(originally posted 12/29/11) Oil prices have just hit record highs, and the nastiest recession since WWII has the country in its grip. Ford’s line-up of bloated, heavy vehicles is piling up like cord-wood on the dealer’s lots. The only car selling is its “Americanized” global compact. Ford stock is priced in cents, and bankruptcy rumors are swirling. The top exec hired a year earlier is intelligent, unassuming and straight-talking. He commits Ford to building “higher quality products with stronger customer appeal…emphasizing smaller, more efficient cars”. Ford in 2008? No, it’s 1981.
Like Alan Mulally today, Donald E. Petersen was an atypical choice when he was promoted to the Presidency by the Ford family in 1980. An engineer, development executive, and genuine piston-head, Petersen was also the antithesis of Lee Iacocca, whom he replaced. Never in modern history has an automotive CEO been so devoid of spin and hyperbole. No wonder Ford of the eighties looked to Japan for inspiration.
Petersen learned of Toyota’s use of quality guru Edwards Deming’s techniques, and uses Deming and corporate guru Peter Drucker in the first coherent US automaker assault on “total quality”. As measured by owners, vehicle quality improves 60% from 1980 to 1987.
The aerodynamic 1983 T-Bird launches a dynamic wave of efficient, exciting and successful passenger cars. The Turbo-Coupe has the world’s first fully computer controlled (EECV-IV) integrated turbocharged fuel injected engine.
The Ranger successfully takes on the long-established Japanese compact pickups, becoming the category best seller for many years.
The Fox-body Mustang reinvents and dominates the pony-car class with its balance of light weight and V8 power at an affordable price.
In the biggest single auto product gamble in modern times, the 1986 Taurus is launched. It leapfrogs the competition, and sets the packaging and dynamic standards for the modern US-market sedan. Taurus soon sells 400k units per year, taking away the best-seller crown from Accord by 1992.
Petersen employs Japanese “just in time” production methods at Ford, and the Atlanta Taurus factory becomes the most efficient auto factory in the US (including Japanese transplants).
Petersen’s honest, cooperative, non-political management style motivated the management ranks as never before, and his deep experience in car development as a car enthusiast assured that Ford’s products were consistently more dynamic than the competition.
In trend-setting, car-conscious California, Ford becomes the number one selling brand, selling passenger cars successfully while GM and Chrysler have already become terminally irrelevant there except for trucks (and Corvettes).
Profits explode, and Ford becomes the most profitable car company in the world in 1986-1987. “F” becomes a Wall Street darling as its stock goes from 68 cents in 1981 to over $10 in 1987, resulting in an 1342% gain.
But what really separates Petersen from the rest of his ilk is that he totally keeps his perspective, candor, and most of all modesty, to the end of his term at Ford, despite the phenomenal success that was fully his doing. In stark contrast to Iacocca, who had to be dragged out of Chrysler kicking and screaming well past his usefulness, and then tried to weasel his way back several more times, Petersen consciously and quietly retired two years early in 1990 at the age of sixty-three. He wanted a new management team to have a running start in dealing with the clouds he clearly saw gathering in Ford’s horizon.
In an exceedingly frank and prescient farewell discussion with thirteen journalists the day before he retired in 1990, Petersen expresses grave concerns about the future of the US auto industry. According to one reporter: “…his terse answers were sobering. The word survival came up a lot because it’s no joke to ask how much of a home-grown auto industry will exist a generation from now.”
“Because of the deep partnerships of the Japanese companies with their suppliers, changes can be implemented predictably and rapidly. The steady loss of state-of-the-art manufacturing technology in the US manifests itself in the longer product cycles and lower real or perceived quality of the domestic automakers”.
Petersen goes on to say: “there’s this nibbling away, this gradual erosion that’s occurring that nobody sees very well, I don’t think. It bothers me a lot.”
He ends with: “the manufacturing sector in the US is going through the same process now as the agricultural sector went through in prior generations…we have to accept that it (manufacturing) will generate a far smaller percentage of the employment of the people of the United States than it does now or did 10 years ago. There will be far fewer jobs.”
Those words spoken twenty years ago seem remarkably prophetic, especially in light of the future bankruptcy of GM and Chrysler, and Ford’s narrow escape itself. Alan Mulally has charted a similar course for Ford’s salvation, emphasizing efficient European cars and quality.
Ford’s stock between 2008 and 2010 took a similarly strong ride up, although the gain from the lowest point to the highest was a mere 689% this time. Has Ford learned its lesson, and will it avoid the mistakes that came along after Petersen?
Update 10/9/2020: Here’s a chart of Ford’s stock price since that last peak in 2010.
Nice story. It reminds me of the reporters who said that Ford had learned more from the 80s recession than the other automakers because it experienced the nearest to death experience without Chrysler’s government intervention and because they didn’t have GMs deep pockets or market share at that point.
What nearly killed Ford was success.
