Once Upon a Car Part 8

Two days later, Zetsche flew from Stuttgart to Auburn Hills for an emergency meeting with LaSorda and his team. When the door was shut in the fifteenth-floor conference room, Zetsche unloaded. "This is unacceptable!" he shouted. "This cannot continue. There are no more chances." Contrite and defensive, LaSorda promised to slash production immediately to bring down inventories. "We know what we have to do," he said. "And we'll do it." When the meeting broke up, the chastened execs knew that Zetsche had run out of patience. "I've never seen Dieter that angry before," said Vines. "We are all in trouble."

He had no idea how shaky Chrysler's future had become. The next day, LaSorda announced a deep round of production cuts and ordered an a.n.a.lysis of more permanent restructuring moves, including plant closings. He also stepped forward and took the heat personally. "The decision for what's going on at the Chrysler Group sits right on my lap," he said in a conference call with reporters. "I take full responsibility."

LaSorda still didn't know that high-level executives in Stuttgart were already secretly preparing for a sale of Chrysler. But seemingly overnight, Chrysler was on the firing line. And his boss wasn't hiding his frustrations anymore. For the first time, Zetsche-Chrysler's most steadfast defender in Stuttgart-went public with his concerns about Daimler's Detroit partner. "I myself am more than dissatisfied with the situation," he told a.n.a.lysts on September 19. "It's not acceptable."

GM's talks with Renault-Nissan didn't even make it to ninety days. Renault's lead negotiator, Patrick Pelata, pressed Fritz Henderson to see the bigger picture and emphasized how an alliance would help GM close the cost gap with Toyota. But the GM side increasingly viewed Renault and Nissan as smaller, less accomplished automakers trying to piggyback on the Detroit giant's immense size and global muscle. "The a.n.a.lysis is quite clear that there are substantial synergies," Henderson said. "But what is even more abundantly clear is that the synergies inure hugely to the benefit of Nissan and Renault, and not so much to General Motors."

Lutz wasn't actively involved in the talks, but he made his opinion known to Wagoner and his fellow execs. "You cannot say yes to an alliance that tips completely in favor of the other guy," Lutz said. "We're going to make Nissan and Renault rich and there's nothing in it for us."

Ghosn was offended by the tone of the criticism. After all, Renault and Nissan were profitable and GM was losing its s.h.i.+rt. "They're tras.h.i.+ng everything we say and everything we've done, even our recovery," he said. "Well, you can't deny the facts."

Then Henderson dropped a bomb in the negotiations. GM, he said, was getting the short end of the savings in the deal. So to even things up, he proposed that Renault-Nissan pay GM more than $2 billion in cash as an "equalizing contribution" to join their alliance. "We're ent.i.tled to some compensation to make it more equitable," Henderson said.

The demand infuriated Ghosn, according to his a.s.sociates. The idea that Renault-Nissan should pay GM to become their partner was an insult. Still, Ghosn didn't want to be the one to prematurely end the talks. He was convinced that a three-party alliance could be worth as much as $10 billion a year in cost savings and value created by combining resources. How could GM walk away from that kind of deal? Was Wagoner so paranoid about his job that he would turn down a working relations.h.i.+p with two successful companies? Why wouldn't he want Nissan to build its products in GM's underused plants?

Something had to give soon. If this was all a charade, it could not go on much longer. Wagoner was scheduled to have a status conference with Ghosn at Renault headquarters during the Paris auto show in late September. "We'll see in Paris if GM is serious about this or not," Ghosn told his team.

