Once Upon a Car Part 12

"Jim! It's so good to see you!" Mulally said. "Is everything okay? Hey, come with me. I've got a secret room back here. It's just for us."

Mulally had brought a book that was filled with drawings, charts, notes, and data. He showed Farley an intricate graphic of Ford-its brands, models, divisions, regional operations, lines of organization. "This is Ford," he said. "And it's a mess. There's like three hundred models here. Jim, it should be fifty. And here's my plan to fix it. We're going to transform our whole lineup. We're going to have global products in global segments. It's going to be one Ford. And we're going to unleash shareholder value in a way no one else ever has."

Their thirty-minute meeting went on for two hours. Farley was spellbound by how Mulally was as comfortable talking about engineering and technology as he was explaining his business strategy. His enthusiasm, as advertised, was remarkable. But more than anything else, Farley loved Mulally's plan. It was so simple and organic and strategic, a lot like Toyota but with a visceral, emotional component. "We'd love to have you on the team," Mulally said. "What do you think of it? Can we pull this off? I need you to come in and help fix North America and globalize our lineup. How would you feel if you were part of our team?"

Farley felt a little like a visitor from another galaxy. "I'm not going to fit in," he said. "I'm a Toyota guy. I've been there so long."

Mulally wasn't buying that. He knew all about Farley. He could tell how intrigued he was from his eye contact, his body language, and the questions he asked. There was a kinship with Ford, a bond already formed.

"Jim, it's me you're talking to," he said in a conspiratorial tone. "I'm here. I'm from Boeing. I was in your shoes. It was a hard decision for me because I felt comfortable. I was in one place for such a long time. But there's only one chance to do something like this. It only takes a few of us. We can do it. And it's Ford, Jim! It's part of the history of our country. It's Ford."

When Farley got home that night, he couldn't stop talking about Mulally. "I have never met anyone like him," he told his wife, Lia. "Oh my G.o.d, he's so approachable. He respects Toyota. He's down to earth. And he knows what to get done."

But Farley couldn't walk away from Toyota right then and there. He had invested so much of himself in the company and had worked so hard to sell its Scions, Camrys, and Tundras. People relied on him and believed in him. He wasn't ready to go until a few months later, when he called Mulally again and reached him at a big Ford dealer meeting in Dearborn.

"Jim!" Mulally said. "Jim, you can't imagine what just happened! I'm meeting with all the dealers. It's unbelievable! They never had a management team that loves them! I made all the Ford people turn around and say 'We love you' to them. It was so cool!"

Farley was stunned. He loves the dealers? That sure didn't sound like Ford. Wow, this guy really gets it, Farley said to himself. Maybe we can do this.

And just like that, Farley was in. Mulally had the perfect job for him-head of Ford's global marketing plus U.S. sales, which would have him working closely with the product team. Ford was streamlining its structure, building teamwork, and developing a supersharp focus on the Blue Oval. But it needed consumers to care about the company again and, more important, trust it. That's where Farley came in. "The future of our industry is a meritocracy," Farley said. "We will win or lose on the merits-our products, the safety and the quality and the value. My approach is, you earn everything." He was officially hired in October and ready to start a month later.

Farley was so wound up on the day he left L.A. to move to Detroit that he threw up in the bathroom at the airport. He took the red-eye flight and landed at five in the morning. A Ford driver took him to the Gla.s.s House, a long, checkerboard monolith of windows and girders and 1950s-era architecture.

Wow, I'm in Detroit, Farley thought. At Toyota, everything was brand-new and this was just so . . . old. I'm one of those people now, the ones that screwed everything up. I'm not one of the good guys anymore, the guys that make the Prius and Scion and Camry. I'm in Detroit now. I'm one of them.

The building was very quiet, and he went up to his new office. It was big and empty and waiting for him. This is what it's all about, Jim, he said to himself. Game time.

He sat at his desk and started writing out a list for Mulally of everything he wanted to do in his first hundred days at Ford.

In his first year, Mulally had laid the foundation. A huge part of it was behavioral. His Thursday-morning business-plan reviews were now second nature. Each executive grew more comfortable playing his position. "Structure is best when it implements a strategy," Mulally preached. "Why are we organized the way we are? Because we are a team, and everyone is doing the best they can in tapping into the full global resources of our company."

Mulally was very sly. He had instilled a discipline that allowed executives to feel both empowered and secure. Better yet, the team policed itself. He didn't have to correct someone who spoke out of turn or started criticizing somebody else-the peer group took care of that. And Mulally was the role model. He worked so many hours and was so ebullient and gung-ho, people wanted to please him. His style was the opposite of the old, starchy, stiff-lipped Ford. If someone scored a breakthrough in purchasing or product development or sales, Mulally hugged him (or her) like a high school coach when a kid hit a home run. He was fun to be around, consistently stimulating, challenging, and motivating each and every Ford employee he came in contact with. When people tried to a.n.a.lyze or figure him out, he just laughed. "I want to be the best father," he said. "I want to be a great friend. I want to have one great, compelling plan. I want to be with people where the gla.s.s is half full, and I expect everybody to listen, help, and appreciate each other."

