The firing is the latest episode at an institution whose history sometimes seems more fit for a soap opera than a Fortune 500 company. Founder Henry Ford and his grandson Henry II ran Ford Motor themselves for its first 75 years, routinely firing underlings who overstepped. The most famous victim: Lee Iacocca, who was dismissed in 1978 and rose to fame leading crosstown rival Chrysler back from the brink of bankruptcy. Since Henry II’s retirement in 1979, no family member has served as the day-to-day chief, but the Ford family, which still wields 40 percent voting control of the company’s stock, has hardly qualified as hands-off. The family has forced out two previous CEOs and meets regularly to drive new vehicles and grill Ford executives. Indeed, when chairman Ford and CEO Nasser began sharing the corner office in 1999, there were frequent predictions that they’d collide. But until last week Ford, a Princeton and MIT grad who’s best known for his environmental views, seemed content to ride shotgun.
To hear Ford tell it, he still wishes that was an option. Just 44 and with four young children, he says his family–especially his mother–worries the CEO job could consume him. “This comes at a terrible time in my life,” Ford says. Outsiders say it’s no act. “This is no quest for power or a coup on his part,” says Pete Pestillo, chief executive of parts maker Visteon and a longtime confidant. “I think he took the job with utter resignation.” To lighten his burden, he beefed up his executive bench before the ouster. Sources tell NEWSWEEK that Ford considered recruiting Tom Stallkamp, the ex-Chrysler president, or J. T. Battenberg, chief of Delphi, the biggest auto-parts supplier, to work alongside Nick Scheele, who was named president last week. Instead, in late October he approached Ford board member Carl Reichardt, 70, former head of Wells Fargo Bank, to become Ford’s vice chairman.
Nasser’s demise is a striking turnabout. Just 15 months ago he was the auto industry’s rising star; some observers compared him to a young Jack Welch. That may have led to the hubris that got Nasser in trouble. As the industry boomed, he appeared to spend little time on the nuts and bolts of the car business. He acquired auto-service centers, created a program to give every employee a home computer and talked of Ford’s future as a New Economy company. But chairman Ford seems most upset over employee lawsuits that stemmed from Nasser’s Darwinian HR initiatives, which required that 10 percent of workers receive a C grade that could lead to termination. Today the new CEO talks of his role as a healer. “This is not a time for barnstorming tours or grand visions. We’ve got to settle this place down,” Ford says. “I’m going to spend a lot of time with employees and dealers and the government, rebuilding relationships.” In his first day on the job Ford was greeted with a thunderous standing ovation when he addressed the troops. By the end of the week Ford was in settlement talks with the white-collar employees suing for age discrimination.
It will take more than mending fences to raise Ford’s stock price. Industry sales hit records in October thanks to the zero-interest price war started by GM, but analysts say the cut-rate financing will further crimp fourth-quarter profits–and dealers worry that the scheme is stealing sales from next year. To limit damage, Scheele is creating a turnaround plan; analysts expect him to close plants, lay off thousands and cut as much as $5 billion in costs from the $180 billion company. But even with a Ford at the wheel, the outlook remains gloomy. The economy “is likely to overshadow even the best efforts of the new Ford management team for the near future,” says Merrill Lynch’s John Casesa. Nasser can’t blame all his missteps on a weak economy. But as this recession deepens, more struggling CEOs may find themselves alongside Nasser in the unemployment line.