Jerry York was stuck in an uncomfortable position. He had been outmaneuvered by Wagoner, George Fisher, and the management loyalists on the GM board. Once the board turned the alliance talks over to Wagoner, York lost his influence. Kerkorian had asked that a committee of directors study the deal. But in the heat of the moment, York couldn't deliver. And it was eating him up. By pus.h.i.+ng so hard to get Ghosn in the picture, York burned the trust he had been gradually earning with some board members. Now he was shut out. He sure couldn't expect Wagoner or Henderson to keep him in the loop on the talks. So he tried frantically to find out what was going on through Ghosn and his sources within GM. "I just want this thing to get a fair shake," he complained. "What's the alternative? Plan A is to go it alone. And Plan B is to enter an alliance. This would turn GM into a truly international company." The most disturbing thing he heard was that GM kept changing the numbers, that one day Henderson said General Motors could save $6 billion in an alliance, and the next it was $2 billion. "What the f.u.c.k is the real number?" York wondered to a friend.

On September 27, Wagoner and Ghosn met for three hours at Renault's headquarters in the Paris suburb of Boulogne-Billancourt. Their teams took turns explaining their findings, but the two CEOs couldn't find any common ground. Wagoner held fast to the notion that GM needed compensation to cut a deal. Ghosn wasn't buying it. Neither side would budge. But neither Wagoner nor Ghosn wanted to be the one to shut down the talks. They agreed to keep the discussions going until the October 15 deadline. After the sit-down, Wagoner went to the Paris auto show. He told reporters that he would not make any deal that jeopardized GM's budding turnaround. "Our primary focus has to be doing what's right for General Motors," he said. "We've made it very clear we have a detailed turnaround plan and growth strategy that's working very well. That's going to be what saves the company."

Ghosn let Wagoner flex his muscles. He would take the high road. "I'm not going to force anyone to act against their interests," he said. "This is going to be a friendly cooperation or not at all." But he could not let GM's demand for compensation pa.s.s without comment: "It's nonsense," Ghosn said. "It's against the spirit of an alliance." If Wagoner truly felt GM was better off going it alone, Ghosn sure wasn't going to beg him to join Renault-Nissan.

Kirk Kerkorian was not going to sit back and let Wagoner call all the shots. A day later, he raised the stakes again. In an SEC filing by his investment firm, Kerkorian indicated he wanted to buy as many as twelve million more GM shares, on top of the fifty-six million he already owned. And he made it clear he was not about to let the alliance talks die at the bargaining table. This deal, he said in the doc.u.ment, was too important to let GM management decide on its own. "Tracinda continues to believe that a strong opportunity exists in a potential alliance between General Motors, Renault and Nissan and there should be strong General Motors Board involvement in the a.n.a.lysis of such a potential alliance, including the utilization of independent advisors," said the filing.

In typical Kerkorian fas.h.i.+on, he was itching for a showdown. So was Wagoner. On the night of October 2, the GM chief executive and Fritz Henderson had dinner with their board of directors at the Renaissance Center. Together they walked the board through the alliance discussions, claiming that Renault-Nissan would get at least triple the savings because GM accounted for the lion's share of all the parts they would purchase together. The only equitable solution, Henderson said, was for GM to be paid a fee to join up. But that wasn't all. The executives also said that Renault and Nissan should be forced to pay a premium on the GM stock price if they wanted to acquire a 20 percent stake. "They want to buy 20 percent and have supermajority rights to make certain calls in what we do in the alliance activities," Henderson said. "But they don't want to pay a premium."

When the board convened the next morning, Wagoner played his final card. If Ghosn wasn't willing to pay up front to equalize the deal, he saw no choice but to recommend that GM walk away from the alliance. Maybe Renault-Nissan would consider doing a few joint projects together, but otherwise there was no need to keep talking. He never mentioned Kerkorian or his insistence that a board committee and outside advisors study the deal. Then the discussion went around the table, with each director getting a chance to weigh in. A few of them vented, saying the whole thing had been a big waste of time. But when York's turn came, he didn't say a word.

Then Wagoner called for a voice vote. There was a resounding chorus of ayes in favor of management's recommendation to end the talks, but there wasn't a single nay heard in opposition. Again York just sat there, like he was frozen. After a break for lunch, GM's corporate lawyer asked Wagoner to call the vote again, to make sure that any director who didn't agree had a chance to speak up.

