Petersen steers Ford along unmapped road
Dearborn, Mich. — THE chief executive at Ford can handle a high-performance car on a test track as well as some of his drivers. As he scans the Detroit landscape and the company's condition from his 12-floor office at Ford's world headquarters here, Donald E. Petersen talks options the way a racer judges cornering and acceleration. One of those options, and one that would affect thousands of American jobs, is building more Ford cars overseas ``where the cost is right.''
Other options have been fraught with risk. The dynamic and personable chairman told his designers to ``forget the past'' and ``do something different.'' The result: the jellybean look of the Ford Motor Company's new cars.
Petersen insists that Ford engineers and executives be put through the paces of high-performance driving because ``the customer, after all, uses our product in motion.''
When he talks about the future of the automobile industry, Petersen, an engineer himself, conveys a combination of zeal and dismay.
``What discourages me most is the inaction'' of the federal government on the issue of foreign trade, he laments, looking the interviewer straight in the eye. President Reagan has held firm against such protective measures as the import quotas sought by many American companies, preferring instead new initiatives aimed at bringing down the value of the dollar and encouraging the opening of foreign markets to US goods.
The Ford chief executive wants to know ``what it is that is causing the whole matter of currency exchange to work to our disadvantage and in favor of the Japanese.'' Expectedly, he is cagey about Ford's strategies to meet the troubling situation. But he insists that ``we want to sustain as much of our manufacturing here in the United States as we possibly can.''
On the one hand, he hints at no immediate decisions on either the production or marketing of Ford cars, saying that Ford will keep its options open ``if we can maintain sufficient flexibility through another election.'' On the other hand, he seems resigned to the apparent status quo, saying, ``The indications are that we are not going to get any specific actions from the federal government such as voluntary-restraint approaches, or perhaps a surcharge, when bilateral trade in any one situation becomes e xcessive.''
The huge trade and budget deficits distress him, as do the tax policies of the federal government. Indeed, he points to the dilemma of the entire domestic automobile industry as it watches the growing tide of Japanese-built cars and the arrival of even more competition from such low-cost producers as the South Koreans and Yugoslavs.
In its hunt for lower labor costs, Ford will import small cars from Korea and Taiwan in the late 1980s and will get cars from the assembly plant it is now building in Hermosillo, Mexico, as well as 40 to 60 percent of the total output when its Japanese affiliate, Mazda, begins to produce cars in Michigan in 1987. Ford is also discussing deals with Italy's Fiat as well as officials in Peking.
Will Ford have to import its large cars as well, in addition to components, to cut costs? The answer may depend on what the federal government does to balance the scales and make the American automobile industry more price-competitive with the imports.
``Never have we faced such a challenge to successful continued production in the United States, our home base and traditionally the source of our strength,'' he told a congressional subcommittee of the Joint Economic Committee in Washington last week.
Ford already has slashed tens of thousands of jobs from its worldwide work force and plans a further white-collar reduction of 25 percent over the next few years. ``The Japanese have found ways to achieve results with fewer people,'' Mr. Petersen comments.
Ford grossed more than $52 billion worldwide in 1984, up 18 percent over '83, and had a net of $2.9 billion, compared with $1.9 billion the preceding year. Worldwide, the company produced 5,584,651 cars and trucks in '84, including 2,047,671 cars and 1,238,928 trucks in the United States. At the end of 1984, Ford had a global work force of 383,696, down from a peak of 506,531 in 1978. Of these, there were 68,800 salaried employees in the US and 118,600 hourly workers at the end of 1984.
Directing the far-flung activities of the world's second-largest vehiclemaker, Petersen is a both-hands-on-the-wheel executive, yet one who prefers a low profile. Perhaps no other chief executive of a major American corporation has his name misspelled more often. The name is P-e-t-e-r-s-E-n, he insists, not P-e-t-e-r-s-O-n. Yet the precise spelling of his name is the least of his concerns these days.
Tough decisions are the order of the day, given the sales fight now raging in both the United States and overcapacitized Western Europe. Petersen has proved repeatedly that he can make those hard choices.
For example, what if the public had said ``No sale'' to the jellybean look of Ford's new cars? He sees the aerodynamic 1986 Taurus and Sable as ``our finest expression yet of the modern approach to designing an automobile.''
As an individual, the Ford chairman is a far cry from such effective, albeit show-biz-type, executives as Chrysler chairman Lee A. Iacocca, himself a one-time president of Ford. Nor is he getting the same amount of publicity as General Motors chairman Roger Smith, with his long-ballyhooed Saturn program and such giant acquisitions as Texas billionaire H. Ross Perot's computer software company and Hughes Aircraft.
Does it bother Petersen that he isn't an industrial star? ``Not at all,'' he insists. ``One individual cannot conceivably do the master strokes or the leaps over tall buildings that are attributed to some people. What I can accomplish at Ford, I'm going to accomplish through people.''
Petersen himself comes across as ``a person who cares'' whether or not the individual motorist agrees with any specific action, or nonaction, by the company itself. When he talks about the highly publicized litigation against Ford, which charges that some earlier-model, automatic-transmission cars may slip from park into into reverse if the engine is left running, he shows obvious distress. Insisting there is no defect, he says ``this has been proved over and over again and has been confirmed by the fe deral government. It troubles me very much, and I don't know where it's all going.''
Also, neither Ford nor GM has been able to meet the federal government's corporate average fuel economy (CAFE) standard of 271/2 m.p.g. for 1985-model cars, let alone '86. To help the two automakers, the figure has been reset for 1986 at 26 m.p.g., and the government says it will consider an extension through 1989. The problem is that Ford, as a full-line manufacturer, is unable to sell enough higher-mileage small cars to offset its sharp gain in big-car sales.
At the same time, Petersen praises the federal government for ``slowing down dramatically the flood of regulation and ever-increasing issuance of additional surprise regulations that were draining us so badly.''
The founder's grandson, Henry Ford II, was a master at ``making the front page,'' with such moves as his unexpected firings of two company presidents, Semon E. Knudson in the late 1960s, whom he had hired away from GM only 18 months before, and Iacocca, now chairman and acclaimed savior of the Chrysler Corporation, in 1978.
Petersen came off a small farm in Pipestone, Minn., by way of California and Oregon, to the Ford chairmanship. A tall, believable man and engineering graduate of the University of Washington, with an MBA from Stanford, he went to work for Ford in 1949 and succeeded Philip Caldwell in the ``hot seat'' Feb. 1. Petersen and his wife collect unusual mineral specimens and gemstones as well as art and sculpture. He enjoys jazz, plays tennis, and ``enjoys recreational reading.''