But changing behaviors was only half the battle. The buyouts in the plants and the bloodletting in the salaried ranks had slimmed down Ford considerably. Slowly but surely, its crushing overhead costs began shrinking. In the third quarter of 2007, the company narrowed its overall loss to $380 million. Revenues were inching up too, 10 percent for the period.

Yet there was still so much work to do. Ford had to break from one of its biggest strategic mistakes and put its European luxury brands up for sale. Jaguar and Aston Martin were already on the market, but Mulally wasn't stopping there. Land Rover and Volvo were also made available. A lot of executives in the company, including Bill Ford, had strong attachments to the brands, but this wasn't elective surgery. These were lifesaving operations. Every minute spent on building SUVs for Volvo or sedans for Jaguar was a minute not spent on fixing Ford. Dumping the luxury brands was not up for debate. It was a question of when, not if.

The real acid test was getting the best and the brightest in Dearborn to create a lineup where every vehicle was excellent, from a subcompact car all the way up to a heavy-duty pickup. Beyond that, was it possible to make cars that could be sold as profitably in Detroit as in Frankfurt, Rome, Shanghai, or So Paulo? This required a giant leap not only in integrating resources but in philosophy. A Ford is a Ford is a Ford the world over, Mulally believed, and that meant safe, reliable, stylish, enjoyable to drive, and efficient to own.

Mulally was relentless in his efforts to standardize parts and platforms and imbue each vehicle's design with a distinctive Ford look, feel, and character. Once the new products were into the engineering stages, the company had to pull off a ma.s.sive shift in its factories. Truck plants quickly had to become car plants, and the beauty of the transformation was in the timing: every aspect of the organization was changing simultaneously. All these parallel initiatives needed to be constantly measured, graded, and improved upon. Even hardened veterans of the car business were swept up in the momentum.

The Ford team was rapidly adapting to this new leader and his expansive agenda. Mulally definitely moved to a different beat, where adrenaline was the fuel, and his vision was the destination. Sure, cars were complicated machines. But he'd spent years and worked with thousands of people to create one new airplane in his Boeing days. Just because the task was big didn't meant it had to be daunting. In fact, that just made the journey more thrilling.

He was the same all the time-blue blazer, white shirt, khaki pants, loafers, big smile. Mulally was like a corporate athlete; he loved tennis and golf and working and learning and interacting with people. But he stayed grounded. Every day he called his wife and five children in Seattle and his eighty-seven-year-old mother in Kansas. And he always took time in his hectic schedule to think by himself. Sometimes when he was alone he felt he could actually see the future, what Ford would be like when it all came together. The key was consistency of effort and att.i.tude. Mulally spent hours perfecting a wallet-size, laminated card every employee in the world got: "One Ford . . . One Team . . . One Plan . . . One Goal." On the back, he listed his "Expected Behaviors," each one starting with one of the four letters in "Ford": "Foster functional and technical excellence . . . Own working together . . . Role-model Ford values . . . Deliver results." He didn't care if it seemed corny or old-fashioned to carry around a corporate mission statement. He believed in it. It was so important that everybody know there was a plan and how they fit into it. "You can't move forward," he said, "if everybody doesn't know all the pieces."

They knew the pieces, but he saw the whole. Getting Jim Farley into the mix was the last major personnel move. Mulally needed that creative force, that one guy whose life revolved around the wants, needs, and desires of consumers. He had inherited a fine product executive in Derrick Kuzak-a soft-spoken deep thinker who had a talent for making decent cars better. Mark Fields was excelling at running the North American operations. Even Don Leclair was getting along and applying his superior financial skills without browbeating people. All down the org chart, the talent was clicking.

And Bill Ford brought just the right dose of encouragement, support, and stability. Mulally appreciated what he had in Bill-a confidant, a partner, and a friend. "He's my private equity," Mulally liked to say, half jokingly. Bill and the Ford family and the board could keep the hounds of Wall Street at bay while he reinvented the business.

Every night, Mulally pondered the most important number in his head-thirty-five. At the end of the third quarter, Ford had $35 billion in cash to finance all the new products and all the improvements the plan called for. It should be enough, as long as the economy cooperated. But that was getting dicey. Ford had to be smart. If the market went bad or disaster struck, it had to react intelligently and forcefully. The plan was perfect-unless it had to be changed.

At Toyota, Farley's cars were at or near the top of every survey of consumer confidence and vehicle quality. He was pleasantly surprised to see Ford making some slow, steady progress in the all-important Consumer Reports and J. D. Power rankings. But Toyota's success always hinged on understanding the customers first and then building cars to meet their expectations. So he was excited when Derrick Kuzak pulled him aside during one of his first days at Ford. "Jim, there are a couple of interesting technologies that I think have potential, and I'd like to get your feedback on them," Kuzak said. "I'd like you to evaluate the DNA of our products-the steering, the brakes, the feel, the responsiveness."