"Anyone who does not agree, please say so now," Wagoner said.

Everyone looked at York, who kept silent.

"So it's unanimous?" Wagoner asked.

York just stared straight ahead.

"Okay," Wagoner said, looking at the lawyers. "Yes, it's unanimous."

Afterward, the outside directors went into executive session without Wagoner present. Fisher made a point to ask York what was on his mind.

"You're as welcome as any other director to say your piece," Fisher said.

"No, I'm not," York said.

The next morning, Wagoner called Ghosn in Paris. He said the two sides were just too far apart and the GM board had voted to cancel the alliance talks. When he offered that GM might be interested in doing an individual project or two with Renault-Nissan, Ghosn cut him off.

"Let's just end it," he said.

A joint statement from the three companies was released. It said that GM, Renault, and Nissan had "agreed to terminate discussions" and that "the parties did not agree on either the total amount of aggregate synergies or the distribution of those benefits."

A short time later, Wagoner held a press conference at the Renaissance Center. He said that ending the discussions was the board's call, not his alone. "This follows a unanimous decision by our board of directors that the structure of the proposed alliance would not be in the best interests of GM and its shareholders," he said. After thanking Renault-Nissan for its "great spirit of cooperation," Wagoner reminded the media that GM was making substantial progress on its own.

The question came up whether the alliance might have helped in those efforts. Wagoner didn't think so. "It would have potentially been a distraction," he said.

That afternoon, Kerkorian's investment firm put out its own statement. "We regret that the [GM] board did not obtain its own independent evaluation of the alliance," it said.

York was furious. He was particularly upset that GM kept saying the board voted unanimously to end the talks. Just because he didn't vote nay didn't mean he supported it. "This is such typical GM s.h.i.+t," he said. "But it doesn't make much difference whether it's twelve to nothing or eleven to one." Why hadn't he argued his case in front of the room when he had the chance? "It's like having an argument with your wife," he said. "You can't win, so you shut up."

After discussing it with Kerkorian, York decided to resign from the board immediately. Whatever they did next, York would feel freer to operate from the outside. He sat down and wrote a letter of resignation to Fisher. In the letter, York said that while he believed GM had made "excellent progress" in some areas of the business, it wasn't enough. "I have grave reservations concerning the ability of the company's current business model to successfully compete in the marketplace with those of the Asian producers," he wrote.

His reservations, however, weren't the reason why he was quitting. The GM board, York concluded, was weak and unwilling to act independently. "I have not found an environment in the boardroom that is very receptive to probing much beyond the materials provided by management," he said. And given that environment, there was "little point in my remaining on the board."

York wasn't sure where he and Kerkorian would go from here. They needed to regroup, survey the possibilities, and talk it over. York had been on the GM board for eight eventful months. That chapter, he said, was over. "My understanding is that Rick feels like he's won," York said. "At the end of the day, we'll find out."

Carlos Ghosn surfaced in public a few days later in Asia. At a media briefing in Jakarta, he said that Renault-Nissan wouldn't be initiating alliance talks with any other automakers soon. "We are not impatient," he said. "We will continue with our life."

The GM negotiating team disbanded and went back to their old jobs. On the night of York's resignation, Fritz Henderson treated himself to a ticket to the Detroit TigersNew York Yankees playoff game at Comerica Park in downtown Detroit. Henderson had been a pitcher in college at the University of Michigan, and he cheered like a rabid fan throughout the tense contest. And when the Tigers prevailed, 60, he let loose, dancing in his seat and high-fiving people around him in the stands.

It must have felt good to win a big one.

Chapter Seventeen.

Ford crashed soon after Alan Mulally was hired, when the company announced huge layoffs on September 16, 2006. The newspapers in Detroit called it "Blue Friday"-the day that Ford's storied oval emblem crumbled.

