet with Bill Ford. The two men seemed to hit it off, but Bernhard changed his mind when he got back to Germany and found an emissary from Volkswagen AG waiting for him. A few months later, the German automaker announced that Bernhard was joining its managing board and would become chairman of the VW division.

  As Laymon’s list of names got shorter, the litany of Ford’s problems grew longer. Ford’s U.S. sales fell in 2002, 2003, and 2004. Its market share continued to decline. An incentive war started by General Motors after the September 11, 2001, terrorist attacks undercut both automakers’ margins and destroyed the residual values of their vehicles. The company remained profitable, but only because of the revenue generated by Ford Credit.

  Reichardt retired for good in 2003, admonishing Bill Ford to do everything in his power to conserve cash and warning that the economy would not keep growing forever. Ford knew Gilmour would not last much longer, either. Scheele decided to hang it up, too, though Bill Ford felt that loss less acutely. Meanwhile Ford’s other top executives continued their turf war. Bill knew that one of them had to go before they tore the company apart. Thursfield was more talented, but also more divisive and a lot harder to control. Padilla was already proving the Peter Principle, but at least he could work well with others. Ford announced Padilla’s promotion and Thursfield’s resignation in April 2004. Gilmour announced his retirement that December. He had already turned the CFO’s position over to Donat “Don” Leclair, a dour financial savant who he was satisfied knew at least much as he did about the company’s finances. Leclair could be abrasive, though, so Ford hired a leadership coach to work with him. When Gilmour left in February 2005, Bill Ford promoted Padilla again—this time to president—and hoped for the best.

  All he got was the same old excuses. When Ford found out that Europe was getting a new version of the Focus compact, he asked why North America was sticking with the old version.

  “It’s out of sync with our product segmentation,” Padilla told him.

  What the heck does that mean? Ford thought, suspecting that he was being snowed once again.

  “Okay,” he said. “Then why can’t we converge the two products?”

  “The product cycles don’t line up,” Padilla told him. “They’re at different phases. We’ll have to wait until the next redesign.”

  But Ford knew they would still be out of sync then.

  This is all a bunch of bullshit, he fumed as he left the meeting. Nobody will give me a straight answer.

  Unable to effect the sweeping changes he knew were necessary, Bill Ford resorted to grand gestures that he hoped would somehow jolt the company out of its stupor. Most of these spoke to his own environmentalist leanings and his desire to transform Ford from the poster child of the SUV era to a leader in sustainable technologies.

  In 2003, as part of the company’s centennial celebration, he unveiled a green makeover of the River Rouge plant, which had long been a symbol of Ford’s manufacturing might. Energy consumption was reduced and the world’s largest living roof was installed over the enormous factory. A year later, Ford became the first American automaker to bring a hybrid to market and the first company in the world to introduce a hybrid SUV. The Escape Hybrid was a labor of love for Bill Ford. He pushed the project through despite persistent resistance from executives worried that it would be a money loser. They were right, but the same could be said of most of Ford’s other products at the time. At least this one would score some points for the company on the public relations front.*

  Some progress was being made. Ford’s engines were improving, and a new six-speed transmission that it developed with General Motors helped both companies catch up with their foreign competitors—at least in the powertrain race. Ford also began working more closely with Japan’s Mazda Motor Corporation. The Dearborn automaker had been a major investor in Mazda since the 1960s and had taken a controlling stake in its Hiroshima-based partner during the Asian economic crisis of the late 1990s. At Scheele’s insistence, Ford began leveraging that relationship to gain access to Mazda’s superior vehicle platforms. Ford did the same thing with its Swedish subsidiary, Volvo. Soon most of the cars and crossovers sold by Ford in the
United States would be based on platforms developed by these two companies. It was a smart move that yielded a significant improvement in the quality and performance of Ford’s products, though it did not say much for the automaker’s own capabilities.

  After Ford’s credit rating was downgraded to junk bond status in May 2005, Bill Ford announced that he would forgo all compensation until the company returned to sustainable profitability. He had not taken a salary since taking over as CEO in 2001, but his stock options and other annual compensation were still valued at around $22 million. Now he would give that up as well.