Focusing on profits over product resulted in fantastic profits from terrible obsolete cars. During the 1970s it became acceptable to fill rides with faux luxuries without enhancing the vehicle itself. By the late 1970s, it had become apparent that no one really wanted an old Ford, unless it was painted up as a Thunderbird with cargo straps glued across its trunk deck. The products themselves were crappy circa-1969 vehicles with smothered engines, steamboat-rides and vinyl seats.
GM had the market share to waste – which they did. Chrysler and Ford didn’t, so they went into chaos. AMC blew its last wad with an attractive AMC Matador Coupe that no one wanted.
Petersen takes the reigns after the new Fox and Panther bodies hit the market. The front-wheeled drive Escort was brand new. He certainly knew where the market was and took risks that GM refused to take. Yet he is humble enough to recognize that he didn’t do it all by himself. A great man!
I thought you were predicting the future!
It’s strange that this has to happen again and again all the time. Especially to Ford, which unlike GM and Chrysler, was a quality car maker from the beginning. (GM and Chrysler were really just owners of a group of quality car makers) The ideas that saved them were the same ideals that old Henry stood for in it’s past, ideas that the Japanese (and the rest of the world) learned from American industries in the first place.
This last time a lot of it was due to things that Ford couldn’t control. Namely 9/11 and the lack of the govt doing anything to quell the public’s uncertainty about the future. That led to GM offering the first of the 0% financing deals that started the race to “employee pricing” AND zero/low interest loans AND a rebate and loosing money on every vehicle sold. That of course set in motion the falling interest rates in general and again the lack of the govt doing anything to regulate the predatory lending. Which eventually led to the collapse of that gold mine that sent the speculators to fuel driving it’s price way up.
That doesn’t let Ford off the hook for depending so heavily on the Explorer, F-150, Navigator and all the other trucks, while they gave car business away to Toyota and Honda. Easy fat profits on low-tech products is poison. Ford should have known better.
When Alan Mulally stepped into the cockpit in 2006, he read the future correctly, immediately hocked all their assets for a $24B line of credit, and started cleaning house. He got a lot of flack for that, but history proved him right, and Mulally became the third man to save Ford, after HF II and Petersen.
Petersen was brilliant. I bought a new Sable in ’87 and loved it. When Petersen’s successors ruined the Taurus/Sable, I knew Ford was back in trouble. It must have been painful for him to watch it happen.
So if you make an average of 10 times the profit on the trucks you should not focus on them? Acorrding to my friends Dad who was a local exec for Ford there was about an average of $500 profit on a Escort while the first incarnation of the Explorer was good for about $5000 of profit on average.
I agree that it was short sighted of Ford to sell all their patents and research data on Hybrid cars to fund the development of the Expedition. At least they were smart enough to make sure that negotiated to be able to license that tech, and developments that came from it, back.
If you’re playing the stock for short-term gain, then by all means take all the profit you can today and don’t spend a dime you don’t have to today. Just be sure you get out fast, before the future you didn’t provide for comes to pass. This is how Wall Street and most corporate CEOs operate today.
Or you could use the profits to build long-term assets and markets at the expense of short-term profits. That takes the guts and ability to fight off the Wall St. pirates.
Actually it isn’t how it works today. It’s not about current profits, nor future potential profits but sales numbers and “impressive” press releases. High profits now are always good, however you need to put some of that away for that rainy day that will eventually come. However the stock market today is heavily driven by “traders” who are only looking for the stock price to swing, not for future growth.
That mentality is part of what got Ford and GM in the trouble they were in. If they didn’t keep upping the ante, pulling demand forward, and eliminating profits Wall St would have responded to the sinking sales numbers by killing the stock price. We can thank the Dot.gone boom for making the stock market think that way, yet nothing was learned from the Dot.gone bust that proved trading on rumors, press releases, and sales that don’t bring actual profits is not the way to value a stock.
“Or you could use the profits to build long-term assets and markets at the expense of short-term profits. That takes the guts and ability to fight off the Wall St. pirates.”
The problem with that is, it makes a business a takeover target for a raider. The cash saved and stored displeases shareholders, who see themselves as shortchanged. Shareholders selling out in large numbers depresses the stock value; and then raiders speculate that buying the company, selling the parts and pocketing the war-chest is profitable – sometimes hugely profitable.
It’s a fine line that needs be walked; and it’s at the root of all the “poison-pill” plans corporations have put together. Not all of them are effective, either.
In a cyclical business like the auto industry, it’s a difficult dilemma.
That is basically what destroyed Chrysler. The synergy with AMC/Jeep worked and profits were piling up, attracting the Daimler takeover, which drained the cash and we saw the end result.
Having said that, Ford is in a unique position for a global automaker, the Ford family trust controls a huge stake (~40%). That means not being totally beholding to Wall Street and possible corporate raiders.
“So if you make an average of 10 times the profit on the trucks you should not focus on them?”