Mark Fields delivered the news. Ford was cutting ten thousand salaried jobs on top of the four thousand already cut. Every one of the company's seventy-five thousand UAW workers would be offered a buyout or early retirement package. The company said it would begin plant closings in 2008, four years earlier than projected in the Way Forward plan. And Fields had to back off his promise that North American operations would turn a profit in two years; now it would take at least three. Financially, Ford was a basket case. An internal report prepared by Don Leclair predicted it could lose as much as $9 billion in 2006.

Despite the extraordinary cuts and losses, management refused to scale back its product plans. Fields pledged that nearly three-quarters of Ford's cars, trucks, and SUVs for the U.S. market would be replaced or upgraded over the next two years. Still, the extent of the downsizing raised questions about whether Ford had waited too long to retrench. Its U.S. market share had now dwindled to 16 percent and still hadn't hit bottom. The company was burning through $1 billion in cash a month, and that was before the huge costs of buying out workers.

Ron Gettelfinger had little choice but to go along with the bloodletting. "The UAW agreed to amputate an arm and a leg to save the body," said Sean McAlinden, an economist at the Center for Automotive Research.

Mulally stayed in the background on Blue Friday; technically he wouldn't be a Ford employee until October 1. But he was already showing up at his new office before dawn, studying organization charts, factory schedules, product plans, sales reports, global market trends. He didn't antic.i.p.ate bringing in outside help or firing a lot of executives. What he wanted to see was who was ready to follow his lead. "Some people can't adapt to me, but that's okay," he told Bill Ford. "People will self-select around me. Either they're going to make it and be part of the team, or they'll know it before I say it."

A few senior executives left on their own, starting with Anne Stevens, second in command in the Americas division. On her way out, she took a parting shot. "The company is too bureaucratic, and it takes too long to get things done," she said in an interview with the Detroit Free Press. Steve Hamp, Bill Ford's brother-in-law, was shown the door by Joe Laymon, who said there was no room for a chief of staff in the new regime.

Turning Ford around was going to be a long, uphill struggle. Mulally wanted to change the mind-set of those who were there, the true-blue loyalists who were sick and tired of losing. He had a way of asking seemingly innocent questions that provoked tough, introspective answers. In one of his first meetings with the executive team, Mulally pulled out a historical chart of the world auto industry twenty years earlier, when Ford had had a 13 percent share and Toyota 9 percent. Now the numbers were flipped. Toyota had 13 percent, and Ford had 9. "How's that going, guys?" Mulally asked. "Does that work for you?"

He seemed to have a chart for everything-the growth in Asia versus that in North America, the steady rise in small car sales and decline in truck and SUV sales, the costly complexity of Ford's brands compared to Toyota's. And with every chart, he tossed out a challenge: Why was Ford doing things this way? What's the reason? Could they change it?

At one meeting, someone suggested that the auto industry was pretty complicated and plans weren't rewritten overnight. Mulally wasn't buying that. "I've been with a global company for thirty-seven years that uses a lot more technology than an automobile," he said. "Airplanes have four million parts, and a car has ten thousand. So I feel pretty comfortable with this."

Despite his smile and sunny disposition, Mulally was a hard, battle-tested executive with no patience for long-winded explanations. He purposely didn't criticize Ford or its history. That would alienate people. But he had a crystal-clear view of Detroit's decline. "These three companies have been slowly going out of business for eighty years," he said. "They were insulated and had great success early on with 70, 80 percent of the market. But they were arrogant. They made fun of the j.a.panese. And then they made shoddy products, all of a sudden they had some compet.i.tion, and their arrogance caught up with them."

Mulally saw no reason to keep doing business the way Ford had done it for decades. He was intent on remolding the organization one step at a time. A lot of the way it operated just didn't make sense to him. He couldn't fathom the proliferation of brands or why it built unique cars for every region. Even the most basic parts were different from one model to the next. Executives would find him in his big corner office with door handles and switches laid out on a table, trying to understand the endless variations that cost money to design, engineer, and produce.

