Return to Glory Read online

  The initial plan, intermittently discussed in the post-financial-crisis period, had been to return to Le Mans with a track-worthy Mustang. It took a major executive push, coming from the top of the company beginning in 2014, to green-light the thrilling new machine while simultaneously organizing and funding a racing operation on two continents.

  Ford continued to bask in the afterglow of having survived the financial crisis and the meltdown of the U.S. auto industry without taking government bailout money or declaring bankruptcy, like General Motors and Chrysler. There is no more iconic American car company than Ford (and yes, part of that iconography includes Henry Ford’s anti-Semitism, a bigotry embedded in the culture that he helped promote). For all practical purposes, Ford invented the automobile for the majority of Americans. And when the dark period of the financial crisis was over it pushed its brand forward in ways that had somehow become unimaginable for a demoralized U.S. auto industry.

  The force doing the pushing was Mark Fields, Ford’s CEO, who got the job after Mulally retired in 2014. When he accepted the big seat, Fields outlined a new vision for Ford as an advanced mobility company far more than a carmaker. His plan was to prevent Ford from ever slipping back to the bleakness of the 2009 period, while simultaneously preparing the company to meet the challenges of the twenty-first century—challenges coming not from GM or Chrysler or Honda or Toyota or Ferrari, but from Tesla, Google, and Apple.

  At the same time, Fields didn’t neglect Ford’s racing legacy. He came to Le Mans for the first time in 2015 to preside over the introduction of the new GT race car and to inaugurate Ford’s Le Mans campaign. He was back in 2016, watching the race as Joey Hand made his move on Ferrari on Sunday morning.

  Fields often said he wasn’t a crusty “car guy,” but he knew what winning on the track meant to the company. And he had working for him Ford family members who also knew.

  “I think racing is something that has always been a part of our DNA,” Henry Ford III told me in early 2016. Ford III is the great-great-grandson of Henry Ford and the grandnephew of Henry Ford II, the executive behind the GT40’s Le Mans wins in the 1960s. Le Mans regulations require that the GT race car have a road-going equivalent, and Henry III had taken on the job of overseeing the marketing of that version to buyers in the general public after the race. His Ford Performance team would live and breathe Le Mans, on a breakneck schedule, for a year.

  “One of the things we’re trying to do with Ford Performance is really use racing as kind of a laboratory and a test bed for innovation,” Ford said.

  In 2016, Ford’s comeback from the financial crisis and its aftermath was complete. Wall Street still hadn’t come around, and Ford executives sometimes grumbled about the stock price. But they didn’t complain about their customers. In 2015, a record 17.5 million new cars and trucks were sold in the United States, and a huge number of them were Fords—in particular Ford pickup trucks, including the F-150, which had been completely revamped to be lighter and get better fuel economy.

  Ford was once again solidly the number-two automaker in the United States, behind GM. But Ford had a story brewing for 2016 that its Motown competitor was going to find tough to match. If Ford won again at Le Mans, it would be a win for everyone who had faith in the idea that Americans could build cars—great cars. Cars to remember, like the cars we remembered from the 1950s and 1960s.

  For me, the story began in 2015 over a meal in New York City. It would end at a racetrack in France, where I stood with the sound of screaming engines in my ears like mechanical thunder. There was the flash of fast machines, and history thick in the air.

  This is that story.

  PART I

  THIS COULD ALL GO AWAY

  Chapter 1

  Betting the Farm

  Bill Collins, Ford’s suave and effective communications man in New York, told me what would become my favorite anecdote about Alan Mulally. He shared it over steaks in 2015, a full six years after the company that had practically defined American industry for the first half of the twentieth century had been on the verge of collapse.

