Ford Motor Company High and Lows: 1953 - 2003

By Nate Hendley (nhendley@interlog.com)

(originally published in AutoPlant, October, 2003)

On May 11, 1953, a four door, "custom" sedan rolled off the assembly line of a factory in Oakville, Ontario. It was the first vehicle built at the brand new Ford facility, which was set on a 420 acre site in an old farm field.

The Oakville Assembly Plant (OAP) was launched in an auspicious year; 1953 marked the 50th anniversary of the Ford Motor Company itself.

NBC and CBS ran television specials to celebrate the occasion, while Norman Rockwell did a commemorative painting depicting founder Henry Ford, his son Edsel Ford, and his grandson, Henry II.

Over the next half-century, Ford would introduce hugely popular vehicles such as the Mustang and Ford Explorer, and terrible bombs, such as the Edsel and Pinto. The company would manage to overtake rival General Motors (GM), only to see its profits slip away as it approached the millennium.

Ford would be praised for safety innovations such as antilock brakes and seat belts and hit with lawsuits for exploding gas tanks. Canada would become a major automotive center while Ford and their Detroit brethren staggered under the impact of imports from Japan.

The Ford Motor Company would also experience ferocious corporate infighting between strong personalities such as Lee Iacocca and Henry Ford II.

Back in 1953, however, executives at Ford’s Dearborn, Michigan headquarters, were focused on two main initiatives: the launch of a brand new car and the company's first public stock offering.

In the early 1950s, the Ford Motor Co. commanded roughly 43 percent of the low-priced automotive market, but a mere 13 percent of the middle and higher priced market. Market surveys indicated that Ford owners typically "graduated" to Pontiacs and Buicks as their salaries increased.

Henry II, who assumed firm control of Ford following his father's death in 1947, was convinced Ford needed a new, high-end car.

On April 7, 1955, Ford executives approved an initiative called "The Big Plan" to build a brand-new vehicle dubbed “the E-Car”. In The Fords: An American Epic, biographers Peter Collier and David Horowitz describe the Big Plan as "the most ambitious proposal ever put before Ford, or perhaps any other automotive company."

In the spring of 1955, Ford established a Special Products Division to build the E-Car, which soon acquired the name “Edsel”, in honour of Henry Ford’s late son.

While the Edsel was being produced, Ford unveiled their 1956 models. These included several then revolutionary safety features, such as optional seat belts and padded dashboards.

On January 17, 1956, the Ford Motor Co. went public, a move Henry Ford had long opposed.

His predecessors thought differently, and their public stock issue caused was a sensation: "It was the biggest stock issue ever. People stood in line outside brokerage houses in 1956 to be able to buy Ford stock, thus owning a piece of the company which still had an almost magical quality for the average American,” wrote Collier and Horowitz.

This enormous success was followed by one of the company’s biggest disasters: on September 4, 1957, Ford unveiled the Edsel. Unfortunately, the car hit the market just as America was grappling with a recession. The gadget filled car proved to be a huge failure, mocked by auto critics and ignored by the public.

“The amount of shake present in the [Edsel] body on rough roads went well beyond any acceptable limit,” wrote Consumer Reports magazine. “The car’s handling qualities – sluggish, over slow steering, sway and lean on turns, and a general, detached-from-the-road feel, are, to put it mildly, without distinction … the “luxury loaded” Edsel … will certainly please anyone who confuses gadgetry with true luxury.”

Consumer Reports aside, the Edsel still has its defenders.

“The Edsel wasn’t actually that bad a car,” insists Dave Redinger, a Toronto-area auto expert and host of a popular radio show called “The Neighbourhood Mechanic”. “It just had the wrong marketing and came out in a recession.”

Ford eventually discontinued the Edsel in 1959, having lost $350 million (in 1950s currency) on the vehicle.

Fortunately, the Edsel wasn’t the only notable car launched by Ford at the time.

In 1957, for example, the Ford Thunderbird became the first mass produced car whose options included a supercharged V-8 engine. The “T-Bird” became a pop culture icon, celebrated in song and movies.

1964 saw the arrival of another sporty Ford vehicle: the two-door Mustang. This small, very powerful car took its name from a World War Two fighter plane. It was based on the customized “muscle cars” popular with street-racing youth.

The Mustang became a big hit and helped launch the career of Lee Iacocca, the Ford executive in large part responsible for pioneering the vehicle. The Mustang’s appeal was so great that Iacocca appeared on the cover of Time and Newsweek in the same week.

The 1960s was also the advent of the consumer movement. While Ralph Nader’s 1965 book, Unsafe at Any Speed didn’t center out a Ford car (it blasted GM’s Corvair), it focused public attention on the safety record of all the Big Three automakers.

During this period, Ford executives protested that their company had always been interested in promoting safety. In 1968, for example, Ford became the first automaker to offer antilock brakes, as an option on their Lincoln Mark III.

During the 1970s, however, Iacocca would lead Ford into a safety-related debacle.

The decade began well enough. Company sales stood at $15 billion in 1970, a record for the firm.

The '70s, however, saw the rise of small imported vehicles, particularly from Japan. Bigger cars began to lose their luster, especially after the cartel OPEC drastically boosted the price of oil in the mid-1970s.

Ford executives wanted to offer an inexpensive, small vehicle of their own, and Iacocca obliged. A forceful personality, Iacocca boasted that he could turn out a car that weighed less than 2,000 pounds and cost no more than $2,000.