He left his wife and family back in Seattle and devoted every moment to Ford, from five in the morning until late at night. He read every book he could find about the auto industry and blocked out an hour each afternoon to clear his head, think, and reflect. Every breakfast, lunch, and dinner was part of his ongoing education-meeting dealers, getting to know his executives, reaching out to anyone who could teach him the intricacies of Ford and the culture of Detroit.

Each day he drove a different Ford, taking notes on why dashboards and controls varied from car to car. "Why is everything so inconsistent?" he kept asking product execs. "World-cla.s.s companies don't do things this way." He wasn't trying to be politically incorrect; he simply didn't care if the truth stung a bit. "If you look at Ford, it's the ant.i.thesis of Toyota-we've got different Fords all over the world," he said, fully aware that praising the j.a.panese automaker was not popular in the Gla.s.s House. But when Mulally said it, somehow it sounded okay.

Mulally quickly learned how bureaucratic Ford was, but he felt in no way bound to convention. His first week on the job he slashed his meeting schedule in favor of informal one-on-ones, field trips to the design centers and engineering labs, and long conversations with Bill Ford. It had been hard for him to leave his coc.o.o.n at Boeing. But in a few weeks' time, he bonded hard with his new home. "I have never seen the depth of feeling for a company as these people have for Ford," he said. "Everybody has this pent-up feeling, and they want to tell me everything they can to make Ford successful." People warmed to Mulally and confided in him. In turn, he made them feel important, valued, needed. "Alan has a way of making it safe to speak up," said Laymon.

Admitting a shortcoming, in Mulally-speak, was a "gem." Coming back after a failure was a sign of "emotional resilience." Owning up to problems was "liberating." He had a knack for making people feel wanted and respected, whether in the employee cafeteria or in a dealer showroom, around the boardroom or on the factory floor.

He knew people were dispirited, worried about their jobs, and fearful instead of confident. "Compet.i.tors may try to divide and conquer us," he said in a companywide e-mail addressed to "the Ford Team." "I'm determined we are not going to do that to ourselves." He preached a message of hope and promised a light at the end of the tunnel. "As demoralizing as a slide down may be," he wrote, "the ride back up is infinitely more exhilarating."

But Ford's downward spiral had cemented some bad habits. Several executives didn't talk to one another (there was a long tradition of that). Others kept information secret, not wanting to share their own internal issues. Divisions were self-contained companies within a company, with their own budgets, finance staffs, and public relations people. Even product teams operated independently of one another.

Way too often, senior managers took their issues or disputes to the CEO. Early on, a number of execs tried to circ.u.mvent Mulally and appeal directly to Bill Ford. How could they do their jobs if the new guy kept questioning everything they did? Bill stopped them in their tracks. "If you have an issue, take it up with Alan," he said. "I agree with everything he is doing."

It wasn't easy for Bill to give Mulally so much lat.i.tude. He was used to being the boss. But he knew that without autonomy and authority, Mulally didn't stand a chance of taming the corporation.

Mulally's Thursday-morning business-plan reviews became the epicenter of Ford's transformation. All the division chiefs and department heads (Fields, Leclair, Laymon, product chief Derrick Kuzak, and on down the line) were required to attend. There was a strict code of conduct. No cell phones, BlackBerry devices, or encyclopedic briefing books allowed. No a.s.sistants or aides in the room. No jokes about another person, no side conversations at the table. And above all, no opinions-just facts. "Data will set you free," Mulally said with a smile.

One day someone in the meeting made a wisecrack about the "ladies' section" because three women were sitting together. When Mulally stared him down, so did the rest of the room. "I can't stand jokes at anybody's expense," he said sternly. He called his rules "working-together behaviors" and said he understood if some people couldn't adapt. "If you can't do it or don't want to do it or it's too hard, that's okay," he said. "You'll just have to work somewhere else." It was tough love with a hug, a smile, and a zero-tolerance policy. "The important thing is we're all accountable to each other," he said. "You are accountable to the team, and the rest of the team is here to help you."

