Return to Glory Page 3

  Looking back, the hasty and controversial decision-making process that unfolded between the autumn of 2008 and the spring of 2009—with a presidential election thrown in—has been vindicated in its mostly improvisational wisdom. The more vehement critics of the bailouts and bankruptcies of GM and Chrysler, notably Mitt Romney (whose father had been an auto-industry executive before ascending to the governor’s office in Michigan), were mistaken in their dogmatic attitudes toward unfettered capitalism and competition in the midst of a nearly unprecedented crisis. By the end of 2015, the U.S. auto industry had decisively recovered, setting a new record for annual new vehicle sales at the end of the year—17.5 million cars and trucks had rolled off dealer lots and into driveways and garages from sea to shining sea. GM, Chrysler (now Fiat Chrysler Automobiles), and Ford are now firmly re-ensconced as the Big Three. (Or at least the Detroit Big Two plus Fiat Chrysler.) But it had been a hell of a fight.

  At GM, Mark Reuss, now CEO Mary Barra’s right-hand man, performed a vital yet familiar role for the automaker: the car guy. Before him, this had been the job of Bob Lutz, an outspoken former U.S. Marine, who at one point flew fighter planes in his spare time but who had also worked in the European auto industry and, during a spell at Chrysler, had been a confidant of Lee Iacocca. Lutz was on the ground when GM CEO Wagoner was taking his fall. But Lutz survived and took on an ever more important position after the bailout and the bankruptcy. After Lutz left, and a series of CEOs passed the baton to Barra, Reuss answered the call.

  Reuss may have been disappointed that he didn’t get the top job—this has been widely discussed, rumored, and hashed over to the point that some felt he would bail on a lifetime at GM when the announcement was made. But he stuck around, and it was a good thing he did. He had the experience of having fought in the trenches to save the business.

  Reuss would later turn out to be a central player in the rivalry between Ford and Chevrolet that was reignited by the GT’s return to Le Mans, where it would face off against not just Ferrari but also Corvette Racing, a team that had been tearing it up in the GT Le Mans sports-car class in the years before 2016. Reuss, like Lutz, is a hell of a driver. Maybe not pro-racer level, but he holds the official qualifications that tell you he’s not going to baby a 550-horsepower Vette or Caddy through a turn. He’s going to drop the hammer.

  Reuss does business the way he drives: on the edge, but with an inspiring degree of precision and expertise. In person, Reuss is that guy you wish had been your dad’s best friend: cheerfully gruff, with a passion for what he does, but a straight shooter who tells it like it is. You want him as a boss for the inspiration—but you also know that you’re going to have to live up to his expectations. He wears a tailored suit and wears it well, but he also has his own racing helmet.

  “That time period was pretty surreal,” Reuss told me, when I asked him about the crisis years. In the mid-2000s he was running Holden, GM’s Australian division. Holden is where all the car guys want to wind up at some point. While the rest of the world, over the decades, has replaced old-school American rear-wheel-drive muscle with front-wheel-drive decorum or all-wheel-drive soccer-mom mobiles, and of course various varieties of hybrids, Holden operates in the land that time forgot. Aussies have a term for driving in an enthusiastic manner: hooning. And you don’t hoon in a Toyota Camry. You hoon in a Holden Commodore, with a nice, big V-8 sending power to a pair of furiously spinning back wheels.

  “At GM, we had a lot of different CEOs and leadership back then,” Reuss said. After Wagoner departed, Frederick “Fritz” Henderson, who had been with GM since the first Reagan administration, took the job, in March 2009. He lasted less than a year. Then Ed Whitacre, a lanky Texan, who had run AT&T before joining the GM board, took over. In autumn of 2010 came Dan Akerson, who had joined GM’s board from the Carlyle Group, a private-equity firm.

  “There were a lot opinions about the company that were very public,” Reuss recalled. “They were coming from people who were close to the TARP funds.” TARP was the Troubled Asset Relief Program, the official name for the bailouts of GM and Chrysler, as well as the money that was pumped into the banking system during the financial crisis by the U.S. Treasury and the Federal Reserve: $425 billion in total, with roughly $80 billion going to the U.S. auto industry.

  “You’re totally defensive,” Reuss added. “Everybody’s got a pen. Everybody’s got the Internet.”

  At GM, there was also the matter of the automaker’s hidebound legacy. It was, for better or worse, the definitive hierarchical corporation, a bastion of bureaucracy, a citadel of Organization Man and Woman. A colleague once told me a great story about “old GM,” the GM of the 1950s, ’60s, ’70s, and even ’80s. He showed up for a meeting and was told to wait outside the conference room while some staffers attended to something.

  “What are they doing in there?” he eventually asked.

  “They’re lining the room,” was the reply.

  “What’s lining the room?”

  In the conference room—one of those classic corporate spaces, with a huge fine-grained wooden table surrounded by chairs, the kind you routinely see in movies but rarely encounter in real life—a crew of GM employees had stretched taut lines of string in right angles across the table’s expanse to precisely align leather business portfolios, pads, pens, and glasses. That was what the executives who were about to meet expected: rote precision.