Not when the reason for “10 times the profit” is not that the trucks are desirable per se, it’s that folks under the thumb of a corrupt Government are not allowed to buy the cars they want.
When America finally throws off the hateful yoke of CAFE, like we finally threw off the yoke of “55”; car sales (REAL cars, not mass-market Penalty Boxes) will rebound and truck sales will return to more-rational levels. Automakers had better have a Plan B if Congress ever comes to it’s senses.
But the days of not offering FWD/AWD on daily-drivers are over. Americans have seen the advantages, and they’re not going back.
According to Bryce Hoffman’s book, the borrowing binge started before Mulally arrived, when Bill Ford Jr. was interim CEO.
What gets lost in the story of FoMoCo’s latest resurrection is the importance of Bill Ford’s role. He saw the need to improve the company’s cash position. He had the humility to know he needed someone else as CEO and the judgment to know Mulally was the right guy. And he had the difficult job of selling the turnaround plan to the Ford family. Many of them had never had a job and relied on FoMoCo dividends to support their lavish lifestyles. So it wasn’t easy to get family backing to stop paying dividends in order to save the company.
Bill Ford’s biggest mistake was probably keeping Nasser around too long, but he’s not the only one who got snowed by Nasser.
(Kind of weird to post to a three-year-old thread, but this is a great topic.)
nah, Ford was in trouble before the Great Recession hit. Everything Don Petersen did right was later unraveled by his successors, most notably Jac the Knife as he spent foolishly on Volvo and Land Rover and created the asinine “Premier Automotive Group.” And of course he was there as Ford implemented “forced ranking” which completely torpedoed morale amongst the rank and file.
WE now have in NZ zero percent financing on cars again used cars asre rising in price but new cars are easier to get
Before Donald Petersen, there was Philip Caldwell who after being president of Ford became CEO when Henry Ford II retired. http://en.wikipedia.org/wiki/Philip_Caldwell I guess then Caldwell probably paved the way for Donald Petersen.
It could be interesting to see an article about Petersen’s successors, Harold Arthur Poling, Alexander Trotman and Jacques Nasser who was CEO of Ford during the Firestone incident.
U r correct. Caldwell was at the top when the Taurus* was approved and most of Ford success was in place.
*Largely cribbed from Audi.
HF II loved the big huge mid 70’s big cars[nicknamed Barges by some], and kept them around until EPA forced change. The Panther platform, while beloved now, was a reverse engineered GM B-body platform. Ford just got lucky that GM dropped some of their big cars in 1984 and buyers went to Ford/Mercury biggies when gas was cheap again.
Not really there wouldn’t have been the time to reverse engineer it off of the downsized B and get it to market when they did. Much like GM they more or less designed a “new” “full-size” based on their intermediate platform.
Undoubtedly the loss of some of the B’s didn’t hurt sales of the Panthers.
According to David Halberstam, who wrote The Reckoning the Panther was a hacked-down version of the then-current Ford full-size. It was a bone of contention with some Ford execs that a front-wheel-drive full-size plan had been axed in favor of a “bastardized” slimming down of a current model.
After he published the book in 1983, of course, those plans for a FWD full-size were dusted off and made into the Taurus. As it turns out, both were, in their own way, winners.
But no, the B models were only motivators – not models to clone.
More than one reviewer back in the day stated that The Reckoning picked the wrong horses – not only was Ford’s turnaround well underway between the end of the book’s focus and its’ publication, but Nissan was reeling from its’ disastrous rebranding and relentlessly dull volume models.
Correct. Halberstam picked the wrong horses.
“The Fox-body Mustang reinvents and dominates the pony-car class with its balance of light weight and V8 power at an affordable price.”
Actaully, it was on chopping block, to be replaced by a Mazda 626 based FWD coupe. It wasn’t til word leaked out, that an uproar started and Ford relented. The Fox Stang was released in fall 1978, just refined for 1987. Affordable since it was near 10 years old, too.
This piece reminds me about how few really, really good automotive executives there are. There are a lot of average auto execs, and some below average ones too.
Petersen would be one of the good ones, as Mulally is today. I think that you may be a little hard on Lido, as I think that he was constrained in many ways by HFII and the finance guys. He did a pretty good job of bringing a very damaged Chrysler back from the dead. I need to read more about Ford’s Iacocca era.
Like you, I saw Fords become more attractive and appealing cars all through the 1980s and into the early 90s. Unfortunately, Trotman and Nasser undid a lot of the good that Petersen accomplished.
It’s easy to knock Iacocca in hindsight for cars like the Pinto, Mustang II and Granada. But those cars sold exceedingly well at the time and Lido managed to catch GM with its pants down in nearly every new market segment for the better part of three decades. Iacocca excelled because as an executive he was a rare animal – an engineer with the mindset of a salesman. He understood how to appeal to customers in a way his wonkish predecessor McNamara never could, but was smart enough to adapt to changing market realities in a way his pale facsimile and would-be successor at Chrysler, Lutz, has repeatedly proved incapable of.
