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T
he board of directors had already decided it was time to consider other options. Earlier that year, they asked Bill Ford to begin exploring mergers with other automakers and consider selling portions of the company to the private equity firms that were beginning to
make discreet inquiries. TPG Capital, then in the middle of a buyout binge, was one of them. So was Jacques Nasser’s new employer, One Equity Partners, the private investment arm of JPMorgan Chase. The directors also asked Ford to begin looking at bankruptcy.

For most companies a Chapter 11 filing might have been the next logical step, but Ford’s situation was unique. The arcane ownership structure Henry Ford II had created to guarantee his family’s continuing control of the company after it went public in 1956 would never survive bankruptcy court. The Ford family would lose their shares along with the other stockholders and would never be able to regain control of the automaker once it emerged from reorganization. The family would not support a Chapter 11 filing, and their ownership of the supervoting Class B shares gave them veto power over any such move. In fact, any merger, sale, or voluntary liquidation of the company
required a separate vote of the Class B shareholders.

Bill Ford was hurt by the board’s crisis of confidence. He could not sleep. He lay awake at night grasping for a switch that would get Ford back on the right track. He knew where the company needed to go, he just needed to find someone who could take it there. He knew he could not do it alone. In the morning, the bleary-eyed Ford would make the long drive to work, stopping at a Starbucks along the way to fortify himself for another day alone at the top. At World Headquarters, he was spending less time in meetings and more time cloistered in his office. Ford would sit for hours behind the huge burled maple desk that had belonged to his grandfather Edsel, staring out the window at the white smoke billowing out of the enormous Rouge complex. Almost eighty years after the first Model A rolled off the line, it was still turning out the bestselling vehicle in America, the F-Series pickup. But that was no longer enough.

What would Henry Ford think of his company today?
Bill wondered.
What would he think of me?

Bill Ford started making calls to his relatives, suggesting that the time had come to take the company private again. Several of the other Fords agreed, but once Leclair and the lawyers began studying the idea, they realized it would not work. The Fords could come up with enough cash to buy out the other shareholders, but not enough to
keep Ford Credit funded. It needed access to the bond markets, and that would become far more costly if Ford went private.

Bill Ford still believed the company could be saved. Other directors were not so sure. Robert Rubin thought the underlying assumptions of Fields’ Way Forward plan were still too optimistic and began expressing serious concern about Ford’s finances. He questioned whether the automaker still had enough money left in the bank to cope with the increasingly challenging business environment. He would soon resign. Director Irv Hockaday was wary of ruling out anything.

“Bismarck’s military strategy was the simultaneous pursuit of diverse options,” he reminded his colleagues.

The other directors agreed.

“We want all options on the table,” they told Ford.

Reluctantly he agreed to begin an analysis of other alternatives.

In December 2005, Ford had hired his brother-in-law, Steve Hamp, as his chief of staff. The husband of Bill’s older sister, Sheila, Hamp had spent the last twenty-seven years at the Henry Ford Museum. He seemed more like a college professor than a businessman, but Hamp had enough management experience to deal with the minutiae that Ford found so frustrating. He also did what he could to help his brother-in-law cope with his increasingly recalcitrant executives. Now, with pressure from the board mounting, Ford asked Hamp to work with Leclair and outside investment bankers to explore the various options.

They established a high-level committee, the Corporate Strategy Leadership Council. Chaired by Bill Ford, it also included Hamp, Leclair, Mark Fields, Joe Laymon, and two other senior executives: Mark Schulz, the vice president in charge of Ford’s international operations, and his second in command, Lewis Booth, the head of Ford of Europe and the Premier Automotive Group. It also included Greg Moran, who had recently been promoted to executive director of corporate strategy.
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Moran had worked for Bank One and had merger experience. Goldman Sachs and Citigroup served as outside advisers.
Together they began work on Project Game Plan, a top-secret initiative aimed at figuring out what could still be done to save the company. The team looked at different finance options and tried to figure out how Ford could raise additional cash. They looked at internal restructuring moves. And they not only looked at the possibility of an alliance with another automaker, but actually began discussions with a couple of companies.

Ford’s first choice was a three-way tie-up with Renault and Nissan, both of which were now being led by Carlos Ghosn. Talks began that summer, but Ghosn was coy. He was not interested in an alliance. He wanted the whole thing. Toyota, Honda, and South Korea’s Hyundai Motor Company were all profiled, but there were no serious talks with any of them. DaimlerChrysler was deemed too much of a mess to bother with. That left General Motors. Ford already had a successful collaboration under way with GM on transmissions. Now it asked the Detroit automaker if it was open to an even broader alliance. In addition to working together on other powertrain components, Ford suggested the two companies explore the possibility of jointly developing vehicle platforms for lower-volume products like small commercial vehicles. Ford also floated the idea of combining the two corporations’ back offices, sharing information technology and perhaps even purchasing costs. GM’s response to all of these overtures was tepid. The guys in downtown Detroit were convinced they had already passed Ford, and they had no intention of helping it catch up.

