This is the 75th anniversary of the birth of the Ford Motor Co. - a momentous event in the history of industrial capitalism - but Chairman Henry Ford II may find little to celebrate in this diamond jubilee year.
For Ford and his company, which is still thoroughly family dominated, 1978 so far as been marked by a major shake-up in the highest executive ranks, some well-publicized auto recalls, a government probe into possible foreign payoffs, and a scandal-charged, $50 million shareholder lawsuit directed mainly at the chairman.
Most recently, Ford in mid-July personally fired Lee Iacocca, the Ford Motor president for the last eight years. It was one of the most dramatic corporate bloodlettings in some time. The action took place over the objections of some directors and resulted from what were said to be personal differences between the two auto industry titans.
In June, the company recalled 1.5 million of its subcompact Pintos and Bobcats that were manufactured between 1971 and 1976. It acted just prior to government hearings following a barrage of reports that the location of the gas tanks in the cars made them vulnerable to fires and explosions upon collision. A government-ordered recall of 9 million Ford cars and trucks equipped with automatic transmissions also may be imminent, according to recent reports. It would be the largest recall in industry history.
Earlier this year, it was disclosed that the company has become the target of a Washington grand jury investigation of possible foreign payoffs by a Ford subsidiary in 1975 in connection with a $30 million Indonesian domestic satellite contract. The company has denied making any illegal payments, claiming it is "squeaky clean" in this area. But in a letter to the Justic Department concerning the Indonesian probe, it admitted that a key document submitted to the grand jury mysteriously had been backdated.
Finally, a $50 million shareholder suit has been filed by New York attorney Roy Cohn against Henry Ford II and other company directors alleging, among many charges, that Chairman Ford himself was a recipient of substantial bribes in return for handing out company business. Ford has labeled the charges as "blatant untruths." And company officials accuse Cohn of seeking publicity and using "McCarthyite tactics," a reference to the late Sen. Joseph McCarthy whom Cohn served as an aide.
Even in the context of Ford Motor's often turbulent and colorful past history, the string of events and allegations of the past few months has been somewhat extraordinary - obscuring that this is a year when company sales should exceed $40 billion for the first time and when profits are surprising some analysts and sticking close to last year's recordbreaking $1.67 billion pace.
Few companies and their top officers are quite as congruent in the public mind as are the Ford Motor Co. and Henry Ford II. He has led the company since 1945 when, at the age of 28, he wrested control of the enterprise from his ailing grandfather, the original Henry Ford.
And under the aegis of Ford, now 60, the company has continued to grow and prosper until it is today the world's fourth largest industrial corporation.
But some observers believe the accumulation of problems could end up casting a shadow on Ford's final years as head of the company as he tries to assure that his family, which continues to control 40 percent of the shareholder votes, keeps firm hold of the management reins.
Ford, who suffers from angina, has said he will step down in 1982 when he turns 65, and has indicated that he would like his son, Edsel II, now 29, eventually to succeed him. An interregnum, involving brother William Clay Ford, 53, meanwhile is being prepared for until Edsel is considered ready.
(Another brother, Benson, died of a heart attack last week at the age of 59. He also had been a company officer and director.)
The firing of Iacocca itself was not unusual. Ford has similarly rid himself of several other top executives in the past.
But some feel Iacocca's loss could weaken the company, and his method of ouster raises questions about how much an enterprise as large as Ford Motor is run like a private duchy by the Whim of one man.
"Iacocca kept General Motors on edge since 1964 when he brought out the Mustang," commented veteran Detroit auto analyst Arvid Jouppi. "You never knew exactly what Iacocca was going to do, and there is no one yet identified in Ford who has shown the same ability to bring a car from concept to showroom in the way that he repeatedly demonstrated he was able to do."
"I was very sorry to see Lee go," said George Bennett, the head of State Street Investment Corp. and an outside Ford director who had urged Iacocca's retention. "We lost a big piece of executive muscle. The auto industry has a lot of problems and we need all of the key talents we have."
Another jolt has come on the safety front where Ford's problems this year appear to be considerable, particularly after last month's Pinto recall.
The fix for the cars, however, won't be available until September. Ford dealers are fuming that the company has allowed critics to deal the car a deathblow without mounting what they consider to be an adequate defense, particularly for the current models which aren't affected by the recall but have slumped in sales due to the negative publicity.
