Ford rebounds to riches
An obsession with quality and the hot new Taurus helped
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But as is so often true in the auto industry, Ford Motor’s success followed earlier problems. Seven years before, it had been close to collapse.
Chrysler Corp.’s brush with bankruptcy in the early 1980s grabbed most of the headlines, but Ford was in almost equally perilous straits. Its gas-thirsty luxobarges sank from favor as the world reeled from the two oil crises, and its small-car response, the Pinto, acquired a reputation for fiery explosions in rear-end crashes. Ford’s sales and profits sank.
Even worse, a large number of Americans had stopped looking at Ford cars when shopping. Donald Petersen, who would become Ford’s chairman in 1985, sat in on focus groups in California in the early 1980s. He was horrified to hear one young shopper after another say that they didn’t own a Ford, their parents didn’t own a Ford, they didn’t know anybody who owned a Ford, and they had never even sat in a Ford vehicle.
Obsessed with quality
To rebuild its fortunes, the automaker became obsessed with a single mantra: Quality. “Quality is Job 1” became the company’s rallying cry — and, from 1984, part of its advertising.
Battered by financial losses and the Japanese carmakers’ gains in the U.S. market, Ford closed 15 plants worldwide from 1980 to 1987. That number included three North American assembly plants. Ford eliminated 49,800 blue-collar jobs and reduced its white-collar work force in 32 consecutive quarters.
When choosing which plants to close, Ford focused not on the oldest or those with the poorest productivity, but those that made the most trouble-plagued vehicles. The message to the manufacturing ranks was blunt: Quality improvements could save jobs.
Ford’s message to shoppers was more subtle. In 1982, Ford introduced a new advertising tag line: “Have you driven a Ford … lately?” Chrysler’s brash chairman, Lee Iacocca, had challenged shoppers, saying, “If you can find a better car, buy it.” Ford’s message, in contrast, amounted to an indirect confession that its cars in the past had not always been that great. The tag line also carried an appeal to Americans’ sense of fair play. Try us again, it said, we’ve gotten better.
Shoppers began checking out Ford’s lineup and were pleased with what they found.
GM was hardly a factor. In the 1980s, it virtually abandoned cars and trucks to buy data processing firms, defense contractors, mortgage companies. GM’s business credo seemed to be “Anything but autos.”
Best sellers
By the late 1980s, Ford had America’s best-selling car in the Ford Escort, plus the best-selling truck — and a cash cow — in the
F-series pickup. Its small pickups were grabbing market share from the Japanese automakers that had invented the segment, helped in part by a strengthening yen that made Japanese models more expensive when priced in dollars for U.S. buyers.
Ford lacked a strong-selling SUV — the Explorer didn’t debut until 1990 — but SUVs were not a huge segment at the time. Also missing was a high-volume minivan. But Ford’s strength in pickups made up for those absentees.
Even more important, Ford had the Taurus, a car that symbolized the resurgence of the American auto industry.
Iacocca had scoffed at the Taurus’ aerodynamic look, which he likened to jelly beans. But jelly beans were President Ronald Reagan’s favorite snack, and in 1988 Reagan was more in touch with the tastes of the American public than Iacocca.
Ford had introduced the aero look with the 1983 Ford Thunderbird. (Some would say the look was borrowed from Audi.) But the Taurus was the first high-volume, mainstream car to adopt the radical new design that was so far afield from the boxy models that clogged the nation’s highways.
The Taurus’ 1985 debut was delayed several months to fix quality glitches. Inside Ford, the delays were yet another affirmation to employees that the company was more intent on getting cars right than in getting cars out the door. Quality was Job 1, indeed.
Rising share
With improved quality, more-pleasing design and strong sellers in the high-volume market segments, Ford’s sales rebounded. From a low of 19.7 percent in 1981, Ford Motor’s share of the U.S. light-vehicle market climbed to 23.2 percent in 1987, 24.3 percent in 1988 and 24.6 percent in 1989.
But rather than add capacity, the automaker’s manufacturing managers became experts at squeezing more cars out of existing factories. They expanded a paint shop here, fixed a bottleneck in the body shop there. Workers were happy to receive fat overtime checks, even though the UAW’s top brass carped that Ford should hire more workers instead.
By 1988, Ford’s North American plants were operating well above 100 percent capacity. In a capital-intensive industry, that was a license to print money.
Ford topped GM in profits in 1986, $3.3 billion to $2.9 billion. It was the first time that had happened since 1924. The accomplishment was even more remarkable considering the disparity in the two carmakers’ worldwide revenue: $102.8 billion for GM vs. $62.7 billion for Ford.
Profit peak
Ford didn’t stop there. Its profits continued to rise, peaking at $5.3 billion in 1988, an industry record.
But the glory days didn’t last long. At the beginning of 1988, only Honda Motor Co. and Nissan Motor Co. among Japanese carmakers had their own factories building vehicles in North America. Toyota Motor Corp., which had tested the American waters by means of a joint venture in California with GM, opened its own plant in Kentucky in May 1988 — and was expanding it before the first car was built. Plants building Mitsubishi, Subaru, Mazda, Isuzu and Suzuki followed.
Meanwhile, the market shifted from cars to light trucks. Ford, which had rejected Hal Sperlich’s idea for a minivan, watched flat-footed as Chrysler dominated a blossoming and highly profitable segment Sperlich created after following Iacocca to Chrysler.
But for a few glorious years in the late 1980s, Ford’s emphasis on quality, styling, manufacturing and marketing made Ford the envy of the North American auto industry.
You can reach James B. Treece at jtreece@crain.com.
