The People's Tycoon: Henry Ford and the American Century (Vintage) (73 page)

Having paid homage to his liege, Kanzler plunged ahead. The problem that could no longer be avoided, he bravely told Henry Ford, was the primary product of the company. “I do not think the Model T will continue to be a satisfactory product to maintain our position in the automobile field,” he wrote. A growing body of evidence, Kanzler argued, showed the old automotive warhorse to be outdated. In the last few years, the company had barely held its own in sales, while its competitors had “gained tremendously.” Ford customers were migrating toward other models, and “our best
dealers are low in morale and not making the money they used to.” Kanzler assembled an array of facts and figures to demonstrate that Ford's share of the market was steadily shrinking. He then offered a brief solution to the problem: “new product necessary.” Kanzler offered one final argument to clinch the case: “Practically every man in your organization to whom you have entrusted the greatest responsibility holds this same opinion.”
²⁹

In the political atmosphere of the company, where Ford's devotion to the Model T was legendary, Kanzler's memo was courageous to the point of recklessness. But the situation was even more emotionally treacherous. Kanzler was Edsel Ford's brother-in-law (he had married one of Eleanor Clay's sisters, Josephine) and his staunch ally. Educated at the University of Michigan and Harvard, this young lawyer had launched a distinguished legal career with a Detroit firm in the 1910s. He made the acquaintance of Henry Ford through his friendship with Edsel and his legal work on the opposing side in both the Dodge brothers and Chicago
Tribune
suits. Impressed by his performance, and with Edsel's endorsement, Henry convinced Kanzler to abandon his law practice and come to work for him, as Charles Sorensen's assistant at the Rouge, in 1919. Kanzler performed brilliantly and became an expert in production and shipment. The situation started to sour rather quickly, however. According to Sorensen, Kanzler openly criticized Henry Ford's habit of undermining Edsel. “One Sunday afternoon in 1920, Mr. and Mrs. Kanzler called on my wife and me at our home,” Sorensen recalled. “To this day my wife remembers how shocked we were at their unrestrained tirade against Mr. Ford and the way he held Edsel down.” A few days later, Sorensen, ever protective of his patron, dismissed Kanzler, who immediately went to Highland Park, where Edsel hired him. He served as Edsel's right-hand man from 1921 to 1926, supervising production, overseeing the branch assembly plants, and helping develop sales strategy. In 1924, Edsel arranged for his lieutenant to be elected a vice president and director of the company.
³⁰

Though Henry Ford did develop professional suspicions about Kanzler, personal animosity carried even more weight. This sophisticated, well-educated young attorney was part of the Grosse Pointe establishment toward which Edsel had gravitated in early adulthood. For Henry and Clara, Kanzler came to symbolize the social elitism that had contaminated their son. When they examined the generational breach that had opened in their family, “their deepest suspicion and animosity was directed at Ernest Kanzler,” Sorensen explained. “At the Ford mansion one day, Mrs. Ford opened up on Kanzler to me. Too many people, she said, were taking advantage of Edsel, and of these Kanzler had the most influence over him.” Henry
Ford came to despise Kanzler and denounced his drinking, partying, and golfing as symptomatic of the evil influence playing upon his son.
³¹

Given this background of tension and resentment, it was no surprise that Kanzler's memo infuriated Henry Ford. He took such umbrage at its contents that he immediately moved to freeze Kanzler out of his company. Ford made his displeasure evident to everyone by giving Kanzler the silent treatment, interrupting him and ridiculing his comments in the executive dining room, commenting loudly, “That young fellow is getting too big for his britches.” Ray Dahlinger, widely seen as Ford's mouthpiece, began making the rounds with stories of how Kanzler was taking advantage of Edsel to gain power in the company. Sorensen also maneuvered against Kanzler and forced lower-level managers to take sides in a power struggle. The outcome was never really in doubt. On July 26,1926, six months after submitting his assertive memorandum, Kanzler resigned from the company.
³²

The Kanzler imbroglio not only heightened the tension between Henry and Edsel, but added fire to the major crisis facing the company by the mid-1920s—what to do with the obsolete automobile that had made Ford but now threatened to take him under. This problem was no secret to the outside world. Kanzler's memorandum, for all of Henry Ford's enraged reaction, contained little that was not already being discussed outside the gates of Highland Park and the River Rouge.

