Philip Caldwell Gave Ford Motor The Green Light

• Curt Schleier
• On 5:38 pm EST, Thursday November 5, 2009

Philip Caldwell had his work cut out for him.

In 1979, he became chief executive of Ford Motor (NYSE:F - News)-- the first nonfamily member appointed to the post. What he walked into wasn't pretty.

The entire U.S. car industry was hurting, none more so than Ford. As Fortune magazine noted: "Its cars were boxy looking and out of date, and quality was poor. Federal requirements for better fuel economy and safety standards were soaking up capital and management time."

Caldwell plunged in. He examined the firm's situation in detail -- and found so much wrong. "The company could have pulled in its horns, hunkered down and waited for a miracle," he said. "But that would have given away Ford's future."

In addition to facing an influx of cars from Japan, Ford had design fumbles. Pinto models had exploding fuel tanks. And defective transmissions on millions of other vehicles drew investigations. "If you get the quality right," Caldwell said, "the volume will take care of itself."

He had enough confidence in his conviction to back it up with action. He ordered a top-to-bottom redesign of Ford cars and trucks, addressing quality issues as well as fuel efficiency and aerodynamics.

"We redesigned everything but the air in the tires," he said.

New Look

Caldwell's self-assurance paid off. One of the cars that emerged from his restructuring of Ford was the Taurus, which became the best-selling car in America. As Fortune noted, by the time Caldwell retired in 1985 "he had executed one of the biggest corporate turnarounds in history."

Caldwell, 89, was born in South Charleston, Ohio. Shown the value of hard work by his parents, he immersed himself in study and graduated from Muskingum College at age 20 with a degree in economics.

Looking to learn more, he earned his MBA from Harvard in 1942 and promptly joined the wartime Navy. After a brief indoctrination, he served on Adm. Chester Nimitz's staff. It was there he learned the importance of planning, as he played a critical role in procuring ordnance and materiel as the Navy leapfrogged across the Pacific. "Failure could have resulted in thousands of Allied casualties," Fortune wrote. "Unstinting attention to detail enabled Caldwell's team to succeed."

This experience stood him in good stead at Ford, where he began his career in 1953 in procurement and purchasing. He held 18 positions with the company, each a promotion from his previous job. Caldwell advanced in part because of his refusal to take no for an answer.

He demonstrated that trait early on. During his senior year in college, he interviewed for a position with Procter & Gamble (NYSE:PG - News) but was told that at 19 he was too young for the job. So that night he did some research and discovered an old magazine article that revealed that P&G's president, Richard Deupree, had joined the company at about the same age. Magazine in hand, Caldwell revisited the recruiter -- and got the job.

After six months, he quit and enrolled at Harvard. P&G was not for him. "If you wish to succeed in business, you must love your product," he said. Caldwell's love was cars.

All For One

As CEO, he made sure his team had more than impressive resumes. "You have to make sure the chemistry is right about people," he told the Ann Arbor (Mich.) News. "Sometimes you can have all the skills on paper, but (people) just don't work well together very well."

To survive in those perilous years, Ford needed to cut operating expenses. From 1979 to 1983, Ford cut $3 billion out of its annual operating costs. Employees felt the pain across the board. Thousands of production jobs were eliminated. But in a sign of Caldwell-inspired teamwork, not a single unit of production in the U.S. was lost due to a strike.

While he reduced costs everywhere, capital investment was one area that was sacrosanct. He told Automotive News, "In 1980, when the industry's combined losses totaled $2 billion, its combined investments totaled $11.4 billion."

This story originally ran Sept. 27, 2002, on Leaders & Success.

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