  As we were waiting for our rib eyes to show up, Bill began talking about how bad things had been in 2008, when the financial crisis had just begun to destroy the economy. Back then nobody was thinking about a steak house lunch, especially in Detroit. Survival was the key. Apocalypse had come to Motown. GM was headed toward bankruptcy. Chrysler was headed toward bankruptcy and eventual acquisition by a savvy, swaggering, argumentative, sweater-wearing, chain-smoking Italian-Canadian named Sergio Marchionne, the CEO of Fiat. Credit, the lifeblood of the auto industry, was nonexistent in the United States at the time. Lehman Brothers was bankrupt, and the grim rumor was that Goldman Sachs was dangerously close to the same fate. The only thing standing between America and Great Depression 2.0 was a bearded, soft-spoken Princeton economist, Federal Reserve chairman Ben Bernanke. In the White House, the lame duck George Bush was alternately bewildered and exhausted. (After leaving office, he would retire to Texas to paint odd portraits of his own feet in the bathtub.) On the campaign trail, Republican presidential candidate John McCain doomed his bid by claiming that the crashing economy was going along fine and by adding Sarah Palin, the factually freewheeling and devoutly self-promotional governor of Alaska, to his ticket.

  On the Democratic side, Barack Obama was reaping the bene­fits of Hillary Clinton’s Wall Street ties. At the beginning of the campaign, he had had nowhere to run but on her left flank. Fate created an opening there. The near collapse of the banking system enraged voters, and the senator from Illinois took the revolutionary rage of Occupy Wall Street and transformed it into an appealing message of hope, which was summarized by an iconic poster created by street artist Shepard Fairey.

  Meanwhile, the hyperventilating pundits on CNBC, whose Wall Street cheerleading and CEO fealty had looked like smart career moves just six months earlier, were screaming, “Sell! Sell! Sell!” Jim Cramer, the loudest cheerleader of them all, is still living down his dramatic reversal of sensibility about the boundless virtues of an unfettered stock market.

  Back in Detroit, as Bill Collins told it, there was blood in the streets. The U.S. auto industry had seen rough times before. GM had barely dodged the Great Depression of the 1930s, and in the late 1970s and early 1980s the government had bailed out Chrysler. The car business is cyclical, and everyone who works in or around the industry, from the oil-change guys to the executive suite, knows that the downturns follow the upswings with grim frequency. There’s no way to prepare for them, either, other than to pile up cash on corporate balance sheets. The only viable strategy is to lay in a war chest with the full knowledge that the nature of the business will force you to spend all of it in order to remain in the game.

  As the election neared, it already felt as if the auto industry was on the downside of a downturn, although it was hard to tell, because the yearly sales numbers looked pretty good, gas wasn’t wildly expensive, and Americans were still buying big trucks and SUVs.

  But at that point GM was struggling. It hadn’t posted a profitable quarter in years, and the carmaker was hemorrhaging money every month to maintain its far-flung operations and keep up with its legacy pension and benefit obligations. The company was running on debt, was constantly low on cash, and was posting staggering quarterly losses. Cynical outsiders were calling for GM to file for bankruptcy protection, but the board and leadership knew they wouldn’t be able to prove that the company was a “going concern.”

  At Ford, the contrast with the good times was stark. An impressive 17.3 million vehicles had been sold in 2000, when Ford had $24 billion in the bank, a “cash hoard,” as the New York Times called it, “one of the largest of any company in the world.” And although that number declined slightly in the years before the Great Recession, sales plunged to just over 10 million in 2009—a year after the company’s stock price had plummeted to unimaginable lows. Detroit had seen bad.
It had been battered by the Big Three’s decades of declining market share and ferocious competition from Japan and Germany (free trade is a bitch). And in Detroit’s case, serving the most competitive car market in the world had become daily combat. For much of the 1970s and ’80s, Detroit had been losing battles. But by 2009, it was losing the war.

  Alan Mulally, who had joined Ford in 2006 after a successful run at Boeing, could see defeat and surrender over the horizon: Ford was poised to lose a knee-buckling $12.7 billion that year, according to the consulting firm McKinsey & Company. At the time, it was reported that Ford was going to cease production at ten factories, creating in one desperate gesture a vast amount of unused manufacturing capacity and a virtual army of idled autoworkers.

  Ford’s losses represented a healthy chunk of the market capitalization of the entire company. The pressing question when Mulally moved into the big chair at Ford, at age sixty-one, was whether a plane guy could do cars—whether the guy who had leaped from success to success at a plane maker could concoct a turnaround at a carmaker. But that turned out to be entirely the wrong question. What we should have been wondering wasn’t whether the plane guy could be a car guy. It was whether there would be any more American cars once the financial crisis had finished savaging the most symbolic of national industries.

