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Chairman Ford


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CHAIRMAN FORD

His Roots, His Role, His Priorities

William Clay Ford Jr. is fuming. The Detroit Lions, the football team he manages and co-owns with his dad, have just suffered a heartbReaking overtime loss to the Cincinnati Bengals--the second straight loss of the season. Disheveled and hoarse, he strides into the locker room and kicks a chair in disgust. "I'm sick of losing," he grumbles. "I hate this." But as sportswriters gather around him, he cools off, praises his coaching staff, and says only they will decide whether to bench quarterback Scott Mitchell for throwing two critical interceptions. "It's not all Scott's fault today," he says of the 34-28 loss.

Bill Ford Jr. is about to have a lot bigger problems than interceptions to worry about. On Sept. 9, he waS named to succeed Ford Motor Co.'s Alexander J. Trotman as chairman of the automotive giant founded by his great-grandfather Henry Ford nearly a century ago. Running a football team, of course, is small potatoes compared with overseeing the world's second-largest carmaker. But the chair-kicking episode gives a glimmer of what Chairman Ford will be like.STRONG HAND. Known for his cordial, gentlemanly manner, the 41-year-old Ford is nevertheless a demanding boss. As soon as Bill Jr. was given more control over the Lions in 1996, he wasted little time firing Coach Wayne Fontes after a string of disappointing seasons. And, diplomatic comments to sportswriters aside, in private Ford makes clear he means to get to the bottom of the latest defeat. "I'd like to talk to Scott to find out what happened on those last two interceptions," says a now-calm Ford.

Football may be Bill Ford Jr.'s passion, but the automobile industry is in his blood. As heir to a family dynasty that still controls 40% of Ford Motor, Bill Jr.'s life has been wrapped up in the car company's fortunes from the moment he was born. Perhaps more than any other American family--and despite its oft-noted propensity for scandal, intrigue, and alcoholism--the Ford family has managed to keep a strong hand in the business from one generation to the next. If ever a family ranked among the aristocracy of American business, it is the Fords.

Now, it falls to Bill Jr. to carry the torch. The first Ford to hold the chairman's post since his uncle Henry Ford II stepped down in 1980, Bill Jr. has held a succession of jobs since he joined the company straight out of college in 1979. From a low-level financial analyst to a vice-president for truck development, he has worked--if only briefly--in nearly every corner of the company as he moved through a career path clearly designed as an apprenticeship for a chairman-in-training. Now Ford, who has emerged as a force on the Ford Motor board in recent years, vows to lead and direct an industrial giant and its 363,892 employees.

Bill Jr. won't be running the $154 billion carmaker alone. In an unusual power-sharing arrangement, Jacques A. Nasser, 50, the company's hard-driving automotive president, will become CEO on Jan. 1--at the same time Ford takes over as chairman. The pair are inheriting their jobs from Trotman, 65, who is leaving a year earlier than planned. With his job largely done, Trotman says he's ready to step down. His global reorganization has paid off, making Ford the world's most profitable carmaker.

The new duo aims to keep it that way. Nasser, the scrappy, hard-nosed cost-cutter who is widely credited with Ford's turnaround, will run day-to-day operations. Although Bill Jr.'s task of setting long-term strategy is harder to define, he insists he'll be no mere figurehead. Every working day, he will be at company headquarters in Dearborn, Mich., he says, sitting at the massive burled-walnut desk that belonged to his grandfather, Edsel B. Ford. Nasser will sit in an adjoining office.

Both insist they will get along fine. The pair go back a ways. When, in 1984, Bill Ford reported to Nasser, "one of his first requests was: `Don't treat me any differently,"' Nasser says. "And I didn't." Today, "Bill leads the board, and my job is to run the company."

Fellow board members say Ford earned the top job in the past three years through his forceful performance as chairman of the board's powerful finance committee, which controls the company's $22 billion cash reserves. Director Carl E. Reichardt, former chairman and CEO of Wells Fargo & Co., says that when Ford first joined the board, at 30, in 1988, he went through a "quiet period" while he learned and matured. But now his words carry weight. "When he speaks, people listen," says Reichardt. "He's no clerk. He's a thoughtful, well-educated young man who doesn't wear his stripes on his sleeve."

Indeed, signs of the new chairman's influence are already evident. Board insiders say he played a key role in Ford's recent decision to back out of the bidding for Korea's insolvent Kia Motors. Worried because the deal would have required taking on Kia's massive $7 billion debt, Ford pushed fellow directors to walk away. "I'm not the shy, retiring type," says Ford.

