Young Henry Takes a Risk

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Late one night last week, Richard Leonard, the soft-voiced, even-tempered Ford director of the U.A.W.-C.I.O., did something he seldom does. He picked up his telephone and called John S. Bugas, the soft-voiced, even-tempered boss of industrial relations at the Ford Motor Co.

"Listen, John," said Leonard, "let's settle this right away."

"Why not?" said Bugas.

"This" was the collective bargaining between Ford and the U.A.W. While bitter strikes spread across the nation, Ford negotiations had gone on almost unnoticed in an atmosphere of tense, tightfisted, but good-humored bargaining. Next morning Bugas and Leonard, trailed by aides, hustled into Detroit's swank Hotel Book-Cadillac and secreted themselves in the Ford suite on the eighth floor.

In two hours they settled what they had argued back & forth for nine weeks. The company agreed to pay an increase of 18-c- an hour (15.1%) in the basic wage rate of 100,000 employes; the .union agreed to give Ford the company security it had demanded, a guarantee against work stoppages and strikes.

The agreement broke the logjam that had dammed up collective bargaining in the auto industry's Big Three. Three hours later Chrysler Corp., not wanting Ford to get a competitive jump, signed up with the union too. But the Ford contract was still the big news. Beyond the pay agreement, it had another important provision: the turbulent U.A.W. had agreed to make its unruly members toe the line. What the Ford Motor Co. had won, the others would soon want and probably get. But the troubles of Ford were still far from over.

Big Stakes. The Ford Motor Co. was already paying the highest wages in the industry ($1.21 an hour). Now President

Henry Ford II had obligated himself to pay out a whopping $39 million more. Yet, on the company's own figures, it was already losing $300 on every car it made. Unless the steel strike ends shortly, the company will have to shut down tight. Closing down, according to Ford, costs $400,000 daily. Then why had the company made the deal?

In 1914, the first generation's Henry Ford had gambled on the $5-a-day wage and his industrial genius to land him atop the auto heap. Now, the third generation's Henry Ford II was taking another gigantic risk. The stakes were just as big. Young Henry hoped to put the company once more on top--or lose his shirt trying.

Big Problem. Biggest problem of all was that the company has been steadily on the downgrade for some 16 years. Reason: the company has not been acutely salesminded. It has insisted on making the cars it wanted, rather than what the public wanted. In 1930, it had a firm hold on 40% of the car market. By 1941, its share had shrunk to 18.8%.

What Ford lost, General Motors and Chrysler, sharp-eared to customer demand, gained. Ford profits, which had in 1929 run upwards of $80,000,000, shrank with the market. Secretive Ford Motor Co. gives out no earnings statement. But the balance sheet it files with the Massachusetts Commissioner of Corporations gives a reasonable estimate of the financial scene.

In 1941, profits were estimated at only $5,100,000--practically nothing for a $700,000,000 corporation in a boom year. The war years checked the trend. Profits (as indicated by changes in the company's surplus account) rose to an average $24,000,000 a year, But there was new trouble. Hobbled by 773 strikes in four and a half years, the efficiency of Ford workers dropped some 34%, far more, according to trade gossip, than any other auto com pany. As long as Uncle Sam paid the bills, the company could swim. In peace this labor sabotage was enough to sink it.

What were Young Henry's plans? How did he expect to solve his problems?

Big Solutions. First of all he had plenty of cash in the company's till. He had a vast empire of 21 major manufacturing and assembly plants, 15 ships, 400,000 acres of timber and mining property, geared into one of the world's greatest production machines. The war had shown what it could do. In five years, it had rolled out the whopping sum of $4 billion in planes, engines, trucks, jeeps and multitudinous weapons of war.