  The financial crisis didn’t completely do away with this aspect of GM’s culture—the place still runs on a rigorous timetable, and offices are typically manicured in a way that would baffle the average Silicon Valley tech worker who gallops between Ping-Pong table and espresso machine—but it did humanize a company that had woven together a bizarrely successful combination of industrial dominance, employee loyalty, and systematic dehumanization.

  Reuss was part of the revolution. “The truth is that GM isn’t a bunch of silos sitting on the Detroit riverfront,” he said, in a reference to the Renaissance Center, the John Portman–designed complex distinguished by its five steel-glass-and-concrete towers, which serves as GM’s world headquarters.

  “GM is the people who build the cars,” he said. “The company was talked about as some entity back then. But the company is people—and those people had incredible resilience. But in those days it was really hard. Everyone went home at the end of the day not knowing if they were going to have a job. That was pretty tough.”

  The restructuring was an ordeal, and from Reuss’s point of view, it changed attitudes not just inside GM but also across the industry. He had the good fortune to be distanced from the often-­unpleasant proceedings. Reuss’s frontline seat for the Detroit meltdown wasn’t in Detroit. It was a day’s flight to the bottom of the world.

  “On a daily basis, Holden was difficult, but it was also rewarding,” he said. Reuss and his team truly were off the grid, running the business on whatever cash came in the door that day, as their lines of credit vanished. Major global companies don’t operate this way—credit is the lubricant that prevents them from seizing up.

  But the financial crisis changed all that. Even General Electric lost access to the credit markets, leading Jeff Immelt to call Henry Paulson, the treasury secretary at the time, in a baffled panic about GE’s inability to issue short-term debt. No key business leader had ever worked this way.

  In Australia, Reuss had few choices. It was do or die.

  “You could see it start to work,” he recalled. “It was an amazing time. We were making it happen, but it was hand to mouth—­everything or nothing.”

  Then he said something everyone in business dreams of saying: “We were able to create our own destiny.”

  If you do get to create your own destiny, Reuss now contends, you can’t be seduced by success into taking it for granted.

  “We haven’t allowed ourselves to be satisfied,” he insisted, when I asked him whether he ever goes home
after a long day and allows himself a moment of back patting. “The business is extraordinarily difficult. And the only way to be successful is to not sit around and think about how great everything is going. The enjoyment I feel in the job is not sitting back and reflecting.”

  That said, he does allow himself the odd moment of joy when he takes in the racing performance that GM has turned in. “‘Take no prisoners’ and ‘Never give up’—those are the two mottoes Chevy racing and GM live by.”

  While Reuss was digging around in his office sofa for loose change Down Under, waiting for a chance to get back to the track to watch Corvettes win trophies, Mulally had his hands full over at Ford. He had to put the carmaker’s finances on the line, rally the troops and his executive leadership, assuage the concerns of a vast network of dealers, retool the company’s unwieldy collection of brands, resist the urge to focus exclusively on the United States while the business in Europe and China was also under incredible stress, and keep track of the agony that Detroit itself was going through (the city would lurch into bankruptcy in July 2013).

  It almost goes without saying, but through this wrenching process, a return to endurance racing and to the legendary turns and straightaways of Le Mans was a million miles away from Mulally’s thinking. If he couldn’t save the company that was building Ford F-150 pickups and Mustangs for America, he was never going to be able to get behind a new GT and a reconquest at Le Mans.

  When Mulally had arrived at Ford, he discovered a mess. Actually, it was more than a mess—it was a looming catastrophe. The reign of Jacques Nasser as CEO from 1999 to 2001 had demoralized the company and saddled it with a cacophony of brands and models ranging from the posh Jaguar to base versions of the F-150 pickup that were intended to ferry bales of hay around ranches. After Nasser, William Clay Ford Jr. had taken over the family business. Bill is another of Henry Ford’s great-great-grandsons, but as well intentioned as he was, he lacked the skills to run a twenty-first-century global manufacturing company. By the end, his job was to stave off bankruptcy, an imperative driven by the entrenched resistance of the Ford heirs to seeing their incomes threatened as the value of the assets they held was laid low. A merger would have made sense, but nobody wanted to merge. And at this time, the high-flying car company executives who could execute were also prima donnas of the highest order. An effort to woo Renault-Nissan’s rock-star chief executive Carlos Ghosn was met head-on by Ghosn’s titanic ego and his desire to be the one man at the top of the Ford hierarchy.

  Actually, Ghosn’s instinct made sense. Like all legacy automakers, Ford had evolved to a point at which working for Ford, not building and selling quality cars, seemed to be the first priority for many execs. In the industry, this problem has always been most evident at GM, where the divisional structure effectively separated the car making from the mother ship. GM’s executive suite oversaw a financial enterprise that was also an insurance company, for all practical purposes, looking after obligations to retirees that had been negotiated in more flush times. This left the heads of the divisions free to make their own luck, by whatever means necessary. And why not? Running Chevrolet or Buick was like having your own car company to play with. The autonomy was a double-edged blade: GM got aggressive market competitors but at the cost of ferocious internal conflict for resources.