"They blew this one bad, just as they blew the dismissal of Iacocca," said Ed Mullane, head of a group of 1,200 disgruntled Ford dealers.
Even more important than the actal sales, which yield relatively low profits, is that Ford has been banking on selling at least 250,000 Pintos and Bobcats in the next two years to allow the company to meet the government's fuel economy targets for the next few years, which are based on averages. If it can't sell enough of these cars or transfer buyers to other economy models, it will be faced with the unappetizing option of rationing sales of its high-profit but low fuel-economy large cars.
"We're counting heavily on continuing to sell Pintos," said William Bourke, executive vice president for Ford's North American automotive operations who has been mentioned as one possible successor to Iacocca, and who indicates he is eager for the job.
"That being at the bottom end of our line, we feel it's important we sell Pintos in quantity for the accomplishment of our objective," he said. "It's pretty critical as far as we're concerned."
However, as one leading Wall Street analyst put it: "The company needs it, they are desperate for it, but the car is dead."
Another potentially severe blow was dealt to the company last week when it was reported that National Highway Traffic Safety Administration is close to ordering the recall of virtually every Ford car and ruck with an automatic transmission that was manufactured between 1973 and 1978 because of a dozen deaths allegedly caused by some Ford cars jumping from park gear into reverse gear. Some 9 million vehicles are potentially involved.
Last year the company also had problems in the recall area, with the need to call back 2.7 million four-cylinder and six-cylinder Ford engines that turned out to be more susceptible to wear during cold weather because two oil holes had been removed in the manufacturing process as a cost-cutting move. Another 1.3 million cars were called back for a faulty fan.
One automobile industry analyst speculated that the company may be having these kinds of problems because, in an effort to reduce costs at a time when its profit margins are under pressure, it may be neglecting some basic engineering questions.
"There is a great temptation on the part of auto company management to cheapen the product line," this analyst commented. "Maybe they believed that removing the two bore holes would not cause any problem with the engine.
"And now, because most of the engineers are spending all of their time on reducing the size of the car and in getting better mileage, they don't devote as much engineering time to see whether or not some of these cost-cutting efforts are also reducing quality," he added.
While the events growing out of the Iacocca sacking and other developments have drawn considerable media attention, the company's actual operations continue to thrive.
Last week, Ford reported record second-quater profits of $540 million on sales of $11.9 billion. However, the company's return on its sales declined sunstantially. Profits rose only 2 percent, while sales registered a robust 22 percent gain in the quarter. As a result, the after-tax return on sales declined to 4.6 percent in the quarter from 5.6 percent a year before.
With a $3-billion-a-year capital spending program planned between now and 1982 in order to meet federal mileage and safety requirements, Ford's shrinking profit margins could mean that a smaller portion of its earnings will be going for shareholders dividends in the next few years.
However, shareholders so far have seemed impervious to the controversies surrounding the Ford Motor Co. After the Iacocca firing, the stock actually ticked up a fraction of a point, which to some leading Wall Street analysts was the most trenchant assessment of the significance of his departure.
"Mr. Ford has been planning to get rid of Iacocca for several years and he has waited until he was in a position for (Vice Chairman Philip) Caldwell and his brother to be there in case anything happened to him," commented Ron Glantz, an analyst with Paine Webber Mitchell Hutchins, who viewed it as "strictly a nonevent."
Caldwell and Bourke, the two executive who are considered to have the inside track to replace Iacocca as president, "have had more influence than Iacocca has had for many years." Galntz said, creaditing them primarily wiht Ford's standout sales success with the Zephyr and Fairmont models introduced last year.
Maryann Keller, an analyst with Kidder Peabody, notes that Caldwell and Bourke are "the people involved in making Ford of Europe such an enormous success," and that it therefore "makes sense that they were promoted." Last year Ford's European operations provided the company with 36 percent of its total net income, although it accounted for only 22 percent of its revenues. In the most recent quarter, earnings for Ford's North American operations actually dipped, but this was more than made up by higher European profits.
"It is the scope of international operations and global strategy that sets Ford apart from other automoblie manufacturers throughout the world," commented Keller.
TUESDAY: The Cohn suit and Ford's operations abroad.