BackAmid change, Fords stand by the family business
Amid change, Fords stand by the family business
PremiumTense times: A file photo of William Clay Ford Jr., executive chairman of Ford Motor Co. The family considers the business to be more than just a financial investment—for it, it’s an emotional commitm
Dearborn, Michigan: They met in late January at a nondescript conference centre near Ford Motor Co. headquarters, just as they have every three months for the last 20 years.
Yet, this meeting was hardly routine for the dozens of descendants of Henry Ford, who are the controlling shareholders of the nation’s second largest auto company.
The value of the family’s 70.9 million special voting shares had hit a new low that month, dwindling to about $140 million (Rs685 crore) from $2.2 billion a decade earlier, and the company was burning through its cash reserves.
During the meeting, family members fired questions about Ford’s shaky finances at the company’s chief executive, Alan R. Mulally.
For the Ford family, it was a gut-check moment—the kind that has led to splits in other famous business families.
The Fords have had their tense times. But as they have done for decades after their meeting last January, they rallied behind the family’s appointed leader: William C. Ford Jr., a great-grandson of the founder and chairman since 1999.
He is also the face of the company in Detroit and much of the world, given the prominent role he played in advertisements during his tenure as chief executive.
“The last thing this company needs at this point is for the family to be difficult," Ford said in an interview. “And rather than splinter, we have pulled together."
The family has made some of the riskiest moves in Ford’s recent history. For the first time, it went outside the auto industry for a chief executive, hiring Mulally from Boeing. Then it backed a plan to mortgage all of Ford’s assets to borrow $23 billion.
“People look to Alan. People look to Bill," said David Hempstead, a lawyer who has advised the family for more than 30 years. “When Alan said, ‘I’ve got a plan and it’s going to work and we’re going to turn this thing around,’ these people believed him."
So far, the decisions have paid off. The money Ford borrowed has kept it solvent and independent, while GM and Chrysler have been pushed into bankruptcy protection. Ford has streamlined its global operations and set a new course towards making smaller, more fuel-efficient vehicles. GM’s managers must answer to a new majority owner, the federal government, which in turn hopes to sell off its stake to other investors. Chrysler executives are learning to work with the Italian auto maker Fiat, which acquired most of its assets.
Ford’s top managers said they have no such worries about their controlling shareholders. “These people are so steadfast," Mulally said. “They believe in this company so much."
The Ford family members own a special class of stock that gives them 40% voting control.
“I feel this is one of Ford’s greatest assets, and one that GM has never had," said David L. Lewis, a business historian at the University of Michigan. “The family has been an oasis of stability through the years."
The regular, quarterly meetings started after the death of Henry Ford II in 1987. The current generation—with 13 cousins, including Bill Ford—has brought its children into the fold. The meetings now include up to 35 family members.
"After my father died, people in the family needed to start talking," said Edsel Ford II, a longtime Ford director and Henry Ford II’s only son. "The meetings have become like a call to arms."
In all, five family members work in some capacity or serve on the board at Ford. Besides Bill and Edsel Ford, three fifth-generation Fords are on the payroll.
Elena, Edsel’s niece, is a rising executive who is currently director of global marketing. Her cousin, Alessandro Uzielli, works in Ford’s Los Angeles office on projects involving the entertainment industry. And Edsel Ford’s oldest son, Henry Ford III, is also a full-time employee.
In 2001, the family asserted its power by replacing the chief executive, Jacques Nasser, with Bill Ford, who had been chairman for two years.
By 2006, the company was floundering, and appeared to be in worse shape than GM. Bill Ford sought family support to hire Mulally. “No question, that was a time of high anxiety for us," Bill Ford said.
Mulally’s vision for Ford included shedding brands and operations that Nasser had built up, and borrowing heavily to restructure. To help persuade banks to lend, the company cancelled its dividend, which cost family members tens of millions of dollars a year. “Our plan required sacrifices from everybody, including the family," Mulally said.
In the spring of 2007, less than a year into Mulally’s tenure, some family members, including Bill’s sister, Sheila Hamp, and her husband, pushed to hire the Wall Street firm Perella Weinberg Partners, to advise them on long-term strategy—including possible mergers or even a sale.
But Bill Ford and Edsel Ford opposed the move, as did Elena Ford, Edsel’s niece. The family voted, and agreed with them. Elena Ford said the family’s strength is rooted in open communications, and unwavering support once decisions are made.
Ford is still losing money— $1.4 billion in the first quarter alone—and its cash reserves are shrinking as auto sales have dried up for the entire industry. Even so, Ford family members said they could not envision any situation that would cause them to sell out.
“If this were just a financial investment, the family probably would have been out of it years ago," Bill Ford said. “This is very much an emotional commitment."
©2009/THE NEW YORK TIMES
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