Of course, Iacocca’s considerable ego was his downfall at Ford and helped spook Bob Eaton into giving Chrysler away to Daimler after he pulled that hostile takeover stunt with Kerkorkian. He may have lost his touch in the later years, too, as Chrysler relied on K-derivatives and boxy “classical” styling themes that appealed to Lee’s own Sinatra-shmoozing tastes long after the industry had moved on (although, in fairness, he signed off on the LH cars).
I read an article about the Pinto in Collectible Automobile and development of the Pinto beginning during the short tenure of Semon “Bunkie” Knudsen as president of Ford. But Bunkie didn’t stay long at Ford, I heard of rumors the reasons why Bunkie was fired was because he entered in Henry Ford II’s office without knocking at the door and treated HFII like a pal.
Ford is also, I believe, really adverse to any kind of bankruptcy, becuause, unlike the other companies, Ford is still has family ownership, it was not a publicly traded company until 1956, meaning that for 53 years of its existance it was totally private, even today, the Ford family still owns the majority of shares in Ford last time I heard, which is why they will do practically anything to avoid a bankruptcy, the minute their majority shares and stock are gone….what are they left with?
The Ford family owns a minority of the shares, but those shares have 40% of the votes, so yes, the family effectively controls the company, and will do pretty much anything to avoid BK, which would end their control (and their source of cash for private schools for the kids, nice houses, etc.).
I’d call Petersen an outstanding executive (although he was the driving force behind buying, erm, Jaguar, and he made little progress at breaking up the fiefdoms that were North America, Europe, Latin America, and Australia/Asia Pacific).
Poling was the right executive for the times (cost cutting in the early 90’s). And despite being at heart a finance guy, he seems to have had some product mojo as well, considering he was EVP of North America during development of the aero Thunderbird and the Taurus.
Trotman tried and failed to cut through the regional barriers, and, it seems to me, began the process of disinvesting in cars and throwing all of the PD funds into trucks (seemed like a good idea at the time…).
Nasser was besotted with 90’s ideas of e-commerce and “owning the customer lifecycle”, and way overpaid for acquisitions that had to be unwound after he was sacked. It was under Nasser Ford got Volvo, Land Rover, and some UK operator of junkyards (sorry, recycling centers). At Ford Credit we managed to resist the mania (except for one $100 million investment in a company alleged to have been developing a website to aggregate insurance quotes on the web, well, and way overpaying for a JV in India).
Ford bought a bunch of junkyards in the US too. It was due to proposed cradle to grave legislation that would have held them liable for the “safe” disposal and recycling of any car that they sold. So around here they bought up the biggest player who had brand (and for a while vehicle) specific yards and then closed most of them before turning around and selling the remaining facilities shortly there after the threat was gone. GM did the same thing but not nearly at the scale that Ford did.
If I recall correctly, Petersen either initially opposed the purchase of Jaguar, or, once the bidding started between Ford and GM and the price climbed, wanted Ford to pull out of the process. He was overruled by others – particularly the Ford Family.
Ford’s biggest mistake with Jaguar was not retaining the current XJ’s design plans, modifying it to use Mustang mechanicals and building it as a new Lincoln Continental while leaving newly-independent JLR to shine on with the old XJ.
That would have harmed their ability to raise money by selling Jaguar though
As a late addendum, it’s worth pointing out that the reason Ford’s regional entities kept ending up drifting apart was that repeated past efforts to unify and centralize control had really not worked. Ford had tried to push top-down, centralized management in the ’20s (!), but it effectively amounted to trying force American-market products on markets that were becoming increasingly nationalistic and protectionist. Ford eventually had to bite the bullet and develop separate products for different markets, but for a long time forced the local subsidiaries to essentially buy engineering and design services from Dearborn at a premium, which the local companies resented and which tended to drive up their prices (since there were several sets of overhead and profit margin built in).
So, while the idea of creating a single top-down global organization might sound good, historically, it seldom worked out as well in practice, and it was not from lack of trying.
I think they tried to do the world car platform concept with the Mondeo and it really didn’t work out all that well (the Mondeo, or Contour in North America, was not really well-suited for North America).
That’s true, although I was referring more to management than models.
World cars sound like a better idea than they often end up being in practice. Back in the late ’20s, Ford tried to sell the Model A in Europe, which did not work well at all because of local taxable horsepower rules intended to discourage exactly that sort of thing. Even where you have models that could be competitive in size or engine displacement, prior to the emergence of the EEC, local tariffs also really made it difficult to sell cars internationally. For example, in the ’30s before the war, the British Ford Model Y didn’t sell well in France because of import duties or in Germany because the Nazi government had made it socially and politically risky to buy a car that wasn’t perceived as German. Ford had one advantage in that it had production in Windsor; for a long time, Canadian-made cars could be exported to other British commonwealths and territories less expensively than American-made cars.