Farley could hardly wait. He was spending his first weekend alone in the dreary Hyatt hotel near headquarters. Now he was pumped to get on the test track. Ever since he was a kid visiting family in Detroit, he'd wondered what went on behind the high brick walls at the top-secret Ford proving grounds. "That was a special moment for me when I drove in there for the first time," he said.

Kuzak and a small band of engineers were waiting for him. They wanted Farley to drive an early prototype of the next Focus small car. It had a special, European-style direct-injection turbocharged engine that Kuzak thought might do well in the United States. When Farley got behind the wheel, he tingled at the power of the engine and how the car handled in the curves and accelerated on the straightaways. After he pulled to a stop, he just about ran over to Kuzak. "Holy bananas!" he said. "I have never driven anything like this. It's really different. People are going to love this car. It's so different. This is the reason I left Toyota."

He wasn't as impressed by the marketing organization. After his first meeting with his top twenty managers, Farley was openly upset. "They just didn't get it," he said. "They thought they had all the answers. I'm like, 'This company has lost 1 percent of market share every year since 1994. They've had a new brand campaign every year for the past five years!'"

When one manager suggested that Ford advertise its latest gains in quality, Farley blew up. "You have to have the evidence before you open your mouth!" he snapped. "What should we say? We're getting close to Toyota? People don't believe that s.h.i.t." He was going to give these people three months to get their act together-or else. "After ninety days," he told Mulally and Fields, "I'm going to have to make changes here."

For the first few weeks, Farley felt like he had to fit some abstract Detroit way of doing things. It was like wearing shoes that hurt. "I had to make a decision whether I was going to be a Ford guy or Jim Farley," he said. "And I decided it was probably time for me to be Jim Farley."

He called a town hall meeting for all his marketing and advertising people. After everybody took their seats, Farley opened with a gesture they wouldn't forget. "I'd like you to turn to the person next to you, I don't care if it's on the right or the left, and pat them on the back," he said. "You deserve it." Then he talked about his grandfather working for Henry Ford, owning his first Mustang, what he did at Toyota, and the day his baby twins died. The room got awful quiet then. He had their attention completely. "I hope you are ready to save this company," Farley said in a low voice, "because that's what I'm going to be doing every minute of every day." He was going to lead, and he expected them to follow. "We are at the precipice right now in North America," he said. "There's no more time. It's just us. We have to fix it, and we can do it."

They needed to get on board now, he said. "I'm going to push, and I'm going to challenge," he said. "I'm not here to be polite. I'm a change agent. This is what I do." Then he shocked them. Yes, he had worked for Toyota. He knew how much the customers loved their cars. He knew their reputation better than anybody. "But you know what?" Farley said. "You know what the problem is at Toyota? They are a fat and lazy compet.i.tor. And we are humble. We are hungry. And we will get this done!"

He felt good after the speech and asked for questions. Someone made the mistake of saying he'd had a lot of bosses over the years and that "outsiders don't last long" at Ford.

"That's pretty funny," Farley said, not smiling. "Have you told Alan that?"

While Farley was joining Mulally and the Ford team, Jim Press was wondering what he was doing at Chrysler. Press and Farley had never been close at Toyota, and their paths would diverge greatly once they both landed in Detroit.

While Mulally was creating cohesion and a sense of purpose at Ford, the opposite was happening at Chrysler. Cerberus had installed a management team that didn't know each other and blamed the Germans for everything that went wrong in Auburn Hills. It was like Chrysler needed to be disciplined and reprogrammed, even though LaSorda and most of its American executives were still in the building.

Nardelli was the taskmaster, sent from New York to show Chrysler the right way to do business. The conceit of private equity was the belief that distressed companies were obviously mismanaged and that with creative financing and some sharp new bosses, any corporation could be fixed. But car companies never turn around quickly, and Chrysler was no exception. "Once you got inside and saw what was there, it didn't add up," said Press. "It was like the aftermath of this huge battle."

The product lineup was woefully thin. Press followed Nardelli around the design dome as he ordered a blitz of cosmetic improvements to instrument panels, seats, and interior trim. But that wasn't going to lure new customers into the showrooms. Only fresh, new models could do that. And even the smartest minds in corporate America had not figured out how to develop a new automobile in a few months.

The only big new model coming was the restyled Dodge Ram pickup, Chrysler's single largest seller and one of its only profit producers. The hope was the Ram could carry the load while Auburn Hills got to work designing and engineering better cars.

But it was tough to stay focused when every expense and position in the company was being scrutinized. Nardelli and his new chief financial officer, Ron Kolka, were cutting budgets and jobs line by line, and preparing real estate and facilities to sell to "monetize a.s.sets." Chrysler's sales and revenue were falling because of inferior products, and Nardelli had to generate cash to keep the place running and to pay for the few product programs actually in progress.