  Ford’s simpler structure avoided this classic GM problem. But of course Ford served the Ford family. Ford also had its own internal snarling and backbiting. That was the auto-industry way.

  Mulally’s personality and experience at Boeing brought a critical new element to the party: proactive teamwork and preemptive quality control. Mulally had overseen the development of the Boeing 777, one of the most successful aircrafts the plane maker had ever built and a critical successor to the legendary 747 jumbo jet. The 777 was a product of innovative collaboration, and since its wildly successful introduction in the 1990s, its development has become a widely used case study in business schools for its willful obliteration of the old “siloed” approach to manufacturing, in which functional groups worked independently, guarding their expertise until it came time to fight for resources—at which point the quality of the product was invariably degraded.

  In the American car business, it was the task of marketers and ad agencies to cleverly—at times very cleverly—paper over the flaws with something snappy that spoke to brand enthusiasts. That doesn’t work in the aviation industry, because the biggest advertisement for a Boeing is airlines ordering its planes and being satisfied with their performance. You don’t spend some $200 million on a 777 because TV spots gush over the stitched leather seats or the quietness of the cockpit. The big jet has to speak for itself—and be able to do so over several decades of its service life with an airline.

  With Ford’s balance sheet shored up by the $25 billion credit line, Mulally could turn his attention to transferring the level of commitment he was familiar with from the aviation business to the auto business. You don’t build bad planes, and you shouldn’t build bad cars. But Mulally also had to remake Ford’s culture at a time when that culture was in crisis.

  What Mulally came up with was epic in its simplicity. He would promulgate a core message and make it his highest priority to ensure that every single employee of the Ford Motor Company understood and supported it.

  No one had ever really done this before, not on such a scale, in the teeth of an existential crisis. Sure, there was the vaunted “Toyota Way,” based on the principle of kaizen, or “continuous improvement.” But kaizen wasn’t a rallying cry; it was designed to intentionally undermine the ultratraditional Japanese deference to authority and empower all Toyota workers to contribute to making better cars. What Mulally wanted to do, in a sense, was revive a reverence for authority at Ford—but not a reverence for Henry Ford or the Ford family. Rather, he sought to convince employees that Ford was a brand they could pledge allegiance to in a way that bordered on the reverential. Again, this was the dark side of Mulally’s personality turned to the work of the light: the gambler in the red Ford-logo sweater vest was also a cunning con man, and con men traffic in belief. What Ford needed more than anything else in the days before the financial crisis hit was something to believe in.

  And so did Detroit.

  In the twentieth century, Detroit brought prosperity to tens of thousands of blue- and white-collar workers. It occupied a special place in the national psyche. But eventually Americans began to see Detroit as a failed metropolis, one beset with social unrest and riots in the 1960s and malaise in the 1970s. And in the 1980s, when competition from Japan destroyed the Big Three’s lock on the U.S. auto market, the city evoked the particular mixture of sadness and irritation that comes with faded glory.

  Some of the distaste for the city that grew in the second half of the twentieth century is firmly rooted in certain cultural shifts, including demographic changes such as “white flight” from urban centers like the city of Detroit, where poor African-Americans remained, frustrated by entrenched economic and political inequality. Then there was the preoccupation with the rising “service economy” that took shape in the 1970s and 1980s. The future, apparently, belonged to the educated professionals who could organize and control complicated technologies and systems. But Detroit’s is a tale of building stuff. It’s not about managing the global flows of capital or creating media empires—those are New York’s specialties. It’s not comparable to the model that made Silicon Valley rise—which you might call the relabeling of computer science as computer engineering. It’s not akin to Hollywood’s creation and exporting of mega-mass-market entertainment.

  Detroit lacks twenty-first-century sex appeal. And yet, as Detroit declined, Americans sensed that something essential was being lost. The city’s problems were complex, culminating in its 2013 bankruptcy, the largest in U.S. history. But Detroit’s attitude was always simple. What it did, in its view of itself, was make cars. And by making cars, the city and its surroundi
ng towns made other things, most critically the American middle class. Unionized autoworkers made good money, even if Detroit didn’t always build the most coveted cars. Auto executives had lived enviable suburban country-club lifestyles, but they weren’t as wildly rich as their counterparts on Wall Street or in Hollywood (and later Silicon Valley). The Ford exec with the nice office in Dearborn felt an affinity with the guy who performed shift labor at an assembly plant building pickup trucks. In the most meaningful sense, they shared a dream, and to this day the people in the offices that steer the Big Three treat a plant visit the way New York gallery owners do a trip to an artist’s studio, or a record executive does the studio session of an important band. They know this is where the magic happens.

  But the magic doesn’t have the same economic power it once did. The United Automobiles Workers union has witnessed its membership fade, while all around it organized labor in America has collapsed. But there are still the cars and what they symbolize: freedom, of course, but also the pinnacle of a certain type of American economic empowerment and a sharing of the wealth between management and labor. They continue to be a powerful rebuke to lazy Marxist thinking about the inevitable exploitation of labor, given that the immense labor force the auto industry created in the Upper Midwest was indeed a force, for social and political change.