It continues to amaze me that, every two decades or so, Ford manages to pull itself out of a death spiral with brilliant management and inspired, quality products, only to completely disregard the lessons learned and come crashing back down under the weight of its own hubris.
Twenty years ago, Ford had a reputation that rivaled Japan. Five years ago, after years of stupid acquisitions a black eye from the Firestone debacle and an overemphasis on trucks, Ford was the odds-on Detroit favorite to tank, while Rick Wagoner was being hailed for fighting off Kirk Kerkorian’s latest takeover attempt and Chrysler was riding high on the success of the hot 300. Funny how times change…
Given the cyclical nature of this industry, I’m still waiting to see if the new Focus is another ’86 Taurus or ’95 Contour.
3 years later, I’d say neither. However, it is on the whole well regarded, so closer to Taurus than to Contour…
It does respectably well here (miles ahead of the Dart, and in the same ballpark as the generally-excellent Cruze) but comes nowhere near Corolla and Civic.
Being tailored to European tastes under “One Ford” may be what holds it back. The Golf is the bogey all automakers aim at when designing a compact car for the European market. But the Golf sells even worse than the Focus on this side of the Atlantic.
Americans find the Focus backseat too small and consider the dry-clutch tranny to be jarring, neither of which is an issue for European car buyers.
I say this as a very satisfied owner of a ’13 Focus.
That said, both the current- and previous- generation Foci are a big hit in China, which may matter more to Ford’s survival than sales in North America.
Civic and Corolla may be the benchmarks, but the Corolla in particular baffles me. Yep, they’re very relaible and well put together. But it’s the personification of “dull as dishwater.” Looks like they’ve tried to inject some style into the new model but reactions are mixed at best…
The base Focus may be a somewhat dull affair but at least the higher models offer style and, in the ST, performance.
Buyers in this class don’t care about what us enthusiasts perceive as a “dull” car, their priorities are completely different. They care about spending nearly twice as much for OE replacement tires, for one. It’s exactly the same reason why the Mazda 3 does not sell well relative to its competitors.
As long as I can remember Ford has offered hot B- and C-segment hatches. That kept the Ford brand appealing to young guys. At least, in the days that I was a young guy. Opel followed the same route with the performance editions of their subcompacts and compacts. Because you see, for the rest both brands primarily offered Plain Jane family cars. A lot of them underpowered. With tiny wheels.
Previously the Focus ST was the more civilized fast Focus. The real beast was the RS, with this 350 hp RS500 as the climax (and so far the last) of the series. From the days that Ford used Volvo 5 cylinder turbo engines in the high performance Focus editions.
In the U.S., the sort of car represented by the various European RS/XR/ST models have been more sporadic and a lot less successful. We did get a version of the first-generation Focus ST170, which was not a commercial success, and I don’t know yet how well the Fiesta ST is going to do.
As cjiguy says, American buyers in the B- and C-segments are concerned more with price, running costs, and painless ownership experience.
@ AUWM, yep, I know that B- and C-segment models are economy cars in the US. My comment was more a supplement to Chris M’s comment regarding the Focus ST availability in the US.
By the way, Toyota had sporty and fast economy cars too (like the TS editions of the Yaris and Corolla, even with a supercharger) but they killed them all off consciously because they only wanted some sort of green image.
Nevertheless, there are more B- and C-segment hot hatches now than ever before. Heck, even Mercedes has one (the A45 AMG).
Just for fun, an ancestor of the Focus ST. The Escort Mk1 RS2000.
(Photo: Brian Snelson / Wikipedia)
Well, the main reason Toyota killed off most of its sporty models was that very few of them sold well. If they’d found a viable niche, they would still be in production. Manufacturers just don’t walk away from segments that are selling unless government issues an explicit thou-shalt-not.
The problem was that established players in that segment are strong enough, established enough, and, in key instances, German enough that any Japanese company is at a real disadvantage just trying to get in. (British comparison tests are exasperatingly predictable in that regard — you know before you read the rankings that the winner will be German, French, or Ford, although every so often there was a Honda upset if VW or Ford was too close to the end of a product cycle.)
Toyota’s image in Europe is such that the T-Sports and TS models would have had to be brilliant to make any real impression and none of them was really that sorted. That’s the conundrum: If you have an old-fuddy image, it’s hard to be taken seriously without making a major investment and that investment is hard to justify if your past efforts in that segment have flopped.
That’s why you should always learn a second language. You know, Dutch, Norwegian, Danish. Countries that don’t have a car industry of their own. A whole new world will open up. 🙂
I see it at TTAC for example. If it’s about Europe all they can do is quote tendentious, ranting and anti-continental crap from the UK. So the article and comments are in the same spirit. You never see a non-Anglo-Saxon source. They can’t read it.
About the hot hatches. Mostly these are halo cars / image builders / image boosters. I mean, how many 280 hp Leons Cupra will Seat sell ?