  Four months later, in September, Ford stood in the airy atrium of the automaker’s most advanced research laboratory and delivered a heartfelt appeal to the company’s scientists and engineers, asking them to revive the spirit of innovation that had once been synonymous with Ford.

  “We will continue to cut our costs and improve our efficiency, but we cannot win the hearts and the minds of a new generation with efficiency alone,” he said. “I need your help more than ever. I need you to question. I need you to challenge. I need you to stop unnecessary processes. I need you to declare that innovation is going to be a necessary ingredient in everything we do.”

  Ford promised that, by 2010, half of all Ford, Lincoln, and Mercury models would be available with hybrid powertrains. In fact, he said the company would produce a quarter of a million of them a year. It was an absurd goal that Ford would not even come close to reaching.* A month later, the head of Ford’s hybrid program resigned in protest.

  None of these initiatives did anything to address the fact that Ford’s basic business model no longer worked, at least not in North America. The same was true of General Motors and Chrysler, too, and the fact that they all continued to refer to themselves collectively as the Big Three proved that none of them got the joke. There was a lingering sense in Detroit that someday soon the world would wake up and realize that low-quality gas-guzzlers really were the way to go after all, so it was best to keep their options—and factories—open. No one suffered from this delusion more than the United Auto Workers. The union’s leadership had spent the last three decades doing everything possible to prevent Ford and other Detroit manufacturers from downsizing their businesses and making their plants more efficient.

  By 2005, Ford’s North American factories were running at only 79 percent of capacity. The company was actually losing an average of $590 on every vehicle it produced in the region, while Toyota and Honda Motor Company both earned more than $1,200. A big part of the problem was productivity. Fewer than thirty hours of labor went into assembling the average Toyota in North America, while it took nearly thirty-six hours to put together the typical Ford. Yet instead of getting rid of factories, Ford was actually adding more. Five years after Nasser spun off Visteon, Ford’s former parts subsidiary was on the verge of collapse and threatening to take the automaker down with it. Ford relied heavily on parts from Visteon, and Visteon’s U.S. plants were still staffed by Ford workers because the UAW had refused to allow the company to break its contract with them. If Visteon failed, Ford would have to take them all back. It also would be left without a supplier for critical components. To avoid both these nightmares, CFO Don Leclair orchestrated a multibillion-dollar bailout of Visteon in May 2005 that kept both companies limping along. The deal required Ford to take back twenty-four Visteon factories in the United States and Mexico, but it was better than letting them be liquidated.*

  The relief that permeated the company in the days following Nasser’s ouster was gone, replaced by the sober realization that Ford’s problems were bigger than one man. For most employees, the sense of hope sparked by Bill Ford’s decision to assume command gave way to a weary fatalism. They updated their résumés and waited for the next round of layoffs. A few continued to rail against the mistakes they saw taking place all around them, but Ford seemed impervious to change. More than one of these frustrated reformers took their case to the press, hoping that exposing Ford’s flaws would shame senior management into fixing them. The company leaked like a sieve as sensitive documents were smuggled out as proof. Most of these ended up at the Detroit News. Bill Ford’s security force tried to plug the leaks by installing software on the company’s e-mail network that flagged any message sent to the newspaper. Suspecting that senior executives were the source of some of these leaks, the corporate spooks monitored their cellphone calls and even installed cameras in rooms housing top-secret documents to see who accessed them and when.

  Bill Ford knew his company had reached a critical point in its history. If it could not address its fundamental problems, it would not survive. He had tried to find someone to help him lead a global restructuring, but all of his overtures had been rebuffed and none of his own executives was up to the challenge. Ford decided to narrow his focus and concentrate on fixing the North American automobile business because, if that continued to decline, nothing else would matter anyway. Everything else could wait.

  “Our commitment must begin here in the United States,” Ford declared in that September speech. “While we’re a global company, our greatest challenges and the need for dramatic change are right here—North America.”