He sold the corporate jets and leased them back. He wanted to sell the parts centers, but the union stopped him. Nardelli was becoming painfully aware that way more money was going out at Chrysler than coming in. He could not lose billions of dollars for Cerberus and last long. "Bob, you're the CEO," Feinberg told him. "We're going to back you. Do it your way. But you've got to be a winner on this one. You've got to make things work."

The top of the company was in complete flux. LaSorda was missing in action. Feinberg had a.s.signed him to find international partners to defray costs and deliver small cars that Chrysler couldn't build profitably on its own. When Daimler was in charge, LaSorda had spent a ton of time cutting a deal to bring an inexpensive small car over from China. Now he had fallen into the arms of Carlos Ghosn. Chrysler was going to buy a subcompact made by Nissan in Mexico for sale in the United States. LaSorda was also pitching Ghosn on the idea of Chrysler using its excess factory s.p.a.ce to manufacture trucks for Nissan. On paper, it seemed to make sense. Anything, it seemed, was worth trying at this point.

The holdover executives at Chrysler feared and misunderstood Nardelli. He worked long hours and came across as so b.u.t.toned-down and serious. But his underlings, like the marketing guru Peter Arnell, were off the wall, babbling about grandiose plans to reposition the brands and become a leader in electric vehicles, a technology in which Chrysler was way behind the compet.i.tion. The designers, engineers, and purchasing execs knew all too well how little money had gone into new products in the past two years. Morale was sinking fast. Having just left Toyota, Press was appalled by what Chrysler had to offer. "The product line was decimated," he said. "Daimler knew they couldn't turn it around and they quit investing. Selling these cars was like pushing peanuts uphill."

Any feeling of trust and camaraderie had frayed to the breaking point. Nardelli's patriotic sermons fell on deaf ears. The staffs were suspicious, resumes were pouring out to other companies, and n.o.body knew whose head would roll if Chrysler crashed. Nothing was more divisive among senior management than compensation. If Cerberus sold Chrysler in the future, the top thirty or so executives could split a huge payout. LaSorda and Press could earn $10 million or more, and Nardelli would get a multiple of that. But below them, who would qualify, and how much would they get? It was a constant source of tense backroom conversation.

Everyone was wondering if they would be chopped off in the next downsizing. And they were starting to turn on each other. One of Nardelli's new hires, the marketing chief Deborah Meyer, was ordered to evaluate all the budgets in her department. She called in Jason Vines, the top communications exec who had worked side by side with Zetsche and LaSorda for years.

"We're spending three times what Toyota does at the auto show," Meyer said.

"Well," said Vines, "we have three press conferences at the Detroit show, and Toyota usually has one. So that's why we spend more."

"You're going to have to cut it," said Meyer.

Vines was already stressed to the max. The sale of the company, the secrecy of Cerberus, replacing Wolfgang Bernhard with Nardelli without telling anybody-it was all a train wreck from a PR standpoint. But Meyer pushed him over the edge. Chrysler's auto show events were always elaborate and newsworthy, and they never failed to attract enormous attention. It was the company's signature, its cachet, what set it apart from dowdy old GM and Ford. Who was this newbie telling him to cut budgets? Vines, a former stand-up comic, had a mouth on him anyway. But this time he outdid himself.

"You know what? Go f.u.c.k yourself," he said. "I'm going to quit. You and these lackeys like you are what's wrong with this industry."

Nardelli didn't care. So what if the senior public relations executive with twenty years of experience quit? He had bigger things to worry about, like making payroll and finding costs to cut. He wasn't going to worry about auto shows. That was fluff compared to the tough tasks on his plate. Besides, Chrysler already had a big press conference planned to introduce the new Ram at the 2008 Detroit show. He had plenty of PR people. Who needed Vines? He wasn't even going to replace him. Better to save the money.

Planning is everything in the car business. Maybe Nardelli should have looked a little closer at what Chrysler had in store for the auto show. If he did, he might have foreseen the debacle coming on January 14, 2008. Chrysler did, in fact, have a spectacular, showstopping press event ready for the Ram. One hundred and twenty longhorn steers and sixteen cowboys had been trucked in from Oklahoma for a cattle drive down Washington Boulevard in downtown Detroit. The idea must have sounded great on paper-TV crews from around the world would capture a herd of live cattle rumbling up the city streets to Cobo Center, where Nardelli and Press would be waiting outside with the new Ram pickup. It would be a supremely macho statement about a very rugged truck and make for great television.

People lined up four deep behind barricades to watch as the cowboys on horseback drove the feisty longhorns up the boulevard and toward the Ram. Press, in a western jacket, gamely played master of ceremonies. "If you think our truck is all hat and no cattle," he said into the microphone, "keep an eye on yonder horizon." But as he started describing the all-new pickup, he was drowned out by the crowd's laughter. Press couldn't figure out why-until he saw some of the cows were mounting each other in the middle of the road. The cowboys couldn't stop them. n.o.body was paying attention to the truck or to Press, who tried his best to ad-lib. "Will you look at that?" he said. "The bulls want to see the trucks." But the amorous cattle were really getting into it now. "Well," Press said, "let's not look at that."