I’m not in marketing. But those fast-and-furious little Fords and Opels made those brands desirable to us young(er) guys. The potential future customers. Toyota desperately wanted a green image and they got rid of all their sporty models in the blink of an eye (TS models, Celica, MR2). That was the impression that I got here in the last years.
By the way, I appreciate your presence here and your endless knowledge about cars from all over the world.
The key is, as in any industry, is to know what the public wants, BEFORE they know they want it. Steve Jobs and Apple is a good example. Ford foresaw the return of high fuel prices, and the return to small fun cars with conventional platforms. It already had the Fiesta, the Focus and the Flex ready for production. It had the Transit Connect for business. GM squandered it’s money and time on making more profit out of trucks/ suvs and their high profit margin, while not investing in small fuel efficient vehicles alongside truck/ suvs. Now it has run out of money and time. The Chevy Volt is the Corvair of the 21st century. Not because of safety, but because it is a unique platform with high R & D costs and limited transfer to other models, as opposed to the Chrysler K Car whose platform could be made into almost anything and reducing production costs.
I grew up in a largely GM family, but it was hard not to notice what was happening at Ford during that time. The cars and trucks that Ford introduced during the 1980s were a lot more attractive than what was coming out of both GM and Chrysler.
Ford initially hit trouble when the new Thunderbird/Cougar platform (MN-12) received mixed reviews, and came in over both cost and weight targets. Then the Explorer was a smash hit, but, in the long term its success, along with strong Expedition and F-150 sales, distracted Ford from its passenger car line-up.
Then came the underwhelming 1995 Contour/Mystique and 1996 Taurus/Sable, and Ford was in trouble. The booming light-truck market allowed the company to paper over the problems, but once the Japanese invaded the SUV market and undercut the Explorer with the RAV-4 and CR-V, and gas prices rose, the chickens came home to roost.
I’m not sure that Petersen’s retirement was entirely voluntary. If I recall correctly, he opposed giving Edsel Ford II and William Clay Ford, Jr., a larger role in various corporate committees, because he felt that they didn’t have the necessary depth of experience. He also wasn’t in favor of the Jaguar purchase. He either opposed the purchase from the outset, or opposed it once a bidding war developed between GM and Ford, and the price began to climb.
I think Philip Caldwell deserves some of the credit here, he was a bean counter but that’s what Ford needed in the dark days of near bankruptcy in 1980. Also either Caldwell or Iacocca must have signed off on the Fox, the Fox body Mustang, and the Panther, which all would have been designed between 75 and 78.
The Fox and Panther kept Ford going from 78 to 83, and the Fox was still competitive enough to spin off the 83 LTD, which (Wikipedia says) was the #3 best selling passenger car in the US in 83-84. Not too bad for a 6 year old platform!
I agree, it was Caldwell who headed Ford when the Taurus was developed.
Petersen wasted billions on Jaguar that could have been spent on product development. That move also paved the way for other similar follies, later grouped under the disaster known as PAG.
Wiki implies that Petersen wanted Jaguar against the wishes of the Ford family – and it led to his departure.
As I have read in more than one account that sound more credible, William Clay Ford, Sr (HFII’s bro) had a major soft spot for Jags going back some time, and that he was the one who pushed the acquisition. And that he pushed mighty hard, at that.
Frankly, it’s very hard to imagine Petersen wanting Jag, as he was such a rational, left brain guy.
I guess when it’s your name on the building, you’re more likely to get your way.
That, and at the time, buying Jaguar seemed like a reasonable enough idea. No one (least of all Jaguar) had any illusions about how bad things at gotten for Jaguar in the ’70s, but John Egan had been able to spin them off successfully and show that Jaguar could still be profitable if removed from the morass of British Leyland. They still had quality problems despite Egan’s efforts to shape things up, but it looked like what Jaguar mainly needed was the capital to finish its housecleaning, which they hadn’t quite had after privatization and certainly didn’t get under BL.
Buying Jag seemed like a good way of dealing with the problem of how to deal with Lincoln not really appealing to Boomers. Lincoln was making money, but it wasn’t from the sort of buyers who were picking up BMWs. So, rather than try to expensively reinvent Lincoln and risk driving existing business away, why not buy an established European brand? Also, GM was after Jag (or at least a share of it) as well, so there was that, too.
Ford poured money in all over the place millions to PSA for their common rail diesel tecknology and they are still using that in their cars and light commercials Jaguar got a couple of those engines too as did Land/Range rover.
“the Fox was still competitive enough to spin off the 83 LTD, which (Wikipedia says) was the #3 best selling passenger car in the US in 83-84. Not too bad for a 6 year old platform!”
Without having any stats in front of me, that doesn’t sound right, unless perhaps it is counting the Fox-platform LTD and Panther-platform LTD Crown Victoria together. The Fox LTD was a decent seller, certainly better than the 1981-82 Fox Granada that it replaced, but I didn’t think it was *that* popular.
Funny (to me, anyway) that the ad image at the bottom was this:
That’s not an ad, it’s the last image in the article.