At first it had seemed ready to mesh as smoothly in peace. Reconversion had been swift. Less than two months after V-E day, the first Fords rolled off the long assembly lines--right smack into the U.A.W.'s demands for a 30% pay boost. Young Henry has solved that by i) patient bargaining and 2) showing the U.A.W. the precarious status of the company. He hoped he had also solved the problem of increasing productivity. If he had, then the cost of making cars in his superb production machine should go down.

House Cleaning. He put his own house in order, cleared out the deadwood in the front office. Close to $1,000,000 a year was lopped from executive payrolls. He brought in bright, alert young men to train into a new elite production staff, upped likely young men from his own plants, puffed new life into his sales force. In his spare time, he hustled around the country, visiting as many as he could of Ford's 6,200 dealers. In easy, confidential tones, he bolstered them up by letting them in on the company's future plans to try to keep them supplied with all the cars they could sell.

The dealers cheered him up in turn with orders for 1,000,000 cars. Current production is already up to 2,800 cars (Fords, Mercurys, Lincolns) and trucks a day, along with some 300 tractors. Soon he hopes to step this up to 5,400 cars and trucks a day. Then the company should stop losing money on every car, start making a little. With luck, and an end to the steel strike, the company may reach this figure soon. If it does it will have the longest start it has had in a decade on G.M. and Chrysler. But Henry II's plans do not stop there.

In the next year, the company will spend $201,000,000 on four new assembly plants and many new supply depots around the country. It will jack up its car-making capacity another notch to 8,000 cars a day. Before long, competitors will get another thrill. In a corner of the cavernous Rouge plant, the first handmade 1947 models have already been built. Soon the tooling up will begin. By October, the new cars will be rolling off the lines.

In Ford maneuvers, these are only tactics. The grand strategy calls for nothing less than a brand-new car which Detroit gossip has described as everything from a slicked-up, marked-down Tin Lizzie to a radical rear-engined car. The company is already dickering with the RFC for the $37,000,000 plant in the Rouge in which Ford made plane motors during the war. When it gets the plant--it will start tooling it up to make its new super-duper car. Young Henry hopes to sell it cheaper than anything on the road.

The New Unknown. All of these fast moves have caused Detroit's automakers to take another long surprised look at Young Henry. Big (190 Ibs.) and tall (6 ft.), he looks little like his frail, sharp-eyed grandfather. Nor has he seemed, in the past, to have any of the old man's genius. Now other motormen are not so sure. What they are sure of is that many of the things they had thought about Young Henry were dead wrong.

In the first place, he had learned the basic realities of the industry far faster than he seemed to have any promise of doing. His basic creed--that labor must be responsible along with management--was not new; the automakers had been trying to shoulder unions with responsibility for years. What was new was that Young Henry had done it shrewdly. He had turned labor into a competitive tool. And he was ready to recognize it for just that. To one automan who tried to inveigle him into some kind of a united front against pay raises, he snapped: "You settle your own troubles. I'll take care of mine." Such stabs as this gave automen the confused feeling that they were really meeting him for the first time.

Few Detroiters have had any chance to know him well. Most of his life he spent in the shadow of his grandfather or of his father, Edsel, who died in 1943. As a child he was kept in comparative seclusion, along with his younger brothers Benson and Billy and sister Josephine.

This was due chiefly to the Ford family's well-founded dread of kidnappers. The press was seldom permitted to take their pictures. Seldom did they go anywhere without a bodyguard discreetly following. At the Detroit University School, which he attended, he was quiet and reserved and just a so-so student. Nor did he make up for his lack of interest in books by any boyish flair for taking clocks or motors apart. All were equally dull stuff to Henry Ford II.

Use It Right. When he went east to Hotchkiss School, he showed little more interest in books (his bodyguard was inconspicuous as a swimming instructor on the school staff). But he impressed fellow students enough with his common sense that the year book picture carried the caption: "You've got something there if you handle it right."

At Yale, which he entered in 1936, he started in as an engineer. But after a year he gave it up--too dull. He switched to sociology, partly because all Fords seem to be amateur sociologists, but chiefly because of Yale's famed Professor Albert Keller. Young Henry liked his lectures because he "did not use hifalutin professorial language, but the people's own language."