With the Kia deal off, Ford's immediate and most important job is figuring out what to do with all that cash. Ford says he's still shopping for a global auto business--but nothing as big as the pending marriage between Daimler-Benz and Chrysler Corp. "Ford has enough products and global breadth that we don't need to rush into anybody's arms," he says.

Wall Street is watching closely. Stephen J. Girsky, a Morgan Stanley Dean Witter analyst, figures Ford has four choices: a stock buyback, a dividend increase, an acquisition, or an investment in the company's dealer network. Ford has "a lot of extra cash burning a hole in their pocket," says Girsky. "How they use it will tell us a lot.""JAC THE KNIFE." Even more revealing will be how Ford and Nasser respond to another imminent problem: Japanese sport-utility vehicles such as the popular Lexus RX300 are beginning to threaten Ford's fat profits. Analysts say nearly half of Ford's annual $6.9 billion 1997 profits came from hot-selling sport-utilities such as the Ford Expedition. "You can't prevent others from encroaching on the parade," says Ford. "We just have to keep pushing and coming out with excellent products."

In the meantime, Bill Ford will serve as Ford's link to Wall Street and other large investors, whom he intends to meet with regularly. And he will make a point of walking the hallways at Ford to keep a finger on the pulse of middle management. "I never want to be sitting in a plush office with the door closed and not out seeing people," says Ford.

Ultimately, Ford's success may rest on his ability to manage one man: partner Jacques Nasser. As Ford's automotive president since October, 1996, the blunt-talking Australian has transformed Ford from struggling with the worst profit margins in the business to scoring record earnings last year--surpassing General Motors Corp. Nasser has slashed $4.3 billion in costs in the past 18 months--thus living up to his nickname, "Jac the Knife"--and this fall he will show a further 10% of Ford's 53,000 salaried staff the door. Nasser also has a flair for car design and has reinvigorated Ford's overseas operations. "Jac's been the catalyst," says Lehman Brothers auto analyst Joseph S. Phillippi, who believes keeping Nasser is crucial. "Jac's the general," he says.

Both executives are opinionated and strong-willed, and they admit they have differences. For example, Nasser doesn't believe he will live to see the death of the internal combustion engine, while Ford believes he will. "If we agreed on every single issue, then we wouldn't be getting the benefit of his perspective and my perspective," says Nasser. Adds Ford: "We'll thrash out our differences thoroughly, but behind closed doors."

Still, one large Ford investor sees problems ahead if either one strays onto the other's turf. "If Jac does a bang-up job by hitting on all cylinders, it is going to be hard for Bill Ford to do more than run the board, make management hires, and run the Lions," the investor says. On the other hand, "if Bill starts to get in Jac's way, then guys like GM will probably be lining up to say, `Jac, why don't you come over and work for us--and be chairman."'

Indeed, the two-for-the-road power-sharing arrangement has a history of failure at Ford. Billy's uncle, the imperious Henry Ford II, ran Ford with an iron fist for 35 years and was legendary for clashes with his managers. Most famously, he fired Lee A. Iacocca in 1978 rather than entrust him with the family legacy. And he frustrated his brother William Clay Ford Sr., Bill's father, now 73, at every turn.

Unquestionably, Bill Ford's appointment to the chairman's job is a victory--and vindication--for both Bill Ford and his father. Bill Jr. now becomes the steward of the Ford clan's considerable fortune, estimated to be worth more than $5 billion. Much of that fortune--about $2 billion--is held by his branch of the family. "The family has more at stake in the welfare of the company than anyone else," explains Bill Sr., the last surviving grandson of Henry Ford. "This ensures that the company won't go off and do something screwy."

Henry Ford, though, just might have found his great-grandson, Bill, a tad peculiar if the two had ever met. Despite his lineage, Bill Jr. is nothing like the old-model auto baron. Rather, he is a New Age industrialist. He calls himself a "passionate" environmentalist, who wants to make green policies as integral a part of Ford as is quality. "For us to succeed, we have to be seen as an environmental company," he says. That's why he's so convinced he'll see the demise of the internal-combustion engine. "Someday, it will be gone," he says, replaced by electric cars powered by fuel cells or some other kind of clean fuel.

Ford also has some awfully high-minded notions for his company's future. Profits are important, but "a great company goes beyond that and makes the world a better place," he insists. He envisions a modern-era version of his great-grandfather's legacy of social engineering: He hopes to use Ford's financial and social clout to educate the poor and help clean up the environment. Already, he has been instrumental in Ford's financing the construction of 100 kindergartens and elementary schools in Mexico. Ford insists his views make good business sense. "I'm not going to be some madman running around with an open checkbook," he insists. "There's no incompatibility between doing the right thing and making money."