James Dalton analyzed the situation for
Motor
magazine and made a gloomy prognostication. He argued that the rising standard of living in the 1920s, coupled with the falling prices of other cars such as the Chevrolet, spelled dark times for Ford. After analyzing the numbers, Dalton demonstrated that the pool of first-time car buyers (Ford's most dependable constituency) was shrinking steadily, while repeat buyers were willing to spend more money to purchase an up-to-date automobile with attractive options. To maintain his customer base, Dalton concluded, Ford would have to “produce something different, distinctive, and attractive, as well as to offer superior values.”
³³

James C. Young, in the New York
Times,
corroborated. Henry Ford had been the giant of the early automobile industry, Young wrote, but now, because of growing problems, “rivals say that Ford is about to lose his grip.” Declining sales and profits had forced cutbacks, and as Ford walked through his plant, many departments “are deserted now, and his footfall sounds loudly in the unaccustomed stillness.” For the first time in the industry, Young reported, “Ford domination has been seriously challenged.” Carmakers believed that failure to develop a new model would send sales plunging further. Noting the split between Henry and Edsel and the Ernest Kanzler controversy, Young concluded that internal divisions were exacer
bating external problems. If changes were not forthcoming, an uncertain future faced the company.
³⁴

Other influential voices joined the chorus.
Liberty
magazine asked the question on the minds of many American consumers: “What will Henry Ford do?” It cited statistics of declining sales, dug into the rumored rift between Henry and Edsel, and added a new item to the litany of bad news. For the first time in some fifteen years, the magazine pointed out, Ford Motor Company “failed to show the largest estimated earnings of any organization in the automobile industry.” General Motors had surpassed it in the profit margin column. In
Forbes,
B. C. Forbes declared that the Ford company had lost its position of leadership in the industry. Its production and sales were falling, its “dealer organization is rapidly being shot to pieces,” and its “management is a hot-bed of jealousy and intrigue.” And all because Ford refused to abandon the automobile he had been making for seventeen years.
³⁵

Despite this barrage of doomsday predictions, Henry Ford refused to be budged from his stubborn defense of the Model T. About 1923, he had authorized preliminary work on an experimental “X Car” that might someday replace the flivver, but he had urged so many outlandish ideas—eight-cylinder engines, four-wheel drive, four-wheel steering—that practical development of this model was impossible. Meanwhile, reporters who interviewed him returned with headlines declaring “Ford to Fight It Out With His Old Car.” Radiating an attitude of calm confidence, he told associates, “The only trouble with the Ford car is that we can't make it fast enough.” He reassured the public that his company would ride out the storm with a product that had been proved dependable over many years. “The Ford car is a tried and proved product that requires no tinkering…. It is not our intention to change our cars except as we always have done by constant improvement,” he told the New York
Times.
During this period, Ford visited a gathering of his salesmen in Detroit, all of whom were complaining about various defects in the Model T and demanding a new model. When they asked his opinion, he replied, “I think that the only thing we need worry about is the best way to make more cars,” and strode out of the room.
³⁶

Ford's reasons for this stance were personal, and obvious. Even Charles Sorensen, not noted for his sensitivity to human needs, understood that his boss “could not abandon the biggest single purpose of his life.” “That achievement had brought him world-wide renown…. Henry Ford was in no mood to abandon it. None of us was sure that he would ever do so,” Sorensen said. This deep emotional commitment to the product that had made him famous may have been accompanied by a damping of his competitive
fires. After hearing another appeal to develop a new car to recapture the market, he confessed to Sorensen, “Charlie, I don't want all the business. Twenty-five per cent will satisfy me.”
³⁷

