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Soon after being promoted to CEO, Nasser received an internal analysis that showed the majority of Ford’s profits came from a few truck and SUV plants in the United States. That terrified him, particularly since the Japanese had finally figured out how much money
there was to be made in those segments and were getting ready to introduce some gas-guzzlers of their own. But rather than figure out how to diversify Ford’s product lineup, he decided to diversify Ford.

Nasser broke open the piggy bank Ford had filled over the past decade and went on a shopping spree. He bought a chain of car repair shops in Britain and a junkyard company in Florida. He invested in dot-coms and inked deals with Microsoft, Hewlett-Packard, and Yahoo! At the same time, he began unwinding Ford’s core automotive business. Nasser had the Blue Oval removed from World Headquarters and began replacing seasoned executives with young guns from other industries. He spun off Ford’s parts subsidiary, which he renamed Visteon Corporation, and seriously considered getting out of the U.S. car business entirely so that Ford could focus exclusively on the more profitable truck and SUV segments. The only part of the automobile business he thought had potential was the luxury segment. Ford already owned two of the most celebrated brands in the world, Aston Martin and Jaguar. Nasser decided to purchase Land Rover and Volvo, too. He added Ford’s own luxury marque, Lincoln, to the mix and created an international house of brands he called the Premier Automotive Group. He even set up a new headquarters for the division in California to put as much distance between it and Detroit as possible.

As Nasser tried to pull the company into the new economy, Bill Ford was pulling it out of the Global Climate Coalition, an industry organization dedicated to lobbying against green initiatives and debunking global warming. Environmentalists applauded the move. Ford was just getting started. In May 2000, he published the company’s first “Corporate Citizenship Report,” which featured frank assessments of controversial issues like the impact of tailpipe emissions on the climate and the dangers posed to smaller cars by the automaker’s big SUVs. Greenpeace invited Bill Ford to deliver the keynote at a green business conference in London.
Car and Driver
editor Brock Yates dismissed the young chairman as “
a guilt-ridden rich kid, not a proud tycoon like those who preceded him.”

But Nasser had the whole tycoon thing covered. He created a new cult of personality around himself, traveling with a large entourage
and constantly upstaging lesser executives at public events. He made sweeping proclamations, ordering all cars to be equipped with analog clocks to give them a touch of class and even changing the hue of blue on the Ford badge on a whim. Nasser once called a meeting of his senior leadership team to outline a new marketing plan. When some of his subordinates began to poke holes in it, he raised his hand to silence the debate.

“This is our new marketing strategy,” he said sharply. “If you don’t agree with it, I’ve got somebody from HR who will work out your retirement.”

Morale suffered as employees struggled to keep up with the dizzying pace of change at Nasser’s Ford and cope with his abrasive personality. It got even worse when he introduced new performance evaluations that assigned letter grades to salaried employees based on a complex set of criteria that gave little weight to experience and favored younger workers. Ford was soon defending itself against a raft of age discrimination lawsuits. Worse, it began to lose the veteran employees who had always been the backbone of the company. These were the men and women whose skills and institutional memory allowed the automaker to bounce back every time it lost its way. They remembered how Ford dealt with past adversities and knew it could again. Now, thanks to Nasser, they were fleeing in droves.

Nasser also alienated Ford’s dealers. He came up with a plan to consolidate dealerships in major metropolitan areas into company-controlled superstores. In exchange for giving up their franchises, these dealers would become part owners of these new retail operations. Most felt like Ford was trying force them out of business so it could claim their profits for itself. Some wrote open letters to the company, decrying Nasser’s strategy and vowing to fight in the courts if necessary.

Ford began to lose sight of the fundamentals. Quality began to suffer. Corners were cut. Launch dates were missed. Vehicle designs began to slip. However, as long as the company was making record profits, few were willing to challenge the pugnacious Nasser.

But it had all become too much for Bill Ford.

Like most members of the Ford family, he had intense pride in
the company that bore his name. The Fords were keenly aware that theirs was the last great industrial dynasty in the United States. They were the custodians of Old Henry’s vision. Like him, they had genuine concern for the people who depended on the company for their livelihoods. A month after Bill Ford took over as chairman, a massive explosion ripped through the powerhouse at the Rouge, killing seven workers and injuring many more. Ford rushed to the scene before the fires were even out, followed the wounded to area hospitals, and spent hours consoling grieving family members. He spent the next several days attending the funerals. This was what made Ford different from all the other automakers. It was why many workers still said they worked at Ford’s, not Ford.

The idea of Ford employees suing the company hurt Bill Ford deeply. So did the angry letters he was getting from dealers, many of whom he knew personally. He feared that the rapid-fire changes Nasser was making were beginning to do real damage—not only to the company, but to the Ford name as well. He decided to do something to stop it before it was too late.

I
n 2000, Irv Hockaday was nearing the end of his distinguished career as the president and CEO of another family-owned company, Hallmark Cards. The bespectacled, white-haired executive with a thick midwestern accent was elected to the automaker’s board in 1987 and had been mentoring Bill Ford ever since he joined a year later. Now he listened quietly as his young protégé outlined his concerns about Nasser. Hockaday agreed that the flamboyant CEO was moving faster than many of the directors would have liked, but Hockaday had rarely worried about how the company was being run under the buttoned-down leadership of men like Petersen and Trotman. He was not sure he should begin to now.

“Well, Bill, you know Jac has a world of experience. He’s an aggressive guy. He’s kind of thinking out of the box,” Hockaday said after hearing Ford out. “Relative to his level of experience, you’re still kind of wet behind the ears. I wouldn’t make a big deal out of it now.”