  By the time Bill Collins and I met up for that New York lunch, Mulally looked like a genius. Convinced as soon as he arrived in Dearborn and got a look at Ford’s books that the automaker didn’t have the balance sheet to endure a downturn, he mortgaged all of the Ford Motor Company’s assets—factories, real estate, inventories, the whole shebang—for $25 billion. He called it, wryly, Ford’s “home improvement loan.” But that was classic Mulally, earnestly downplaying a big bet. Mulally favored tan trousers, blue blazers, and red sweater vests; he wasn’t going to adopt a uniform of intimidation at Ford. He didn’t change his wardrobe even when he headed to Congress in the throes of the crisis.

  In his manner, Mulally resembled a man on his way to church. His expressions were uniformly placid and optimistic. He lacked anything even vaguely resembling rage. Steady beams of bright Midwesternness emanated from his eyes. If you met him at a bar, you would be surprised, because men like Alan Mulally don’t go to bars. I watched him bound onto a stage in the years immediately following the financial crisis and half expected him to start singing campfire songs. The overwhelming impression Mulally delivered was deep trustworthiness. But it was entirely an act. Ford was his big chip, and he was all in.

  When he mortgaged the farm, Mulally hadn’t come across as a genius. He’d come across as desperate. At the 2007 Detroit auto show I had sat with some journalist colleagues and tried to draw a bead on what Mulally’s Ford was all about. Apart from the pickup-truck business—the Ford F-Series has been the best-selling vehicle in America, year after year, since sometime before the start of the Vietnam War—and a certain iconic muscle car, there wasn’t much to point to. “It’s a pickup and Mustang company,” I concluded, with a dismissiveness I would come to regret.

  I didn’t think Ford would be able to turn itself around—to reinvent itself, to abandon any of its old attitudes, or retain the no-longer-justified reputation for consistently achieving great things. It all just seemed like hubris. In Detroit, the men and women who run the American auto industry haven’t yet discovered the false modesty that defines executives in newer business cultures. CEOs don’t sit with the troops in open-plan offices, where status is erased by professional geography. The auto-industry big shots have big offices, with big views. If you’re seeking the last gasp of the American mid-century style of business, Detroit is it. Everyone wears a suit, and the higher-ups often wear suits that are quite sharp. Very expensive Swiss watches are the rule. The smoking has largely vanished, but there’s no shortage of drinking. The industry does business over beer, wine, and liquor—and doesn’t apologize for it. I thought these guys didn’t have a chance at another act. Ford and the rest of the carmakers were going to be done in by an excessive, inflexible pride in their past, and outpaced by the radical new business ideas of the Googles and Apples and Teslas, companies that didn’t make things so much as create experiences—albeit cold, virtual ones.

  Mulally wasn’t exactly of that old auto-industry culture, coming from Boeing and its hard-core aerospace and defense-engineering culture, where they’re always trying to think a few decades into the future. But he was the CEO of Ford, so he did his work in a big room.

  Bill Collins described Mulally’s office, a sizable affair on the twelfth floor of Ford’s headquarters in Dearborn, a place known colloquially as the Glass House, in reference to its extensive use of the material. The office has a view of the legendary River Rouge plant that Henry Ford built over more than ten years, throwing open the doors in 1928. In its heyday, the Rouge was a factory where train cars full of iron ore rolled up at one end and finished cars rolled out at the other. Thunderbirds and Mustangs were built there. At one point the facility had its own river freighter, the SS William Clay Ford, named for Henry Ford’s grandson. Vehicles are still built in the 600-acre facility, now called the Rouge Center. Alan Mulally got to look at it every day.

  “Bill,” Mulally said to Collins one day, as they sat in that office, “I look over there”—to the east and downtown Detroit—“and I can see GM.”

  Mulally paused. Collins waited.

  “And if I look over there,” Mulally gestured north toward Auburn Hills, thirty-five miles away. “I can just see Chrysler.”

  Detroit sits on a vast, flat plain in the Upper Midwest, on the banks of the Detroit River. If you’re up high, you can see for miles. You can see Canada. And you can, if you’re Alan Mulally, see the future.