At Yale he had a good time with a minimum of collegiate hell-raising, joined Zeta Psi fraternity, Book and Snake Club, and became manager of the 1940 Varsity crew. In four years he failed to gather enough credits for graduation. He quit: he did not care enough about formal education to continue.

The Girl. Anyway, he wanted to get married to a girl he had met on a European tour, slim, blonde Anne McDonnell. Anne was one of the 14 children of wealthy Broker James Francis McDonnell of New York, granddaughter of famed Inventor Thomas E. Murray. She was also a devout Catholic. Young Henry, a Methodist, began studying catechism with Msgr. Fulton J. Sheen. Under the brilliant theologian's guidance, he embraced Catholicism the day before his wedding in the summer of 1940. The wedding in Southampton was one of the most glittering of the season (to keep the bridesmaids' dresses from becoming rumpled in cars, Young Henry persuaded the McDonnells to hire a bus, which drove them all to the church while they stood, hanging from straps).

In Grosse Pointe, just outside Detroit, Henry and Anne settled down in a house presented to them by Father Edsel. At their first dinner party the new Mrs. Ford surprised Detroit's socialites. Unaffectedly she said grace aloud.

Young Henry made a leisurely start at learning about the Ford empire from the bottom up. He worked at testing motors, greasing cars and other dirty jobs. There seemed no reason for haste. At 47, wiry, quick-stepping Edsel Ford looked as if he would be president of the company for years to come. There would be plenty of time for Young Henry to learn. In April 1941, Young Henry joined the Navy. Commissioned an ensign, he later returned to the Rouge plant to teach mathematics in the Navy school there.

The New Job. Almost overnight he was thrust into a far bigger job. After a short illness his father died. Now, there was no longer time to learn from the bottom up; Young Henry had to learn from the top down. Old Henry took up the job of teaching him personally, as he had taught Edsel.

But there was no time left for instruction. The iron hand with which Old Henry had once run his empire was now feeble and failing. Last September Old Henry was forced to step down from the presidency. Young Henry stepped up, promptly took over.

The New Broom. In the summary manner in which Old Henry had always acted, Young Henry acted. Out went short, nail-hard Harry Bennett, onetime apple of Old Henry's eye, who had protected the boss from everything from kidnapping to collective bargaining. Out went dozens of others in the swish of his new broom. One executive had fitted himself up a cozy hideaway in the Rouge plant for his private entertainment. When Young Henry heard of it he descended on the hideaway one night to investigate. The door was locked. He picked up a wrecking bar and smashed down the door. Next day he fired the executive.

When he swept out Harry Bennett, Young Henry also swept out the last remnants of the labor policy which he felt had long given Ford bad publicity and hurt car sales. As long as Bennett was there, Young Henry felt that the union would remember his bone-crushing days. As long as a core of bad feeling remained, the union would never believe that the company was sincerely anxious to get along with the U.A.W.

New Hands. With his new broom, Young Henry brought in other new ideas. Shrewd enough to realize that there was a lot about automaking that he did not know, he set up a policy committee to supply him with the answers. On the cornmittee are: Labor-Relations Expert John Bugas, onetime director of the FBI's Detroit office and now the company's No. 2 policymaker; black-haired, gruff Mead L. Bricker, the production boss who "saved" Willow Run; John R. Davis, the cheerful, shrewd boss of sales and advertising; pint-sized R. H. McCarroll, now executive engineer but chief chemical engineer for 22 of the 30 years he has been with the corporation; Secretary Herman Moekle; Treasurer B. J. Craig and Purchasing Agent Charles Carroll.

Young Henry presides over the committee meetings, decides company matters on the basis of a majority vote. In four-to-four ties, his side wins. Yet, on many a point he is outvoted, even when one of his favorite ideas is involved.