During the weekly reviews, Mulally and his top fifteen executives systematically deconstructed, questioned, debated, updated, and refocused every aspect of the business-product cycles, market conditions, investment plans, sales performance, factory schedules, productivity rates, and cost improvements. And each business unit had its own defined s.p.a.ce on the walls of the windowless Thunderbird Room for the reams of graphs and charts that marked their progress-all beneath a photograph of the executive responsible.

For so long, Ford's leaders had hunkered down in their own departments, huddled with their people, crafted plans on their own, and presented them at formal strategy sessions with the CEO and his coterie of advisors. Now the nexus of all decisions was the big circular table in the Thunderbird Room. Mulally showed the executives how to color-code their status reports: green (on target), yellow (somewhat short), or red (in trouble). Everybody talked about everyone's plan, no exceptions allowed. "What is the real situation?" Mulally would ask them repeatedly. "And what do we need to do to change it?"

First and foremost, Ford had to cut costs, standardize processes and parts, and reduce the number of models and brands. That focus would improve quality and create an ident.i.ty around the Blue Oval. And Mulally absolutely loved that little badge with the Ford name written out in script. "Gosh, it must be so cool to have your name on all these millions of cars!" he said to Bill Ford. As far as product, he wanted more cars, less trucks, and a relentless drive to improve fuel economy in every segment. The balance sheet obviously needed immediate help, and he constantly prepared for the big pitch to the banks to borrow billions of dollars. And the foundation of the comeback would be two words that were stuck in his head: "one Ford." Not a Ford in Asia and a Ford in North America and a Ford in Europe-one Ford, with one mission, one goal, and one singular purpose. "I had a point of view of where we wanted to go," he said. "And every week it got clearer and clearer because they were all talking about it."

On October 24, less than a month into the job, Mulally stood front and center to report Ford's worst quarter in fourteen years-a $5.8 billion loss, including $2 billion in red ink in North America. Wall Street gasped, driving the stock down below $8 a share. Auto a.n.a.lyst David Healy said, "It's difficult to tell if they are getting out of the woods, or just getting into the woods." If Mulally needed a stick to prod Ford to change, the third quarter numbers provided it. "These business results are clearly unacceptable," he said. "This is not a viable business model going forward." Plant closings and job cuts would not be enough. Fixing Ford required new behaviors and the humility to admit that the old ways had failed. "This is a critical time," Mulally said. "It absolutely demands decisive action and a clear focus."

A day later, Bill Ford left Dearborn for a trip to China, where Ford was lagging behind its rivals in establis.h.i.+ng a manufacturing foothold. The trip had been long in the works, but symbolically it couldn't have come at a better time. He'd be seven thousand miles away from the Gla.s.s House. And Mulally was now on his own.

Oh, s.h.i.+t, thought Mark Fields. Why me?

He had just received a report from Ford's a.s.sembly plant in Oakville, Ontario, and it couldn't have been worse. The first two thousand Ford Edge crossovers off the line had a problem with their hydraulic lift gates, and production had to be stopped. The Edge was Ford's single most important vehicle launch of the year-it was its first fuel-efficient, high-tech SUV replacement and a cornerstone of the Way Forward product offensive. To make matters worse, dealers had already ordered thousands of Edges, and customers were waiting.

Fields had two choices, neither one of them good. He could s.h.i.+p the Edges that worked, restart production, and hope the glitch could be found and fixed on the fly. Or he could delay the launch and be the first executive to go into Mulally's Thursday-morning meeting with a big fat red dot on his weekly progress sheet. He sat down with his team in Dearborn and made the call. "We are not going to s.h.i.+p a vehicle before it is ready," he said. "We just can't. We have to delay it. I'm going to have to call it a red." His staff members looked at him. He could almost feel their pity.

At the next business review, Fields took his seat, right next to Mulally. As luck would have it, he was the first executive to present. His mind raced. I'm going to get killed here, he thought. Then he took a deep breath and showed everyone the launch page with a large red dot on it. "The Edge launch is red," he said. "And we're delaying it."