By the time Nardelli got to the stage in a heavy topcoat, the cattle were being herded off with the TV crews in hot pursuit. Hardly anyone was left to hear his speech about Chrysler's next comeback. He got a smattering of applause from the Chrysler employees left standing around, but he'd been upstaged by his own cows. Press was sort of in a daze. He had introduced dozens of Toyota vehicles at auto shows over the years, always with dignity and professionalism. Now it was pickup trucks and cowboy hats and humping cattle. "This is f.u.c.king unbelievable," he muttered. "Why in the h.e.l.l did we do that?"

Chapter Twenty-Four.

Ford had a billion-dollar truck to introduce too-the new F-series pickup, which had been the bestselling vehicle in America for many years running. An hour before the Chrysler cattle drive, the lights went down on the big stage at Cobo Center and Alan Mulally and Mark Fields brought out the F-150 with flashing strobe lights, fireworks, and an appearance by country music star Toby Keith. Ford had sold nearly seven hundred thousand pickups in the United States in 2007, a sharp skid after hitting almost a million just a few years before. Even so, this was Ford's most antic.i.p.ated launch. Without the profits from the F-series, the formula for a North American turnaround could crumble. The company badly needed the money from pickup sales to buy time while it made the transition to cars.

But the more intriguing Ford press conference was the quieter, more sedate rollout of the Verve concept-a sporty little four-door sedan with a four-cylinder engine and interior controls designed to look like the keypad on a mobile phone. The car had a distinct European flair, a design ethic the company liked to call "kinetic." It was the working version of the next Ford Fiesta, which would be the smallest, least expensive, and most fuel-efficient global car in the Blue Oval lineup.

For years, Ford's finest engineers and hottest executives worked on trucks and SUVs. That was where the action was. But Derrick Kuzak was changing that. He was fifty-six years old and a native Detroiter, with swept-back, graying brown hair and a thick mustache. He was so quiet and laid-back, people underestimated his burning desire to prove that Ford could make compet.i.tive small cars. He had done it splendidly in Europe, and now Mulally had given him the resources to create global platforms for small sedans, coupes, hatchbacks, and wagons.

Pickups made big money, but demand for small cars was exploding around the world. a.n.a.lysts projected that by 2012, thirty-eight million small cars would be sold annually-a 65 percent increase in less than a decade. Kuzak had done his stint working on sport-utilities and pickups in the 1990s. But he loved these crisp-handling, peppy little cars. He constantly tinkered to make them lighter in weight, and he worked to goose more horsepower from their small engines with the latest turbocharging technology. "We want a family of cars that are as exciting to drive as they are to look at," Kuzak said at the Verve event.

It was no surprise that Jim Farley joined him at the stand. Farley had lived and breathed small cars when he ran Scion at Toyota. He knew this baby was as good as anything the j.a.panese made, and it was critical to changing Ford's image to a progressive, green-minded automaker with a future. "Customers are smart," Farley said. "They value their vehicles, and the more efficient, the better."

He showed off the Verve to Michigan's governor, Jennifer Granholm, who came to the show with Ron Gettelfinger. Granholm was on the front lines of Detroit's depression; her state's economy and budget had been decimated by the Big Three's troubles. The pet.i.te blond governor gushed over the car but was disappointed to learn that Ford would not be making them in Michigan. It was the one vehicle the UAW had been unable to get a commitment for during the labor talks. Ford still could not make a profit building subcompacts with union workers. When the Verve came to production it would be manufactured in Mexico, not the United States.

The 2008 show captured an industry in transition. On one side were the trucks; on the other were small cars, gas-electric hybrids, and all-electric concept vehicles. With gas prices heading to $3.50 a gallon, a turning point was near. The Big Three had platoons of researchers to calculate when consumers would reach their breaking point on fuel. Was it when it cost a hundred bucks to fill the tank on the Suburban or the Jeep? Or was it when the fear took over that gas would just get more and more expensive, with no end in sight? If that happened, there would be a ma.s.s migration into more fuel-efficient and cost-effective cars.

At the same time, the sluggish economy had slowed consumer spending. Americans were squeezing their household budgets. A spike in gas prices would do serious damage to automakers accustomed to annual U.S. sales well above sixteen million vehicles. And any company without small cars to sell should expect to get slammed.

Farley smelled it coming. He was a maniac for data, and he was amazed at the reams of research generated by Ford's marketing staff. He pored over the numbers, zeroing in on which products sold well or lagged in the fifty biggest U.S. markets, paying special attention to the East and West Coasts, where Ford was weakest. He was struck by how rapidly the overall demand for pickups and SUVs was eroding. People who had bought trucks when they were trendy were trading them in for cars. And old-style sport-utilities had completely lost their appeal. Farley tried to think like the consumer. What was on the checklist for a new vehicle? Which attributes were really important? If it came down to a choice between two models, what drove the decision?