Occasionally he is also out-argued. Example: when OPA set the price ceilings on Fords, they seemed too low to Young

Henry. His impetuous decision was to launch a nationwide ad campaign blasting OPA. But he was cooled down and the plan was dropped.

How to Sell Chevies. The consuming ambition to make Ford first again keeps Young Henry moving fast with his bouncing stride. He gets up early, usually at 6 a.m., showers and dresses. Most of the time he wears dark, expensively cut grey or blue double-breasted suits (still made by his prep-school tailor), favors blue polka dot four-in-hands.

His chauffeur almost always drives him to the Rouge plant, some twelve miles from his home, and leaves again in a new car just off the production line. By giving at least two cars a day his own private road tests, he thinks that it helps keep the production men on their toes. On his way, Henry winds windows up & down, bounces in the seats, tests all the gadgets.

One day a door sounded tinny when he slammed it. Angrily he called the entire production staff around, slammed the door.

"Don't you know," he snapped, "that Chevrolet salesmen take prospects over to a Ford salesroom and slam a car door. When it sounds like this they just say 'see, tin,' then take them back and sell them a Chevrolet."

Then he ran down the production line, slamming car doors, marked every one that sounded tinny to be fixed.

In the Ford administration building, Young Henry's office is small, plainly furnished and glass-enclosed like all the rest. Like his grandfather, who never stayed put, he spends more time out of his office than in it.

He is usually home by 7:30 in the evening, usually stays there. His Georgian brick house, comfortably furnished with early American pieces, is far from palatial. Its four bedrooms are big enough for the family. Still worried about kidnappers, Young Henry has never permitted the house to be photographed. Nor has he ever let the press take pictures of his daughters, Charlotte, who will be five in April, and Anne, two and a half.

He seldom goes to nightclubs, but he entertains frequently at home. For special occasions, he usually has a small orchestra in. At such times, he has a drink or two (Scotch & soda), but he rarely smokes. His grandfather's ban on smoking in Ford offices is still in effect.

Fond of most sports, he plays golf in the gos, plays tennis all the year round (in winter in the $500,000 Tennis House which his father & friends had built near by). When he can get away, he takes his wife skiing, or goes duck-hunting.

Shock on Shock. In the last two years, the empire has survived the shock of Edsel's death and Old Henry's retirement. There is no reason to suppose that it will not also survive the financial shock of the day when death comes to Old Henry Ford. The inheritance taxes on his 58% holdings of Ford stock would be enormous --if they were paid. But they will probably be minimized in the same way as the taxes on Edsel's 42% interest.

Then, the 71,650 shares of voting stock were split equally among Mrs. Edsel Ford and. the four children. Until Billy and Josephine, now married to Walter Buhl Ford II (no blood relation), reach the age of 25, Mrs. Edsel Ford is trustee for their shares. The 1,350,000 shares of non-voting stock were turned over to the Ford Foundation, a tax-free charity (Ford Hospital, Greenfield Village, etc.), which the family organized ten years ago. Thus the inheritance tax was comparatively light, although the exact sum is still in dispute between the Ford family and the state.

Certain that control will remain in the family (through the voting stock), the Fords are already laying plans to fit the younger brothers into the dynastic pattern. Benson Ford, now 26, has just been released from the Army, will probably be settled down in labor relations. Breezy, talkative, he liked formal education even less than Henry, spent only a year at Princeton. After his draft board rejected him (he is virtually blind in one eye), he managed to enlist anyway, ended up as a lieutenant. .Billy, 20, was in the Navy's V-5 program, likes to tinker with motors more than the other boys, plans to attend Yale before he joins up with his brothers. By that time, Young Henry's gamble may be won--or lost. These days Young Henry is quite certain that it will be won, that the troubled labor relations that harried the empire for years are finally at an end. He has one solid fact to go on. Since V-J day, there has not been a single work stoppage in any of the Ford plants.

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