  “I do this all the time, because I like to keep an eye on everyone. But I also do it to remind myself of something,” Mulally said. “I remind myself that this could all go away.”

  That was quite a black realization, it occurred to me as Bill finished the story, to be living in the mind, the conscience, of one of the country’s most important industrial leaders at a time of crisis. Yet Mulally is a man who smiles easily. He is driven not by fear but rather by the optimism of someone who spent much of his career overseeing the design and construction of huge machines that can fly 600 miles per hour at 35,000 feet.

  Ford, and the auto industry generally, brought Mulally back down to earth. The financial crisis and the Motown meltdown meant that the landing was anything but soft. It was a full-on crash. At one point, Ford’s stock price fell to $1.24. The joke at the time was whether you “wanted fries with that.” There was a certain amount of untoward celebration about not just Ford’s struggles but also GM’s and Chrysler’s. At the extremes, some pundits argued that the government should simply let the industry go and allow it to rebuild itself through either traditional bankruptcy or liquidation. But that overlooked a pair of critical factors.

  First, with credit locked up because of the banking crisis, there was no one but the government to provide bankruptcy financing. And even if financing had been available, an executive such as GM CEO Rick Wagoner knew from experience that a carmaker of GM’s size wouldn’t be able to sustain itself through a conventional Chapter 11 restructuring. GM’s parts-making arm, Delphi, had been spun off in the decade before the financial crisis to satisfy Wall Street’s desire to see GM unlock some trapped value. But Delphi had fallen into bankruptcy and languished in Chapter 11 for years, with GM providing the funding.

  Second, it was unclear whether the solvent players in the U.S. ­industry—the transplants from Japan, Germany, and South Korea—would be able to take over Detroit’s manufacturing capacity. The Big Three employed hundred of thousands of workers in dozens of plants, many assembling the trucks and SUVs that tended to satisfy the U.S. markets. Toyota and Honda built mainly cars at their U.S. plants. The Big Three also supported an extensive supply chain in the Midwest. Their financing arms generated billions in
auto loans. As much as critics of the U.S. industry—including those longtime detractors who continued to think that the Big Three built crappy cars and existed mainly to keep the United Auto Workers in business—might have fervently hoped to see a day of reckoning that would vaporize 100 years of industrial history, there were some very practical considerations in a market that should require at a minimum 14 million to 15 million new cars and trucks every year.

  Everyone in the industry knew that the crisis, as bad as it had gotten, was not going to last forever. Barring complete economic collapse, an annual U.S. vehicle market of merely 10 million units simply wasn’t conceivable. Beyond those core issues, there was also the national security question. Even if, say, Toyota, Honda, BMW, and Mercedes had been able step in, was it really advisable to turn over the most advanced and sophisticated industrial enterprise in the world to companies not based in the United States?

  Ultimately, President Obama got behind the bailouts of GM and Chrysler and turned the challenge of saving Detroit over to “car czar” Steve Rattner, an erstwhile investment banker and Democratic political supporter who during the 2008 election had longed to become treasury secretary in a Hillary Clinton administration. In a 2010 Vanity Fair story about Rattner’s ambition, William D. Cohan called his desire to lead Treasury “one of the biggest open secrets in New York’s social and financial circles.” Rattner’s job was to deal with the Chapter 11 issues and Chrysler’s bondholders, while a second member of the team, Ron Bloom, would tackle the UAW and its sprawling legacy costs. Another staffer would devote his full attention to GM.

  There was no question that GM would be saved, but Chrysler was another story. It had already been bailed out once before. And the company had been kicked around and disastrously operated for a period by Daimler before being acquired by Cerberus Capital Management, a private-equity firm. Cerberus couldn’t do any better than Daimler, so by the time the crisis hit, Chrysler was a basket case. Obama and his advisors wanted to let it go, but the hangover of the Lehman catastrophe was still fresh. Fiat’s Sergio Marchionne arrived with a plan to effectively take over the management of Chrysler, assuming the government’s problems in exchange for its provision of the billions in financing that a rapidly executed bankruptcy of the automaker would demand.