The data said people were fixating on their fuel gauges and calculating the cost every time a gallon of gas went up a dime. "One of the things Toyota does really, really well is put the voice of the customer right there at the table in front of the chairman of the company," he said. "When we're in Dearborn, where is the customer at the table? Who was at the table when all the profits for trucks and SUVs were rolling in? What happens if this doesn't continue forever?"

Farley was determined to be the customer's voice at Ford. And he knew the way to make it resonate was through the dealers. Farley bonded fast and hard with the Ford dealer body. In three months he had met hundreds of them, and he wouldn't stop until he met all four thousand. He flew dozens of them into Michigan, split them into groups of five, and then he and his staff watched behind one-way mirrors as they talked about the company's products, advertising, and management.

One big Texas dealer, Charlie Gilchrist, warned Farley he might not like what he would hear. "The reality in Detroit is not the reality we're dealing with," he said. But Farley was ecstatic when the dealers got brutally frank about the tired old ad campaigns. And it was during those sessions that he found his big message. He kept hearing that Ford had solid, fuel-efficient cars, especially the Fusion and the Focus. But the company's reputation was so lousy. Few people believed the cars were as good as Toyota's. If only Ford could get more potential buyers to try one.

Then it came to Farley. Not try one . . . drive one. That was how he'd start. It would be an open invitation to consumers to experience these cars and trust the company again. "The first thing we need to do is break this cycle of apathy," he said. "We need to show a Ford that people don't expect-a successful Ford."

It was buyout time again. After all the plant closings, job cuts, and labor negotiations, Detroit was still overproducing and needed to get smaller. Ford went first, offering each of its remaining fifty-four thousand American workers up to $140,000 in cash to leave the company and hoping at least eight thousand would take it. The automaker laid out a whole buffet of buyout deals, including one that paid college tuition for an entire family.

There were job fairs at all the plants, and Ford mailed to every worker a special DVD t.i.tled Connecting with Your Future that extolled the promise of new careers beyond the a.s.sembly line. It was strange to see recruiters for other companies inside Ford factories. Workers at the large Woodhaven stamping plant south of Detroit spent their lunch hour perusing pamphlets about starting pizza franchises or becoming electricians at the local power company.

It was a tough call-stick with Ford and hope for the best, or take the money and run. "I'm taking the money," said Stacy Haynes, a thirty-four-year-old mother of four children. "I've been here twelve years, and I can't believe I've lasted this long." Others weren't sure whether to roll the dice. "The only thing that would make me do it is the uncertainty," said Jerry Thomas, a millwright with a dozen years at the plant. "We just don't know what's going to happen with Ford."

GM matched everything Ford put on the table. It was a curious reversal of roles. All of a sudden, Ford looked healthier, quicker, and more focused. GM managed to keep its crown as number one in the world for 2007 by the slimmest of margins-9.369 million vehicles compared to Toyota's 9.366 million sold, a difference of three thousand (the number of pickup trucks GM sold in one day). But it couldn't shake its unique legacy woes. Delphi still didn't have a buyer in bankruptcy, which meant that GM would have to provide more financial support. To make matters worse, the UAW struck at one of its other corporate spin-offs, American Axle, which immediately forced GM to shut down three profitable truck plants when supplies ran out.

And nothing had been done to streamline its overlapping and costly bureaucracy. Downsizing production was one thing, but GM still supported eight separate brands in the United States and far too many models for its dwindling market share, which was now under 23 percent and falling. On March 3, the GM board made an important move and promoted Fritz Henderson to president and chief operating officer for the entire corporation. It was partly a reward for his yeoman work negotiating the union contract, selling off GMAC, minding the mess at Delphi, and finally fixing the accounting flaws and getting federal regulators off its back.

Becoming president of GM was a monumental step for Henderson. He had devoted his life to the company, as his father had before him. He was following in the footsteps of some of the most famous auto execs in Detroit history: Alfred Sloan, Ed Cole, Pete Estes, Jack Smith-and Rick Wagoner. Henderson was a dedicated, hands-on executive, and he had been putting out major fires for two years as the CFO.

He relished the chance to run a real business again, as he had at GM Europe and in Asia and South America. His wife and two school-age daughters had stayed behind at their home in Miami ever since he moved to Singapore in 2002; it was the ultimate corporate sacrifice for a family man such as Fritz. Now he could get out of his rented condo, move his family to the Detroit suburb of Bloomfield Hills, and settle down to the round-the-clock job of getting GM to consistently deliver good products and sell them at a profit.