I have a Fiat 500 ad below my gold Ford. 🙂
Ed, are you using adblocker?
You’re lucky. I have a political ad below the gold Ford.
November 4th can’t come quickly enough…
I am someone who earned a living in a cutthroat business (air conditioning) that is rife with government oversight and who is retired from a profession that was even worse with politics (teaching). I think the world of automotive sales makes my careers look like walks in the park.
I still have a positive, lasting impression of Lee Iacocca, so I feel the harshness of the criticism above is pretty heavy-handed.
However, very, very few leaders of industry have a long tenure when they make all correct, visionary decisions. Like most athletes, most of them have a fairly short envelope of superior accomplishments and then it’s time to step aside.
Unfortunately, ego gets in the way and brings them down, forever tainting their legacy. That was Lido’s problem, and it’s haunted him ever since.
Most on here know I’m not a big Ford man, but I was ready to buy a Ford back in the 1980s, but already having K-Cars and other various Chrysler products that served us well, we kept our debt low. Now, if we had not bought our 1990 Acclaim, we would have definitely bought the beautifully-refreshed early 1990s Taurus… in that wonderful bluish-green that so many of them were painted!
“The Turbo-Coupe has the world’s first fully computer controlled (EECV-IV) integrated turbocharged fuel injected engine.”
I think SAAB’s APC system was out before Ford’s system
I also though that clam to be suspect. I know nothing about the Saab system, but the Mitsubish Lancer EX 2000 Turbo came to my mind as predating the Ford.
I may have not written it well. While there were other systems before the EEC-IV, my understanding of it is that it was more advanced than the others in terms of overall functions and diagnostics.I don’t believe the Saab APC had that. I have been under the impression that the EEC-IV was the most advanced unit of its kind at the time. But if that’s wrong, I’m always prepared to be corrected. 🙂
EEC-IV is a complicated subject because it was really the engine management computer, not the complete system — Ford used versions of it with both mechanical and electronic injection (and possibly carburetors; I don’t remember offhand), although how much the computer could control obviously varied by application. I think it always had control of the ignition, which was electronic, but I assume the K-Jetronic applications had the same sort of belts-and-braces Lambda-sond mixture control as the Saab APC or the Hitachi computer used on the early Audi quattro.
I don’t know if the APC or Hitachi systems (or the early Bosch DME) had a lot in the way of diagnostics, which may have been the EEC-IV system’s advantage. On the other hand, the Saab system had a knock sensor, which I think the earliest Ford turbo applications didn’t, at least prior to the Mustang SVO.
I’m not familiar enough with the workings of the systems to compare their features, but we know how often marketing “firsts” tend to be followed by a long list of little asterisked qualifiers…
My 84 Bronco II (bought it in 85) had EEC-IV, with the carburetor on top of the 2.8 V6. Only issue I seemed to have was an EGR that liked to coke up the sensor that sat atop the device. Seemed to be buy replacement sensors quite often. That and an ignition that liked to stall out whenever it was damp or rainy outside. Ford came out with a vented distributor cap, which seemed to help quite a bit, but did not completely solve that issue.
I think the real breakthrough was EFI. My later 89 Ranger with the 2.9 EFI engine never had an issue with the distributor cap/damp weather. And on this updated Cologne motor, the EGR system was eliminated outright.
The SVO Mustang didn’t have a knock sensor either. It had a switch on the instrument panel marked “Reg” and “Prem” that retarded the spark when you selected “Reg”. I kept mine on “Prem” and filled with premium unleaded, and got awesome performance. Of course these days a basic V6 Mustang could leave the SVO in the dust, and do it with regular gas. I’d still like to have my SVO back.
SAAB’s APC was used lh-jetronic and featured on board diagnostics. the check engine light flashes a sequence which translates to an error code and there is a scan tool which can be attached as well.
1983-up Turbo Coupe did have a knock sensor; in the intake manifold, oddly, but it was there.
The systems seem similar, with the exception of Ford’s being more integrated.
Add to that story Ford products of that time were a hell of a lot more dependable than GM or Chrysler products.
I don’t think anyone can disagree that Petersen saved Ford. Prior to the Taurus, their cars seemed weary and cheap; they were parts-bin specials which gave the impression that if someone found a warehouse full of parts left over from 1963, Ford would have bolted them on to anything they fit.
The first Taurus was completely different thinking. I remember reading each component of the vehicle was designed to work with the other components of the car – and that this was a big deal for a Detroit-built vehicle – although Japan had been building cars that way forever.
It was easy to spot Petersen’s retirement just by looking at the product Ford offered. Instead of continuing the lessons of Japan and fixing the weak points of Taurus, Ford used “Detroit-logic” and did a “Longer! Lower! Wider! (Roundier!!) on the old car. It was easy to see that the reactionaries were back in power, and that Ford was back on the road to Hell.
