Driving Force: Henry Ford

He produced an affordable car, paid high wages and helped create a middle class. Not bad for an autocrat

By Lee Iacocca Monday, Dec. 07, 1998

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    When Ford stumbled, it was because he wanted to do everything his way. By the late 1920s the company had become so vertically integrated that it was completely self-sufficient. Ford controlled rubber plantations in Brazil, a fleet of ships, a railroad, 16 coal mines, and thousands of acres of timberland and iron-ore mines in Michigan and Minnesota. All this was combined at the gigantic River Rouge plant, a sprawling city of a place where more than 100,000 men worked.

    The problem was that for too long they worked on only one model. Although people told him to diversify, Henry Ford had developed tunnel vision. He basically started saying "to hell with the customer," who can have any color as long as it's black. He didn't bring out a new design until the Model A in '27, and by then GM was gaining.

    In a sense Henry Ford became a prisoner of his own success. He turned on some of his best and brightest when they launched design changes or plans he had not approved. On one level you have to admire his paternalism. He was so worried that his workers would go crazy with their five bucks a day that he set up a "Sociological Department" to make sure that they didn't blow the money on booze and vice. He banned smoking because he thought, correctly as it turned out, that tobacco was unhealthy. "I want the whole organization dominated by a just, generous and humane policy," he said.

    Naturally, Ford, and only Ford, determined that policy. He was violently opposed to labor organizers, whom he saw as "the worst thing that ever struck the earth," and entirely unnecessary--who, after all, knew more about taking care of his people than he? Only when he was faced with a general strike in 1941 did he finally agree to let the United Auto Workers organize a plant.

    By then Alfred P. Sloan had combined various car companies into a powerful General Motors, with a variety of models and prices to suit all tastes. He had also made labor peace. That left Ford in the dust, its management in turmoil. And if World War II hadn't turned the company's manufacturing prowess to the business of making B-24 bombers and jeeps, it is entirely possible that the 1932 V-8 engine might have been Ford's last innovation.

    In the prewar years there was no intelligent management at Ford. When I arrived at the end of the war, the company was a monolithic dictatorship. Its balance sheet was still being kept on the back of an envelope, and the guys in purchasing had to weigh the invoices to count them. College kids, managers, anyone with book learning was viewed with some kind of suspicion. Ford had done so many screwy things--from terrorizing his own lieutenants to canonizing Adolf Hitler--that the company's image was as low as it could go.

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