Henderson's promotion was also an admission by GM that Rick Wagoner needed help. Nothing was moving the needle in a positive direction for GM-not its new pickups and full-size SUVs, not the Chevy Malibu or Saturn Aura or Buick Enclave. The health care deal, the job cuts, the plants-it was all one step forward and two steps back. GM was losing a billion dollars a month. Its international operations were booming, but North America was hemorrhaging cash. And its biggest headache wasn't even the car business. The GMAC finance arm was getting pounded by the mortgage meltdown sweeping the country. The credit company had enormous exposure in home loans, and the losses were running in the hundreds of millions every few weeks. Fortunately for GM, it only owned 49 percent of GMAC. A little more than half of the red ink was being absorbed by its majority partner-none other than Steve Feinberg and Cerberus. Investors were taking a hard look at General Motors and concluding that it had one of the weakest balance sheets of any industrial company in the world. Henderson was an optimist and a true-blue believer by nature, but even he was floored by how fragile GM had become. "My G.o.d, we've got a big, fat negative net worth," he said. "We're just getting exposed here."

Not once during this period did Wagoner or the board of directors even suggest that bankruptcy was an option. Henderson wondered when, or if, that suggestion was coming. But it never did. "Rick didn't want people working on it," he said. "So we didn't work on it."

Still, there was no getting around the fact that the company had a limited amount of cash, even less than Ford. GM was going to need more money. The company could buy out workers and divest whatever a.s.sets it could, but Henderson figured that GM still had to go to Wall Street by the summer and borrow billions. It would not be easy. Even private equity deals had ground to a halt because of the tighter purse strings at banks crunched by the mortgage market. How would an old-economy goliath such as GM get loans when bankers were turning away even hotter business opportunities? Ford had timed its borrowing perfectly and had done so before the big money started drying up. Wall Street would not be so welcoming for GM.

Henderson's only recourse was to stop the bleeding. The big question was whether GM would kill brands such as Saab, Hummer, and Saturn that consumed billions in capital but were bit players in the market. GM had already hacked away at the blue-collar manufacturing base, and it had two very powerful American brands, Chevrolet and Cadillac. But it sustained whole divisions that could disappear and the ravenous car market wouldn't blink. The Pontiac division, one of the hallowed muscle-car nameplates of all time, sold 350,000 cars and SUVs a year in the United States and couldn't break even. Saturn was the biggest money pit in GM history. And Hummer, the gas-guzzling brute of the SUV world, seemed so out of step with consumer trends as to be laughable. These decisions were the toughest call in the business-give away volume by shutting or selling brands, but improve the core business as a result.

Wagoner still had a hangover from closing Oldsmobile, one of GM's other ancient divisions. It had cost the company a billion dollars to pay off all the Olds dealers protected by state franchise laws. He abhorred the idea of going through that again. And for someone who had been with General Motors for thirty years, Wagoner still kept most of the actual duties of building cars at arm's length. He deputized Bob Lutz to oversee everything.

Lutz and Wagoner didn't so much drift apart as go their separate ways. Lutz's domain was the GM tech center, the company's half-mile-square epicenter of design and engineering, where President Eisenhower had cut the ribbon at the opening in 1956. Fifteen thousand people worked on the pristine campus, an architectural landmark with twenty-five buildings, eleven miles of roads, and a twenty-two-acre lake in the middle. Lutz parked his personal helicopter right by the lake and ruled GM's global product development from a sleek lair of blond wood and polished metal on the second floor of the main offices. Close by were the studios where designers still fashioned car models out of clay, and the majestic design dome where Lutz and his lieutenants chose the next generation of GM vehicles.

If GM was to survive its trials and stay on top, it would be because the brainpower and experience a.s.sembled at the tech center produced excellent, attractive automobiles. That was Lutz's mission in life; there was no close second. But at the age of seventy-five, his patience had worn thin with the bureaucratic twilight zone at GM. Its counterpart to Mulally's weekly business reviews were the monthly meetings of the baronial Automotive Strategy Board, which had twice the number of partic.i.p.ants as at Ford, and every agenda was meticulously vetted with pre-meeting questions and debate.

The scope of the meetings went way beyond Ford's compartmentalized appraisal of the company at that very moment. The ASB sessions covered a wide swath of topics, everything from a new-car program to an ad campaign to the endless internal discussions about personnel. Lutz could not abide the hours and hours spent on deciding whether promising young managers should be put on a functional track such as manufacturing or given a broader a.s.signment. "Just put him on both lists!" Lutz griped at one meeting. "What the h.e.l.l difference does it make?" And he hated the companywide obsession with the Performance Management Program, the dreaded PMP, which set micro-objectives for every member of management (numbering in the tens of thousands) and graded them on an intricate, ongoing matrix.

One day Lutz couldn't take it anymore. "Holy s.h.i.t . . . these PMPs are not worth the f.u.c.king paper they are written on," he blurted out. "Two months into the year and the entire economy changes and we're asking these people what goals haven't they reached? What does it tell you about an executive team where guys have to consult a piece of paper to figure out what they're supposed to be doing?"