Fields thought he felt people moving their chairs away from the table, away from him. Bringing bad news to senior management at Ford was typically avoided at all costs. n.o.body wanted to even be near the culprit. The Thunderbird Room got very quiet. Everyone looked at Mulally, waiting for his reaction. A few seconds pa.s.sed. Then Mulally turned toward Fields, stood up, and started clapping. Fields was momentarily stunned. Then Mulally really started clapping, as though Fields had just hit a home run. "Thank you, Mark," he said, "for the transparency." At that moment, the atmosphere in the review room changed for good. Someone had had the guts to put a red out there-and survived. Not only that, Mulally liked it!

"Mark, that is great visibility," Mulally said. "Now, is there any help you need from any member of the team?" All of a sudden, people started to speak up. Bennie Fowler, head of the quality department, said he'd seen that type of problem before and had some ideas. The head of procurement weighed in about the parts on the Edge. The manufacturing exec promised to send some extra engineers to the plant. Fields couldn't believe it. A crucial launch was delayed, and somehow he was a hero. "A picture was worth a thousand words," he said. "And that picture was Alan clapping." Within two weeks, the red had turned to yellow. Three weeks later, the Edge launch was green to go.

It was fitting that Fields broke the ice and showed the courage to admit a problem. He had been doing the heavy lifting on the Way Forward restructuring and had drawn the ire of the UAW in the process. He also had been a lightning rod in the Gla.s.s House, viewed by some other executives as Bill Ford's favorite and a little too c.o.c.ky for his own good. But Fields had nothing to apologize for. He worked extremely hard, stuck his neck out, and fought for what he believed in.

Some people thought Fields would leave Ford after it brought in a new CEO. His star was on the rise, and he always had job offers. But right before Mulally's hiring was announced, Bill called Fields into his office, brewed him an espresso, and prepared him for getting a new boss. "There's going to be a management change," Bill said. "I'd really like you to support and work for this new CEO, Alan Mulally."

At first Fields was crestfallen. If Bill was giving up the chief executive job, why wasn't he considered? But very quickly Fields took stock of the situation. Bill had shown a lot of faith in him and had given him an enormous amount of responsibility at a critical time. There was no way he would walk out on him. "Bill, whatever you want me to do, I'll do it," Fields said.

And after the Edge episode, he was glad he'd stayed. "I am very loyal to this company that gave me this opportunity," he said. "And I've grown a lot and learned a lot just by observing Alan. He's taught me how to partic.i.p.ate."

So far, Mulally had sold his principles and methods successfully to the organization. People were responding, coming up to him in the hallways and thanking him for injecting new spirit into the place.

But now he had a much tougher sales pitch to make.

Despite its troubles, Ford had been extremely frugal with its cash h.o.a.rd. Thanks to Leclair's tight hold on the purse strings, the company had $23 billion in reserve at the end of the third quarter. But with business worsening and buyouts looming, its bank account was shrinking fast. At best, there would be $20 billion left at year's end. And it already had $17 billion in debt.

In normal times, that type of spread might work. But the plant closings and new products would be very expensive. "We are going to have a big liquidity problem," Leclair had told the board in the early spring. Since then, he and his team had been working out the details of a plan to borrow a huge amount of money. For decades, Ford's credit was so good it could easily get loans without pledging a.s.sets. But times had changed. To get the big banks to lend now, Ford had to put up nearly everything it owned in America as collateral-its factories, office buildings, stock in Ford Credit, and all of its patents and trademarks, including the rights to the Blue Oval itself.

At a board meeting, one of the directors asked, "Does that mean we're hocking the Ford brand?"

Yes, said Bill Ford. They were, in fact, ready to bet the house.