Still, Bill Ford knows as well as anyone else that his company's profits come largely from sales of outsize pickup trucks and sport-utes such as the giant Lincoln Navigator--autos that have been widely criticized as gas-guzzling polluters. And with Nasser's strong presence a comforting counterweight, Wall Street isn't yet overly concerned about Ford's social agenda. "At the end of the day, we want the stock to go up and Bill Jr. wants the stock to go up," says analyst Girsky.DRIVING A SEMI. Within the company, Ford's wide-eyed enthusiasm and boyish looks led to resentment as he climbed the corporate ladder. And some executives at the auto maker wonder whether Bill Jr. has really paid his dues. Others disagree. Ally and adviser Peter J. Pestillo, Ford executive vice-president for corporate relations, says: "Whatever advantages he has as a member of the family he paid for dearly."

Ford is sensitive to being thought a dilettante. A few years back, he asked people to stop calling him Billy, his childhood nickname. And he has often gone the extra mile to compensate for his lineage. In 1989, when given a mundane assignment in heavy-truck engineering, Ford went to driving school and got a license to drive big 18-wheelers. His final exam required him to haul a load round-trip from Detroit to Toledo. "I recognize that there are those who think this job was handed to me," he says. "But I was under the microscope every step of the way. I had to have drive and ambition because people were looking for me to fail."

Despite Ford's privileged background--or maybe because of it--he developed into a ferocious competitor. On fishing trips with his three closest friends, Ford usually bags the biggest catch. "I define a good day of fishing as just being there," says Steve Hamp, Bill Jr.'s brother-in-law and a fishing buddy. "His definition is being there but also producing. He's always got a couple of buckets that he's trying to fill."

His competitive streak was nurtured growing up in a branch of the Ford family that made few headlines. In contrast to the fractured home life that many of his cousins endured, Bill and his three sisters thrived in their quiet, unremarkable household, bringing home good grades and earning laurels in sports. Their parents, Bill Sr. and Martha Firestone Ford, the tire heiress, tried to create as normal a world as possible given their family name and huge wealth. The family had no bodyguards or chauffeurs. Bill's mom made sure to drive him across town so he could play hockey with kids from far more modest backgrounds. Recalls teammate Ed Sadorski Jr., who played with him when both were teens: "He didn't shy away from the rough-and-tumble stuff."

Those games stood Bill in good stead later when he went away to the Hotchkiss School in Lakeville, Conn. Childhood pal Stephen Phinny remembers him as a terror on the soccer field who held his own in the raucous fights that broke out between rival prep schools. Bill got another lesson in toughing it out by watching his dad's football team lose year after year. The Detroit Lions, in fact, have not won a championship in the 34 years Bill Sr. has owned the team. After every Lions loss, young Bill listened to long-suffering fans howling at his father on sports radio. "It hurt, and I hated it," he says.

But it was the classroom, not the playing field, that counted most in the family, and Bill Jr. excelled there, too. At Princeton University, where he met his wife, Lisa Vanderzee, he majored in political science, writing his senior thesis on Ford's labor relations. In 1983, four years after joining the company, he took time off to earn a masters in management at Massachusetts Institute of Technology. Bill also read deeply about environmental issues. He studied the works of nature author Edward Abbey and read Rachel Carson's seminal work, Silent Spring. As a teenager, he began volunteering on clean-water projects and became involved in Earth Day. "It struck a chord with me very young," he says.

Ford breezed through 11 jobs in his first decade at the auto maker as his father worked behind the scenes to make sure his son was getting the seasoning to lead Ford someday. Pestillo recalls that Bill Ford Sr. approached him in 1982 and asked that he put then 25-year-old Bill on Ford's bargaining team in talks with the United Auto Workers. "Bill Sr. had been on Ford's 1949 bargaining team and thought it was a great experience," says Pestillo. "He felt that if you are going to lead the company, you have to understand labor relations."

The only operation Bill ever ran at Ford was the company's tiny Swiss business. To test his mettle, Pestillo sent him there in 1987 to fix Ford's struggling operations. Bill Jr. did turn the unit around, boosting profits and putting Ford's top local dealer out of business because of poor performance.GRIEVANCES AIRED. Back home, though, he soon encountered rough going. Donald Petersen, who was then chairman, marginalized him and his cousin Edsel Ford II, then 39, after they were named to the board in 1988. Petersen refused the "Ford Boys" committee assignments. "We felt penalized for our last names," Bill recalls. After Edsel and Bill went public with their unhappiness, Petersen relented and allowed them a more influential role. Following the family dustup, Petersen retired early, in 1990.