No way Lutz would last in one of Alan Mulally's no-distraction meetings. When the ASB sessions droned on, he amused himself by playing the Brick Breaker video game on his BlackBerry. He just could not stomach the "arcane, sequential, orderly bulls.h.i.t" that Wagoner thrived on. Lutz liked Wagoner personally. And he appreciated the great confidence Wagoner showed in him. But he knew this was no way to make quick, decisive moves. And he was sick of the lists of corporate "priorities" and uplifting "values" every executive was supposed to follow. "One of our values was supposed to be a sense of urgency," he said. "Well that's not even a goal. It's an enabler." The actual product plans became almost abstract, just another topic equal in weight to all the bureaucratic paperwork. "Rick devoted his energy to too many different things that didn't matter in the final a.n.a.lysis," Lutz said. "If there was such a thing as being too intellectual for the automobile business, he was it."

Wagoner tolerated Lutz's criticism, but he wouldn't change GM for Lutz. "If we made Bob the dictator of product and didn't involve the regional presidents, would decisions have been made faster?" he said. "Yes. Would they have been made better? I'm not convinced of that." Still, he gave Lutz a lot of leeway. Product decisions were just not Wagoner's forte, his skill set, or even his interest. It was left to Lutz to motivate and ride herd on the engineers, designers, and planners in order to bring compet.i.tive vehicles to market. "For some reason our guys did not have a pa.s.sion for greatness," Wagoner admitted. "Bob brought that out in them."

While he gave Lutz as much autonomy as possible, he had nearly as tricky a relationship with Fritz Henderson. He was never going to second-guess Lutz on a new car. But Wagoner had done most of the jobs Henderson was doing, and he had basically been the company's chief operating officer before the board promoted Henderson to the position.

No matter what Henderson did, he always felt Wagoner hovering over his shoulder. "Rick controlled a lot of things," Henderson said. "He liked to have things come to him. We had lots of meetings about roles and responsibilities, but he just didn't want to ever let go. Normally it would be, 'This is what you work on and this is what I work on.' That wasn't the way it was. It's always, 'Let's talk.' We'd talk about it before I did it."

Wagoner ran the corporate strategy and Lutz lorded over the product. But Henderson had the heavy lifting-the union, the plants, the cost cuts, Delphi, GMAC, and the responsibility to somehow reverse years of losses in North America. With gas prices going up and sales coming down, he would be facing some very tough calls very soon. "The biggest problem," he said, "was we had no idea where the bottom was."

Alan Mulally was so happy he could hug somebody. On March 26, Ford reached an agreement to sell its Land Rover and Jaguar brands for $2.3 billion to Tata Motors, one of India's largest conglomerates and a burgeoning power in the country's emerging auto industry. It marked the first time an established European or American brand had been acquired by an Asian manufacturer. The j.a.panese Three-Toyota, Honda, and Nissan-preferred to grow their own nameplates. But the new breed of automakers, such as Tata, was hungry, well-financed, and in a hurry to make its mark. And it was quite a coup for a company from a former British colony to acquire two of the great names in English automotive history.

Mulally couldn't have been more pleased. Not only was Ford getting a good price for Jaguar and Land Rover, it could stop subsidizing the losses at the two luxury brands. And he didn't care what the sale meant in terms of lost prestige for Dearborn. "It's a killer to keep all these brands and just think you're here to deliver market share," he said. "If it's not part of the core, it's gone."

The deal was a milestone for Mulally. He had done a remarkable job eliminating the sacred cows at Ford. Jaguar and Land Rover had been woven deep into the fabric of the company. And Volvo would be the next to go. He never forgot how many foreign brands he'd seen in the Gla.s.s House parking garage the day he arrived in Dearborn. If that's what the executives wanted to drive, how could he get them to really relate to what the Ford brand was putting on the road?

Now his executives and managers were channeling his point of view and marching to his beat. Unlike GM, the bureaucracy couldn't impede his transformation plan. It was now accepted and owned by the organization at all levels. At a town hall meeting at headquarters, Mulally pulled out his new "One Ford" card and called out, "Who's got theirs?" Right on cue, hundreds of Ford employees reached into their pockets and purses and wallets and held their cards high.

Mulally was surprising himself with how quickly the company was evolving. First and foremost was the progress made in simplifying Ford's hugely complex product portfolio. "Seventy percent of our total volume will be on eight platforms by 2012," he said. "You can only imagine what a tremendous improvement that will be." And he was finally seeing progress financially. While GM was losing billions in the first quarter of 2008, Ford might actually turn a small profit. That would be quite an achievement given the pressure on sales by rising gas prices and the shaky economy.

In early April, Mulally flew to Las Vegas for the end of a four-day summit between Farley and his sales team and fourteen hundred of Ford's top dealers. The meetings went extremely well. It was Farley's idea to bring sixty Ford engineers along to the event. He had them set up exhibits to show dealers all the latest innovations back in Dearborn, such as high-tech airbags, scratchproof paint, and recyclable interior parts. Several dealers crowded around a chemical engineer, Angela Harris, as she showed off soybean-based foam used in seats and other parts. A few dealers from farming communities asked for samples to take back home. Farley just beamed. "Do you know how happy it makes me to see a Ford engineer talking to Ford dealers about soybean foam so they can tell their customers who are farmers?" he said. "I mean, how freaking cool is that?"