How Ford shifted its focus and hung on during the energy crisis

Running on empty

How Ford shifted its focus and hung on during the energy crisis

FROM THE ARCHIVES

This story originally appeared in Ford 100, an Automotive News special issue published on June 16, 2003.

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Walter Oben had a unique way to probe consumer sentiment. The Ford Division general sales manager in 1974 ordered automatic counters put on the doors of show cars to see how many people sat in each model.

Oben's report was bad news for Ford's big-car portfolio. At the Chicago Auto Show's first weekend in March, about 6,000 people sat in the Pinto wagon, and 3,000 tried out the Mustang II Ghia. Only 900 tried out the big Thunderbird nearby.

Consumers were reacting to the oil embargo of October 1973, when the Organization of Petroleum Exporting Countries cut oil production and embargoed exports to Western countries. The cut of 7 percent of the world's oil supply panicked commodity markets and governments, creating further artificial shortages that amplified the oil embargo's effects. Hoarders and market timers interrupted retail oil distribution; service stations limited purchases or simply closed for hours or days.

While auto executives of the time held that the "energy crisis" was imaginary, overblown or insignificant in the long term, that didn't matter to car buyers. They were realizing, for the first time since World War II rationing, just how much they depended on cheap gasoline - and how much gasoline their large cars used to go a few miles.

Rapid change


For Ford, the energy crisis was a watershed event. It came at the same time that air pollution regulations meant adoption of costly catalyst-based systems, an area in which General Motors had a commanding lead. Safety and crashworthiness mandates, including bumpers capable of withstanding 5-mph hits, also made styling and engineering inroads. One automotive publication called 1975-model cars "a field of opera windows and upright grilles."

Ford already had launched its Pinto/Bobcat subcompact car in 1970, and the Mustang II had just come onto the market in 1973, but consumer demand for fuel efficiency and less-expensive cars quickly outstripped capacity. In September 1973, Ford could build

1.34 million small cars a year. Shifting capacity at its Wayne (Mich.) Assembly Plant to build more compact Mavericks, converting the Mahwah, N.J., plant to small-car production and starting second shifts at some Pinto-producing plants boosted that capacity to 2 million in 1974.

Lee Iacocca, Ford president at the time, said, "We are in the midst of the greatest industrial conversion in history, at least in peacetime." He coyly hinted at new models to come that resembled a "well-known, expensive German car," according to an Automotive News article.

Nobody ever mistook either the Ford Granada or Mercury Monarch of 1975 for a Mercedes, but the cars did surprise Big 3 competitors by having luxury-based interiors in a constrained package. And Ford went to work emphasizing its downsized cars.

Robert Alexander, then car engineering group vice president, noted also that the company's new "MPG" fleet of eight car models used lower rear-axle ratios, improved carburetors, new exhaust-gas recirculation systems and recalibrated engines to boost fuel efficiency and lower emissions. Just coming into production was computer-controlled timing, introduced on the Lincoln Continental Mark IV, soon to lead to solid-state ignition systems and active transmission controls.

"By 1980, I believe you will see - throughout the industry - smaller versions of big, mid-sized and even what we consider small cars today," Alexander correctly predicted.

The MPG campaign by Ford was meant to be a direct challenge to a rising tide of Japanese and European imported vehicles, cars that tended to meet clean air standards while offering high mileage. The Pinto was meant to best the Audi Fox, Volkswagen Beetle, Toyota Corona and Datsun 710. The Mustang II was supposed to defeat the Datsun 280Z, Toyota Celica, Opel Manta, and VW Dasher and Scirocco.

MPG cars kept Ford in the game but didn't defeat the opponents. Federal legislation in 1976 implemented corporate average fuel economy standards, meanwhile, that left Ford bewildered about how to make a profit. The company added a massive product-planning computer to its arsenal to try to balance its model mix and still hit fuel targets.

Ben Bidwell, then sales group vice president, said in September 1976: "We may find that if we want to add 5,000 Lincolns to meet market demand, the computer will show 'tilt' unless we also add 40,000 Pintos to those already coming out our ears just to make our average fuel-economy bogey."

Pinto problems


Then, in 1977, Mother Jones published an article titled "Pinto Madness" that cited fuel-fed fires in Pinto crashes. (See story on Page 208.) The National Highway Traffic Safety Administration, spurred by a petition from the Center for Auto Safety, demanded a recall. In 1978, Ford recalled 1.5 million of its fuel economy-leading vehicles, not long before a second energy crisis sparked by the overthrow of the Shah of Iran imperiled the U.S. economy.

Today, the Mustang II, Pinto and other Ford cars of the energy crisis remain among the least-collectible vehicles on enthusiasts' lists. Like ice-age fossils, they show an almost desperate evolutionary trend to keep up with unprecedented business shifts. But they show the company's ability to shift focus and hang on as the world changed.

A new Ford subcompact was on its way to replace the Pinto for 1980. But long before the U.S. version of the Escort arrived, Lee Iacocca was gone and Ford's early, ungainly attempts to wrestle with fuel economy were being tucked away as far out of sight and memory as possible.

You can reach Tim Moran at autonews@crain.com.

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