The two cousins were already viewed as rivals for the top job. As Henry II's son and the eldest male of the fourth generation, Edsel, 49, was long thought to be the favorite. But Bill's rise was assured when in 1995 he took the chairmanship of the board's powerful finance committee, a post created by Henry II to assure the family complete control of the company's purse strings. Meanwhile, Edsel is said to have clashed with Alex Trotman, and his advancement in the company stalled.

Edsel retired in April after 25 years at the company, the last seven years as president of Ford's auto-lending unit, Ford Credit. Now the new chairman would like him to return. "The door is open," says Bill Jr. "I'm going to plead with him to get as involved as he wants." Edsel appears interested. "I'm glad he said that because he knows how much the company means to me," responds Edsel. "When the time is right, I'll sit down and discuss" it with Bill Jr.

The family can continue to exert absolute power at Ford because they stacked the deck in their favor when they took the auto maker public in 1956. Henry Ford II and his three siblings established a special "class B" stock that only family members can hold. One class B share's financial value is equal to a share of Ford common stock--but it has eight times the voting rights. Today, the Fords own 72 million class B shares. Bill Sr. and Bill Jr. together control more than 26% of the class B shares, worth $871 million. They also hold two of the family's three seats on the company's 11-member board.

Indeed, the Fords have avoided the erosion of fortune that has splintered other dynasties. They have amassed a purchase fund, and they acquire Ford common stock to trade with family members who need to liquidate class B shares for estate taxes or other expenses. That's why Bill Jr. says the family is not worried about losing its voting power. "People in our family are buyers, not sellers," he says. What's more, the 13 cousins in Bill Jr.'s fourth generation meet twice a year to review the family holdings. And a special voting trust has been established by the family so they can vote their shares in lockstep. "We're a very cohesive family," says Bill Jr. "There's a great sense of tradition and responsibility in this family."CHILDREN FIRST. Recently, Bill Jr. has emerged to join older cousins Edsel and Charlotte Ford as leaders of the fourth generation, says brother-in-law Hamp. "Bill, Edsel, and Charlotte have worked hard to develop a sense of unity and keep the group focused," says Hamp, president of the Edison Institute. And Bill plays a special role in family meetings: "He's a lot of fun, and he keeps things rolling," says Hamp.

Even with his heavy new burden of responsibility, Bill Jr. insists he will keep balance in his life. He readily confesses that he would always "rather be outside than indoors." And he shares his love of nature with his wife and four young children. As a family, they camp, hike, and ski whenever they can. Like his parents, Ford is immersed in the lives of his two daughters and two sons, who range in age from 13 to 3. He coaches their soccer teams and likes to clown around for their friends whenever they visit. "My children keep saying that all the kids in the neighborhood like to come to our house because they find me entertaining," he says. "We're rarely serious around our house." Like a true '90s dad, Bill Jr. vows that even the chairmanship of Ford Motor Co. won't keep him from his children. "I will never give up any involvement in their lives," he says.

Reluctantly, he's already had to cut down on his next greatest passion as an adult: a Hemingwayesque obsession with fly-fishing. Every chance he gets, Ford travels the world in search of the perfect fishing hole. He even co-owns a fly-rod company. A few years ago, he and his friends found themselves in the Amazon casting for peacock bass and catching a few piranhas. Eventually, they were chased from their paradise by torrential rains and a pesky anaconda that attacked one of their guides. Recalls longtime friend Ralph Booth: "We made a mutual decision: We've caught enough fish. Let's get out of here."

Ford also dabbles in Eastern philosophy and reads Buddhist texts. A strict vegetarian, Ford shuns alcohol and believes in the curative powers of alternative medicine. "I've seen an acupuncturist, an herbalist, and I do yoga," says Ford. He also practices the martial art tae kwon do. "I try not to drink," says Ford, whose fAther and uncles were afflicted by alcoholism. "My personalIty doesn't improve a lot when I drink." That's not the only lesson he's drawn from the family history. "Fame, fortune, and power really hold no allure for me," he says. "I grew up with them, and I've seen them make so many people miserable. I know they don't bring happiness."

Back on the sidelines, just before the Lions' crushing loss to Cincinnati, William Clay Ford Sr. talks of how proud he is that his son has reached the top in the family company. He once warned his son of the heartache Ford Motor Co. can give a family member. Now he just wants Bill Jr. to know that his old man is watching. "Hopefully, he'll do a good job," chides Bill Sr. "If he doesn't, I'll cut his allowance. He's too big to spank." But those who know Bill Jr. suspect he'll be the one to kick himself the hardest should he fumble in his bid to keep one of America's great industrial dynasties going for yet another generation.With Kathleen Kerwin in DetroitReturn to top


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