Finally, the Project Game Plan team looked at selling Ford’s foreign brands. Together, these were worth billions. Proposals were presented to Bill Ford and his senior executives, but no one in Dearborn wanted to part with these prestige properties. The only one they could agree on was Aston Martin. Selling it would generate some cash, but not enough to make a difference.

By the middle of the summer, the mood was somber. The team had graphed Ford’s revenue and cash burn rate and came to a sobering realization: The lines did not cross in time. They ran various models, but none of them offered any hope of salvation.

“We are going to run out of cash in eighteen to thirty-six months,” Leclair said. “At that point, we will have to make a chapter filing.”

Leclair began preparing for that contingency. He and Hamp also began exploring the possibility of a sale to another automaker. It was not the best role for the former museum director. Hamp had little experience with the for-profit world and had no perspective by which to judge Ford’s woes. Every problem seemed like a crisis to him. Every hallway conversation seemed to darken his view of the situation a little bit more.

Hamp shared his growing concern with his wife and other members of the Ford family. Many of Henry Ford’s heirs were already nervous. They had watched the value of their stock fall steadily since Bill Ford’s coup in 2001, from more than $16 a share to less than $10. The tidbits from Hamp took on ever-greater import as they circulated among the family, which was desperate for information. Some began to whisper that the situation was far worse than Bill was letting on. Others worried that he was becoming overwhelmed. In April, Ford finally decided that Padilla was doing more harm than good. He asked him to retire and added the positions of president and COO to his own list of responsibilities. It was too much. Two months later, one of Hank the Deuce’s daughters, Anne Ford, sent her cousin a carefully considered e-mail.

“
The stock price is terrible,” she wrote Bill. “Maybe we ought to bring somebody in to help you.”

Anne Ford was not the only one who had begun wondering aloud if Bill was really up to the challenge of running Ford Motor Company. Some of Ford’s board members were asking the same question. They were increasingly frustrated with his lack of engagement with the day-to-day operations of the company and his inability to overcome the resistance of his subordinates. A few board members had been advised by their personal attorneys that they could be accused of neglecting their fiduciary responsibility to Ford’s shareholders if they did not begin pushing for a change in leadership. Though relations between Bill and the board remained cordial, there were some heated exchanges in executive session when the CEO was not present.

Some said the time had come to force Ford to step aside.

“He is not giving it the 24/7 effort that he promised us. He’s not involved in the operational and product meetings. And he’s been
unable to resolve the internal conflicts,” said one director. “You have to have the CEO calling the shots. Bill isn’t.”

Others argued for more a respectful approach to the man who was, after all, the designated representative of the Ford family.

“At the end of the day, it’s their company,” said another. “We have to tread carefully.”

Bill Ford had accomplished a great deal since 2001. He had taken over a company that was awash in red ink and delivered three years of solid profitability. He had refocused Ford on its core business of building and selling cars and trucks, and had made it the first American automaker to bring a hybrid to market. He had tried to do a lot more, but had ultimately been unable to overcome decades of mismanagement and the ossified corporate culture responsible for it.

As the July board meeting approached, Hockaday decided the time had come for a fatherly chat with the company’s top executive. He had been impressed with Bill’s desire to lead Ford and had done what he could to support him. Now Ford admitted he was overwhelmed.

“No single individual can run this company effectively under the current circumstances,” he told Hockaday. “I need help. Help me get that help.”

Hockaday commended Ford for having the self-awareness and the lack of ego to admit that, but he gently suggested that Ford needed something more than a new COO. Bill agreed: The time had come to find a CEO who could save Ford from itself.

O
n July 12, 2006, less than five years after he had demanded Jacques Nasser’s head, Bill Ford once again stood before the company’s board of directors and delivered another emotional appeal. This time, he spoke not with the emphatic self-confidence of a rightful heir demanding his throne, but with the strained voice of a man fighting to hold on to his job and his company. When Ford took over as CEO back in October 2001, the company’s stock was worth more than $16 a share. Now it was trading for less than $7. Then Ford had been the second-largest automaker in the world, after General Motors. Now it had fallen to third place behind Toyota. Ford had
promised $9 billion a year in profits by the middle of the decade. Now Ford was heading toward its biggest loss ever. There was talk of bankruptcy, of selling the company, of parting it out to other automakers or private equity firms. The story of the past five years was written on Ford’s face. His easy smile was gone. He looked exhausted. He told the directors that he was tired of showing up at each month’s board meeting just to listen to the list of the company’s problems read back to him.

“I know what’s wrong,” he said. “Help me find a solution.”

Ford asked the other directors to help him find a new CEO.

“This company means a lot to me. I have a lot tied up in it,” Ford said. “But the one thing I don’t is my ego.”

Though he knew it was coming, Hockaday thought Bill Ford’s speech to the directors was one of the most moving he had ever heard in a boardroom. No one ascends to the top of a major corporation without a healthy ego, but those in the automobile industry were oversized even by Fortune 500 standards. It took a big man to admit that he could not save his company, particularly when his name was on the side of the building. In other boardrooms in Detroit, other CEOs were adamantly refusing to admit defeat. They would stubbornly cling to power and take their companies down with them. Bill Ford cared too much about Ford to let that happen in Dearborn.