  As Ford delivered that speech, he was in the process of putting together a team to take on that task. Instead of relying on his top executives, he gathered together less senior managers from around the world who had demonstrated real potential. To lead them, he turned to the company’s brightest rising star, Mark Fields.

  Fields was a handsome young executive with a wavy mullet and movie-star smile who exuded self-confidence. He was born in Brooklyn, grew up in New Jersey, and still had a bit of its air about him that a Rutgers economics degree and a Harvard MBA could not entirely dispel. Hired by Ford in 1989 after a stint at IBM, he started out in marketing and rose rapidly through the ranks thanks to a quick mind and an evident mastery of management science. Many who encountered Fields thought he was arrogant, but his belief in his own abilities was well founded. After extricating Ford’s Argentine subsidiary from a failed marriage with Volkswagen, he was transferred to Japan in 1999 and put in charge of Mazda. He was only thirty-eight, the youngest person ever to lead a Japanese car company.

  While Ghosn was making headlines as the savior of Nissan, Fields was working the same magic in Hiroshima, albeit without the media attention. Mazda had no clear idea of what it wanted to be. It had gotten into trouble by trying to match the bigger Japanese automakers with a full family of plain-vanilla models for the masses. But the world did not need another boring four-door sedan. Fields convinced the company to return to its roots and make sporty cars with edgy designs for people who were passionate about driving. The results were a new generation of vehicles that were widely regarded as some of the best in the world and a new tagline, “Zoom-Zoom,” that was one of the catchiest in the industry. Mazda stood for something again, and it was soon back in the black. It was a stunning performance, and the lack of notice would have been far less chafing if another gaijin had not been making girls swoon in the streets of Tokyo. It would take Fields a long time to get over that. He was soon reassigned to London, where he was put in charge of Nasser’s Premier Automotive Group. In 2004, he became head of Ford of Europe, too.

  In each of these postings, Fields made the brands stronger and the budgets leaner. After he arrived in Argentina, he was invited to the company’s annual polo tournament. He spent a pleasant afternoon sipping champagne with the Buenos Aires elite, then told his new employees that he hoped they had enjoyed the event, because it was the last one. At Mazda, he had axed 20 percent of the company’s workforce—this in a nation where lifetime employment was still the norm. When he took over the Premier Automotive Group, he closed its posh headquarters on London’s tony Berkeley Square and moved himself and the rest of the employees to a Ford design facility in Soho.

  Bill Ford and the other directors had been following Fields’ career closely. They thought his tough-love approach was just the sort o
f thing the company needed in North America. However, while he was being groomed for the post of president of the Americas—maybe even CEO one day—they were not sure he was ready to take on the company’s most dysfunctional division. But they were certain no one else was. So, in late August, Ford picked up his telephone and called Fields in London.

  “I really need you here to run the Americas,” he said. “This place needs leadership, and you’re the guy I’d like to lead it. I need you to help me sort things out.”

  Fields realized it was a huge opportunity, but he was not sure he wanted to take it. He knew how poisonous the culture inside World Headquarters could be, and he had a pretty good idea just how dire the situation in Dearborn had become. He asked to sleep on it. That night, Fields mulled his situation over a bottle of beer. He was not surprised that Ford was looking for someone else to run the region. Over the past six months, it had become obvious that North America was a rudderless ship with no real plan for the future. He knew the infighting at the top of the house was occupying more time than the problems on the ground. Fields had been insulated from most of this because he was overseas, and he did not relish the idea of being thrown into the thick of it. He thought he could fix North America, but he was not sure the other executives would let him. The next day, he called Ford back and said he was ready to accept the job, provided his boss would promise to protect him.

  “Let me build my team, and just keep corporate out of my hair,” he told Ford. “Everybody’s got to know who’s accountable for delivering the Americas, and that’s got to be me and my team—not everybody else sticking their fingers into the pot. I’ve seen that. I’ve seen what it’s done. There’s no plan there. There’s no accountability.”