As Henry dug in his heels, however, he came face to face with an unprecedented situation. Proponents of a new model, led by Edsel, refused to retreat. Instead of bowing to his father, even after the Kanzler fiasco, Edsel, with the implicit support of many other top-level managers, kept up a campaign of persistent pressure to convince him to change his mind. During “the years of the great debate,” as one observer described this period, “everyone but Mr. Ford wanted to change the Model T…. Openly, Kanzler and Edsel were against [continuing] it. Rockelman was against it, not openly but quite frankly. Sorensen and Martin were against it in a very veiled way.” The fight was long and bloody, and Edsel carried the flag. Week after week, he offered suggestions for a new car, and, just as dependably, his father ignored the ideas or dismissed them outright. One day, after another such exchange, a tight-lipped Henry walked away and left his son and other advisers standing at a drafting table. Sorensen was summoned to Henry's office. “The elder Ford told me to tell Edsel to take a trip to California. ‘Make it a long stay,’ he said, ‘and tell him I will send him his paycheck out there. I'll send for him when I want to see him again,' ” Sorensen reported. Wisely, Sorensen delayed in following these instructions, and the storm blew over in a few days. But the struggle soon resumed, as did the tension between the two Fords.
³⁸

Finally, late in the summer of 1926—it is difficult to pinpoint a precise date—Henry Ford succumbed. Though he never explained his rationale, it seems that the combination of pressure from associates and falling sales finally got to him. Ford approved the design of a new four-cylinder automobile to replace the Model T and appointed an engineering team to begin development: Lawrence Sheldrick served as project director, Joseph Galamb worked on the body and frame, Eugene Farkas on various mechanical systems, Frank Johnson on clutch and transmission, and Harold Hicks on engine and exhaust system. The old production bosses, Charles Sorensen and P. E. Martin, advised on the project, and Edsel took the lead in styling the model. Henry Ford was also deeply involved, often spending half of every day in Sheldrick's office, where he would monitor each detail of the new car as it emerged.
³⁹

Almost immediately, fresh debates erupted over the nature of the new car, and once again Henry and Edsel were at loggerheads. Predictably, Henry fought for the traditional features of the Model T; Edsel insisted on more modern innovations. Henry wanted to keep the planetary transmission and traditional brakes; Edsel successfully urged adoption of a sliding
gear transmission and brakes with balanced pressure on all four wheels. The Fords also clashed over the new car's suspension system, the son promoting the new coil-spring system against his father's opposition. But Edsel clearly carried the day on a number of stylistic issues, such as inclusion of a grille to cover the radiator at the front of the car, a larger frame with a lower ground clearance, a sharply designed instrument panel, a comfortable interior with cushions and trimmings, and a series of attractive color schemes.
⁴⁰

Henry accepted some of Edsel's judgment as the new Ford model took shape, even going so far as to comment, “We've got a pretty good man in my son. He knows style—how a car ought to look.” But on many other matters, Henry stubbornly insisted on old-fashioned features, in defiance of Edsel's advice. Tensions waxed and waned as father and son argued over the central issue of meeting the public's taste. “It was the old man's belief that he knew best what was good for them [the public] and he was going to give them what was best,” explained Lawrence Sheldrick, who witnessed these disputes. “Edsel, on the other hand, would try to give the public what they wanted.” Eugene Farkas saw Edsel's frustration. “I know that he would have liked to make the Model A even more modern than we started out to do,” he claimed.
⁴¹

Despite fits of obstructionism, Henry threw himself into development of the new Ford car with his usual energy. Since he liked to see things full-sized, Sheldrick and Farkas set up a large drawing board covered with blackboard cloth on which they drew true-to-scale sketches of the car and its components. They even used crayons to depict various mechanical parts in different colors, so they could refer to the blue piston or the red cylinder block. Ford would examine the drawings, stand back to get an overall picture, discuss matters with the engineers, and issue directives. According to Sheldrick, “He was continually making comments and suggestions with reference to any element of design whether it was weight, or size, or strength.” Ford observed tests run on the new prototype. After seeing the new car—it could reach speeds of sixty to sixty-five miles per hour, in contrast to the Model T's limit of forty-five—go careening into a ditch as the test driver banged his head and bruised his limbs, an agitated Ford burst out, “We can't put that car out on the public! We'll kill them all!” Once, Henry even conducted his own seat-of-the-pants test, commandeering the prototype from his startled engineers and driving off to traverse a field full of ruts, stones, and branches. Upon returning, he issued an order: “Rides too hard. Put on hydraulic shock absorbers.” Thus was born one of the best features of the new car.
⁴²