Is there a ‘Tell-All’ book out there about the Jaguar adventure and subsequent debacle? I would love to read about it. One thing that has always interested me is the huge brand equity of Jaguar survived their decades of terrible quality, and even the down-market “I can’t believe it’s just a Ford Mondeo!” move that Ford pulled. That’s a trick that Cadillac couldn’t manage. I wonder what the difference between the two situations is?
Mr Petersen and his predecessor, Phillip Caldwell, had to be the best 1-2 punch of US automobile executives ever assembled in the modern era. They elevated Ford from the near bankrupt automaker it was under Lee Iaccoca/Henry Ford II into a dynamic company. Under their watch came the European influenced Mustang, the Ford Ranger and later, sophisticated turbocharged, fuel injected cars like the Mustang SVO and Ford Thunderbird Turbo Coupe. The Ford Taurus and Mercury Sable were ground breaking cars whose influence is seen in near every car made today. The Jelly Bean Aero Look, introduced with the Ford Tempo led the way for the Taurus.
I believe the 1982 introduction of the Mustang GT 5.0 kept the PonyCar flame alive, re-igniting the Camaro/Mustang street wars and survives quite well today, with the GT still with us, alongside the retro Camaro and Dodge Challenger. Today, the spirit of the 1984-86 Mustang SVO survives in the 2015 Mustang GT Ecoboost turbo 4.
The 1983 debut of the Bronco II paved the way for the later 90’s explosion of the SUV onto our roadways, while the T-Bird Turbo Coupe brought European looks and performance into a Nameplate that was near DOA in the late 70’s/early 80’s. Ford’s EEC-IV computer control system allowed the introduction of a more reliable and more cleaner EFI fuel delivery system while providing better control of the new generation of turbo’s introduced with the SVO and Turbo Coupe. The SVO division brought Ford back into racing, through the IMSA circuit. The TBird Turbo Coupe was a major winner in the Nascar Circuit…..
Ford had it all together under Mr Petersen. After he left, as the SUV craze took over the nation, it seemed that Ford lost it’s way, more concerned with the Explorer, Expedition and Excursion, one bigger then the other. Cars were left to stagnate. Then, the Firestone TIre/Ford Explorer fiasco came to almost destroy the company. The hiring of Alan Mulally saved the company, much like the hiring of Caldwell and later, Petersen. Wonderful write up of a man whom I have great respect for, my favorite era for Ford Motor Company. I wish I could relive those days again. Make mine a Mustang SVO! 🙂
Good anaylsis, with one qualifier–the Thunderbird nearly died in the early 80’s, after the disastrous downsizing to the Fox platform (before the aero Bird debuted). 1980 to 82 were dark days for the T-bird. The late 70’s cars, however, though they may not have been objectively very good, sold like gangbusters with almost 1 million produced over 3 years in ’77 to ’79.
I’ll agree the hiring of Mulally was brilliant. He got all of the parts of Ford pulling together, and Dearborn firing on all cylinders is unbeatable. At least it keeps my retiree health insurance and my early retirement pension paid for. Looking back at my management lease cars, I’d love to have back my 84 SVO Mustang, the 85 Tbird Turbo Coupe, and the 89 Taurus SHO, all products of the Petersen era. IIRC, Petersen had all of the execs go through the Bondurant school to learn how to drive, and the products of that time reflected that; they were drivers’ cars. I was hustling one of these cars (probably the Taurus) through the mountains of Colorado, and was complimented on my smooth driving. I’d attribute that to the attributes of the car, which rewarded smooth, Jackie Stewart-style, driving with rapid progress.
Where did you work at Ford?
We had the same lease cars! Mustang SVO, T-bird turbo coupe manual and SHO manual, then several SHO V8PE cars and later an XJ12.
Owed a lot of Ford stock and even shorted it once when I did not work there.
When Ford bought Jaguar in 1989 and the Lexus & Infiniti launches in the 1990 model year. It made some sense. Before “near Luxury”, there was a wider gulf between luxury and less loaded cars. Seems it’s always a battle between the “car guys” & the bean counters”. Along with NIH, not invented here. Robert Mac’s era 4 wheeled appliances, like the 1960 Falcon, were called “Plain Macs”.
It’s really interesting to see things have come full circle. Gas is cheap, credit is easy and the trucks that grow in size every generation. The F series truck sells in huge numbers, so much so Ford has given up on a full range of models. We are back to the time when car companies have finance companies. It’s the only way to sell brodozers to normal people. Think 96 month car loans and permanent payments.
This reflects the stock price. I do wonder what the repossession rate is we the moment.
As much as the old guys put the hate on Tesla, their stock price reflects the way forward.
Just when things seemed at their most dire, Ford always seemed to select the right guy that made the right moves to save the company. Ernie Breech, McNamara, the rest of the whiz kids, Iacocca, Petersen, Mulllaly, even HFII in the early days. Brilliant men with the brains and self-confidence to make tough decisions with billions at stake. GM by comparison always seemed too big for one person to have a profound effect.