It’s always very satisfying to get a proper explanation to phenomena that has been described repeatedly. The endless stream of comments here over the years here about Fords being the worst rusters (relative to the competition) in the mid-late ’60s through the ’70s has always made me wonder why. Now I know, thanks to reading David Halberstam’s “The Reckoning”.
Rust was always a huge problem in the industry, and it got significantly worse as the use of road salt increased. In 1957, Dr. George E.F. Brewer and his team of development engineers at Ford created E-Coat, and Electrophoretic coating method for automobiles. Electrophoretic deposition (EPD), is a term for a broad range of processes which includes electrocoating, cathodic electrodeposition, anodic electrodeposition, and electrophoretic coating, or electrophoretic painting. A characteristic feature of this process is that paint or primer particles suspended in a liquid medium migrate under the influence of an electric charge and are deposited onto an electrode (the car body receiving an opposite charge).
The first commercial anodic automotive system (“E-Coat”) began operations in 1963, at Ford’s Wixom plant, which built Lincoln Continentals and Thunderbirds.
As seen in this contemporary video, the E-Coat process is typically used in automotive applications to ensure that the special primer coat covers every tiny nook and cranny of the bare steel body. These are the places where rust typically develops first, where moisture is easily trapped.
Contrary to what one might logically expect, Ford did not move to install E-Coat in its other plants and become the leader in rust prevention. Quite the opposite, actually. Why? Ford during this era was dominated by finance types, specifically Ed Lundy, who was one of the original “Whiz Kids” hired by Henry Ford II right after the war to bring modern management techniques to Ford, whose financial management operations (such as they even existed) were utterly obsolete. The Whiz Kids had had been instrumental in creating quantitative analysis and other techniques to manage the overwhelming logistical challenges of the Defense Department during the war. They “sold” themselves as a group to Ford.
Ed Lundy, one of the brightest of the bunch, quickly rose through the ranks in the finance department, and was responsible for making the finance division at Ford all-powerful, controlling every aspect and function of the company. And he had HFII’s full support, as Ford trusted him to safeguard his company, and to make sure that the profits, dividends and stock price stayed high. Lundy, who was CFO from 1967 until his retirement in 1979, was in many ways the most powerful person at Ford for a long period of time, despite not being the CEO or President. As HFII became increasingly disengaged in the ’70s, Lundy’s power grew even more. Henry Ford became extremely conservative in this decade, only liked big cars, and wouldn’t invest in downsizing or small car programs until it was almost too late. This directly led to Ford’s near brush with bankruptcy in 1980.
One of the resultant dynamics during this era was that Ford constantly starved its plants of new equipment. Manufacturing and plant managers, who once ran the show at Ford, were mow low men on the totem pole, just below the product development guys. Lundy would incessantly veto or drastically reduce requests of all sorts from both of these groups, warning HFII that the stock market might react negatively or the dividends, from which the Ford clan lived, might have to be reduced.
So what did Ford do with E-Coat? They sold the rights to the competition, but didn’t invest (some $4 million per plant) to install it in their own faculties. GM paid big license fees to Ford for E-Coat, and the Japanese started using it too. Actually, Ford of Europe, which was always run more progressively, did install E-Coat fairly early on. But the domestic Ford plants were laggards.
Needless to say, this really rubbed Ford’s manufacturing staff, headed by Marvin Runyon, the wrong way. More than ever, it confirmed the arrogance of the executives toward the customers. But Lundy’s (and in effect HFII’s) response to their pleadings was always the same: that the manufacturing guys couldn’t actually prove that improved quality would improve sales in the short term. Seriously.
One day in 1973 Iacocca got furious at a meeting with Runyon, exploding into a rage about the poor quality of their cars, especially in terms of rusting, which was now affecting warranty costs alarmingly. Runyon pointed out that he’d been begging for E-Coat in his plants for almost a decade! Finally Iacocca got the message and started advocating for its wider adoption at Ford.
But even then, it was dragged out over a decade. By 1975, it was in half the plants. And it wasn’t until 1984, almost 30 years after inventing the process and 25 years after first utilizing it at Wixom that E-Coat was finally installed in all of Ford’s plants.
This is just one of so many examples of how the product and manufacturing branches were perpetually starved, including much lower compensation for the execs and managers in those areas. Ambitious young hires knew that it was a dead end to be involved with manufacturing, and stayed away. And the ones that were already there struggled, including physically and mentally. Or finally left, as Runyon did in 1981, to join Nissan as CEO of North America and to oversee the construction of its pioneering assembly and engine plants in Smyrna, TN.