Mulally was totally on board. He saw no other choice. There was only one opportunity to fix Ford. They might as well get as much money as possible. If the turnaround didn't work, it wouldn't matter whether Ford had mortgaged the Blue Oval or the Gla.s.s House because the company would be heading into bankruptcy. Ford had hired the biggest and the best investment firms to arrange the debt package-JPMorgan Chase, Goldman Sachs, and Citigroup. Their working goals for the borrowing were to raise $15 billion in loans secured by collateral and another $3 billion in unsecured financing backed by notes or bonds that could be converted into company stock.

But it would be up to Mulally to sell the loan package to all the banks that would lend money into the deal. He had to convince them that Ford had a bright future and that he had a strategy to get the company there.

On November 29, he walked onto the stage of the Grand Ballroom in the Marriott Marquis in midtown Manhattan. There were four hundred bankers in the room, representing some of the largest financial inst.i.tutions in the country. It was at moments like this that Mulally shone. When the pressure was the hottest, he brought his best game. And today he would lay it all on the line for Ford.

"We face an industry that is increasingly compet.i.tive," he said, as slides flashed on a screen behind him. "Consumer preferences are changing, particularly in North America, where higher fuel prices are s.h.i.+fting demand from trucks-our strength-to cars. And excess capacity continues to add downward pressure on our prices. Our cost structure is not compet.i.tive, and our business units are not well integrated."

But, he said, Ford has a plan.

"The number one thing we need to do is deal with reality and tackle those issues head on," Mulally said. "A key opportunity going forward is to operate as one company."

He went through every last detail: what new products were coming, how the company was downsizing its workforce and operations, when it would pull its far-flung divisions together, and how he would change the corporate culture that drove it into the ditch in the first place. He even ad-libbed a little, calling the financing the "world's largest home improvement loan," which drew a few laughs from the b.u.t.toned-down crowd. Then he hammered home the message: Please trust us. We will get this right.

"This liquidity," Mulally said, "is needed to execute the plan I have highlighted to transform the company and provide a cus.h.i.+on to protect for a recession or other unexpected event." Later, he called the speech a "defining moment" and proof that Ford was on a new and different path.

That same day, he got some unexpected positive news. Thirty-eight thousand UAW workers had accepted buyouts to leave Ford-half of the company's U.S. workforce. And a week later, the returns came in from the banks. The demand to partic.i.p.ate in the financing package was way bigger than anyone hoped for. All told, the banks were willing to lend Ford as much as $23.5 billion to turn itself around.

When he heard that, Mulally didn't hesitate. He recommended to the board that Ford go for it all and borrow the maximum. "We're going to need it," he said.

Chapter Eighteen.

It was the most famous sight in Stuttgart: an immense silver three-pointed star inside a perfect circle, s.h.i.+ning atop the headquarters of DaimlerChrysler AG. But it wasn't the corporate logo of the transatlantic auto giant created in the 1998 merger of Daimler-Benz and Chrysler. The star was the universally recognized emblem of Mercedes-Benz, the pride of industrial Germany and the gold standard for luxury cars around the world. Ever since Daimler-Benz and Chrysler joined forces, there was never a doubt which of their brands was the foundation of the new company. It wasn't an American-made Chrysler minivan or Jeep sport-utility or Dodge truck. The heart and soul of DaimlerChrysler was, and always would be, Mercedes-Benz.

The financial crisis unfolding at Chrysler in the United States had unleashed a groundswell in Stuttgart to dump the faltering American division and save the cherished three-pointed star from being dragged down with the disaster in Detroit. A few weeks earlier, Dieter Zetsche had told Tom LaSorda and his senior executives that their jobs were on the line: they had to fix this business or else. But it was too late-Chrysler was as good as gone.

In early October, three hundred DaimlerChrysler communications staffers gathered in Stuttgart for their annual global leaders.h.i.+p conference. They came from all over the world, including a contingent from Auburn Hills, Michigan. The American staffers could sense the tension directed toward them as soon as they entered the meeting hall. Several senior company executives, including Zetsche and LaSorda, made presentations over an interactive satellite hookup. When LaSorda's face appeared on the large video screen, some of the Germans in attendance started booing and making rude remarks.