The end-result was the Pinto, a cheap subcompact launched in 1971. The car was enormously popular, until people discovered it had a faulty gas tank that tended to burst into flames following rear-end collisions. In the rush to bring the car to market at a very low price, the problem hadn't been fixed.

In 1977, the left-wing Mother Jones magazine blasted the Pinto as "the deadliest car in America". One year later, Ford recalled 1.5 million Pintos. The company stopped producing the vehicles in 1980.

Iacocca, for his part, was fired in 1978 by Henry II, in one of the most widely publicized dismissals in corporate history. Iacocca later found fame as the savior of the Chrysler corporation.

By 1982, things looked grim at Ford.

That year, the company's losses stood at $1.5 billion.

An improving economy and a new commitment to quality helped Ford turn their financial picture around. In 1984, Ford earned a profit of $2.9 billion. Two years later, profits stood at $3.3 billion. That year, Ford topped GM in profits for the first time since 1924.

Ford's turnaround came in part from a decision to focus, almost obsessively, on quality. In the 1980s, Ford adopted a new slogan - "Quality is job one" – that epitomized their new attitude.

This attitude was reflected in Ford's decision to close 15 plants, including three assembly facilities in North America, between 1980 and 1987. Nearly 50,000 blue collar jobs were eliminated in this process.

The plants padlocked by Ford were not the worst producing factories owned by the company. They were responsible, however, for making the most trouble-prone vehicles in Ford's fleet, which is why they were closed.

Ford's quality offensive was also reflected in some radical new designs introduced in the mid-1980s. 1986 saw the release of the Ford Taurus and Mercury Sable. Both cars bore visually striking, rounded "aerodynamic" design. Other auto makers took notice and began to incorporate aerodynamic elements into their own vehicles.

During the early 1990s, Ford helped kick off the craze for Sport Utility Vehicles (SUVs). In 1991, the company launched the Ford Explorer, which has gone to become the top selling SUV in the United States for 12 years in a row.

In 1999, Ford marked another milestone: the company became the first U.S. automaker to build a hydrogen fuel filling station. The firm's interest in hydrogen-hybrid vehicles was part of a continuing tradition, started by Henry Ford, of investigating fuel alternatives.

By 2000, however, Ford was experiencing some new problems.

That year marked the launch of Visteon Corporation, a spin-off from Ford’s high-cost parts operation. Hefty salaries, due in large part to union demands, and management chaos (Visteon didn’t have a president when the company went public) ensured that the company was a major money-loser. In 2002 Visteon had losses of $352 million against total revenues of $18.4 billion.

Year 2000 also marked a bitter falling out with tire maker and long-term partner Bridgestone/Firestone. The failing out was caused by what Ford viewed as defective tires. Amidst furious media coverage, Ford recalled 13 million Bridgestone/Firestone tires, at a cost of $3 billion. In May, 2001, Bridgestone/Firestone dropped Ford as a client.

“Both sides came out losers,” says Mike Jackson, senior manager of North American Vehicle Forecasts for the Michigan based auto research firm, CSM.

If Bridgestone/Firestone and Ford had handled their differences “behind closed doors” the “perception to consumers wouldn’t have been as damaging,” says Jackson.

On October 30, 2001, Bill Ford Jr. became CEO of the Ford Motor Company, the first member of the Ford family to occupy that position for over two decades.

For all of Ford’s troubles, the company Bill Ford Jr. took over was still a colossus; Ford is currently the second biggest automaker in the world, employing 350,000 people and operating in 200 markets on six continents.

Last year, the company sold 6.9 million cars and trucks around the world. Revenues for Ford stood at $162.6 billion in 2002, up slightly from 2001, when it stood at $160.7 billion.

Ford presently buys $4.5 billion worth of parts from Canadian firms each year, a figure that is expected to rise to $7 billion by 2005.

The Oakville Assembly Plant, meanwhile, has produced nearly 10 million vehicles in the five decades since it opened. The OAP operates with a great deal of independence. The Canadian Auto Workers (CAW), not the United Auto Workers (UAW), who serve as the union of choice for American Ford employees, for example, unionized its workforce.

“Surviving as a separate entity is really a great achievement,” notes Redinger.

Despite their position at the pinnacle of the automotive world, the Ford Motor Company continues to hemorrhage money: the company lost $980 million last year, versus $5.45 billion the year before.

Bill Ford has pledged a dramatic about-face: according to Automotive News, Bill Ford "pledged to Wall Street that he will deliver ... $7 billion in pretax operating profit in 2005."

Analysts offer different opinions about the feasibility of this goal.

“My impression is that there is not yet the degree of new product in the pipeline that makes such a scenario viable,” states Jackson.

Dennis DesRosiers, president of DesRosiers Automotive Consultants in Richmond Hill, ON, disagrees. He says Bill Ford’s profit target is “absolutely” doable.

“In some respects, he has no choice,” states DesRosiers. “He has to do it for the survival of Ford.”

DesRosiers says Bill Ford Jr. was “the perfect choice” to lead the company into the 21st Century.

“There’s a lot of very difficult decisions that have to be made at Ford,” states DesRosiers. “A family member, with the backing of the [Ford] family, is able to get rid of some old hobby horses that someone else might be hesitant to deal with.”

DesRosiers won’t name any specific hobby horses, although he does note that the Ford company’s fortunes “is riding on their new products.”

And with Bill Ford Jr. at the helm, it’s again reliant on the skills of a family with a remarkable track record for resiliency. Whether that’s enough this time remains to be seen.

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