He suggested that they watch and wait. Reluctantly, Ford agreed.

Then the wheels came off. Literally.

In early 2000, the National Highway Traffic Safety Administration began investigating reports of fatal accidents involving Ford Explorers equipped with Firestone tires. The tires were prone to suffering catastrophic failures when driven at high speed in hot weather, causing the vehicle to roll over. That was Ford’s take at least. Japan’s Bridgestone, which had purchased Firestone in 1988, claimed Ford’s SUV was the real culprit. Consumer advocates blamed both companies and also accused them of covering up the problem.

The U.S. government ordered Firestone to recall 6.5 million tires. In an effort to restore consumer confidence, Ford decided to recall 13 million more at a cost of $2.1 billion. As the number of deaths blamed on the problem climbed past 140, both companies became the targets of major class-action lawsuits. They severed their century-long relationship, at least in the United States, and began tearing each other apart in court. All of this litigation would ultimately cost Ford hundreds of millions of dollars. But it would do far greater damage to its brand image.

Meanwhile, America was entering another recession. Ford’s sales dropped dramatically—partly as a result of the economy, partly because consumers were starting to notice that its products were slipping. Earnings were down by more than 50 percent at the end of 2000, and 2001 was looking much, much worse. As recalls and litigation ate up what was left of Ford’s cash cushion, Nasser’s spending began to look downright reckless. Even the Ford Motor Credit Company—long a reliable source of revenue for the parent company—had started to drift. In 1999, Nasser hired a hotshot banker, Don Winkler, to lead the finance company. Winkler thought the business of providing car and truck loans to creditworthy consumers was boring and vowed to turn Ford Credit into “a global auto-finance superpower.” Underwriting got fast and loose, and the number of bad loans on the company’s books began to increase at an alarming rate.

Bill Ford was no longer the only board member who was worried. When he called Hockaday again, the Hallmark chief agreed the time had come for Ford to share his concerns with the rest of the board. But Hockaday wanted to make sure the young chairman was ready.
He offered to round up a couple of other sympathetic directors for a dress rehearsal.

“Don’t take me up on this offer unless you really have your facts straight,” Hockaday advised Ford. “Because if you come in with a sort of half-baked emotional presentation, you’re going to do yourself more harm than good.”

“Fair enough,” Ford said.

But he was worried someone might learn of the meeting. Ford had reason to be paranoid. At least one of Nasser’s predecessors had tapped Ford’s telephone and bugged his car to make sure he was not plotting a coup. Hockaday offered to host the meeting at Hallmark’s headquarters in Kansas City, Missouri. He even sent the Hallmark jet for Bill so the trip would not appear on the logbook of any Ford aircraft.

When Ford arrived, he found Carl Reichardt and Robert Rubin waiting for him. Reichardt was the retired head of Wells Fargo; Rubin had been Bill Clinton’s Treasury secretary. Both were directors Hockaday trusted—not only to keep quiet, but also to give an honest assessment of Ford’s presentation.

All three were stunned by what Bill Ford shared with them. He outlined all of the ways in which Nasser was damaging the company’s core business and offered plenty of facts and figures to support his claims. The other directors were deeply impressed that Ford had been able to collect so much data, especially since Nasser had refused to turn over key reports and other documents he had requested. They promised to put the matter on the agenda for the next board meeting.

In July 2001, Ford made his case to the full board in Dearborn. After hearing him out, the other directors asked Ford to leave and called in Nasser.

“You’ve got an issue here,” the board told him. “There are concerns that Bill has and has expressed to some of us, and we think that they are legitimate. We recognize that you’re the CEO, but these are concerns you shouldn’t ignore.”

Nasser remained stoic and offered no defense. The directors called Ford back into the boardroom and addressed both men together.

“You guys need to get your act together, because if you don’t, then
the board’s going to have to step in and resolve the issue,” the directors warned them. “It would be better if you could work together to define your roles in a complementary way and leverage your strengths. You better give that a real hard try.”

The board granted Bill Ford more authority over the day-to-day running of the business, but Nasser refused to take his concerns seriously. The automaker’s finances continued to deteriorate, as did morale. The terrorist attacks of September 11, 2001, delivered a devastating blow to the U.S. economy in general and American automakers in particular. The decline in new vehicle sales that followed made Ford’s problems that much worse. The dealers were getting angrier by the month. The board agreed that Nasser had to go. The only question now was who would replace him.

In early October, the heirs of Henry Ford gathered to discuss the future of the company. Bill Ford stood before them and delivered a blunt assessment of the situation. Their company was in trouble. Nasser was destroying everything they and their ancestors had built. Bill told them he had looked up and down Ford’s roster and could see no suitable replacement. For two decades, they had let others run their company. Now it was time for a Ford to run Ford again. Bill Ford intended to fire Nasser and replace him as CEO. He
asked for their support.

He got it.

By the time Ford’s board met two weeks later, the directors had received many phone calls from family members making their feelings clear. Now Bill Ford delivered his own pitch in person. The only way to restore trust in the company was to put a Ford back in the driver’s seat. He knew being CEO would require a huge commitment on his part, but Ford assured the directors he was willing to do whatever it took to save the company. The directors were moved by Ford’s passionate plea, but many still had doubts about his abilities. It was one thing to run down to the Rouge after an explosion. Managing the day-to-day operations of a multinational corporation was another thing entirely. But they figured he had earned the right to try.

“We were all a bit hesitant,” one director confided. “But we all wanted him to succeed.”