Is He Built Ford Tough?

By FRANK GIBNEY JR.

William Clay (Bill) Ford Jr. agonized over whether to fire Jacques Nasser. But when he decided two weeks ago that the CEO of the family-controlled Ford Motor Co. had to go, he moved fast. Ford called Carl Reichardt, a longtime director and former head of Wells Fargo Bank, and asked him if he would be vice chairman. To his surprise, the 70-year-old Reichardt, whose financial acumen Ford sorely needs, called back two days later and agreed. So last Monday, Ford ushered Nasser into his wood-paneled corner office and took away the keys. "We were just getting pounded," Ford told TIME last week. "The speculation over what was going to happen next was pushing the company into paralysis."

Thus Bill Ford becomes the first family member to be CEO since his uncle Henry Ford II relinquished the post in 1979. Although not paralyzed, Ford Motor is in great need of an overhaul, and the question reverberating from Dearborn to Wall Street is whether that can be accomplished by the man whose family owns 40% of the voting shares. The knock is that Bill Ford has neither the experience nor the mettle to make the tough decisions--on everything from plant closings to new-car programs--required to pull Ford Motor out of the ditch. Ford's much broader legion of admirers, who range from union bosses to the president of the Sierra Club, say his savvy and his rare blend of guts and grace point to success.

Whichever the case, this Ford faces a real challenge at the wheel. "Our problems didn't just sneak up on us," he admitted last week. "We've been in trouble since last year when the Firestone crisis broke." All of which means that although Ford has been exonerated by federal regulators in the death of 271 people in Explorers whose Firestone tires failed, the company is beset by a garageful of problems. Its dividend has been halved. Its vehicles have been dogged by quality issues, such as the cooling-fan glitch that has once again postponed delivery of the long-awaited Thunderbird. The company's relations with its unions, dealers and suppliers turned poisonous during Nasser's tenure. And many white-collar managers were angered by the Australian-born CEO's crusade for diversity among their ranks. Ford has also blown through an estimated $15 billion in cash since 1999.

It is remarkable that a company that just two years ago was being celebrated as a symbol of American competitiveness has sunk so low, so fast. Part of the blame lies with Ford's board of directors. It began to question Nasser's management style only in March. The following month, projected results for the year fell so sharply that Nasser was told privately to get his management house in order and reduce the number of top executives (21) who reported directly to him. By July, when he still had not made any substantial changes, some of the 14 directors wanted him fired, but he hung on. "Nasser is an excellent chief executive," says an insider. "He deserved another chance."

Then last month, during one of the Ford family's biannual meetings, Bill still found Nasser unwilling to acknowledge the depth of the company's problems. That's when he called Reichardt, who has an impeccable management record. Nasser was finished. (He has declined to comment to TIME.)

Bill Ford knows he has to move quickly on many fronts. Ford and GM racked up impressive 34% and 30% sales gains in October, attributable to a desperate, costly 0%-financing program. Ford, like GM and Chrysler, has steadily lost ground to imports this year. "We don't have the luxury to do things sequentially," says Bill.

The company's problems are so complex that Ford, Reichardt and Nick Scheele, the former head of Ford Europe who was named president last week, are not expected to come up with a rescue plan much before January. Until then, Ford's first priority is to get his team back to work. "I see myself as a coach, and my job is to set the direction of the company, to make sure we have the right players and eliminate the politicking," he says. "One of the great things about having me as a CEO is that it eliminates all speculation about who else might take the job."

--With reporting by Joseph R. Szczesny/Dearborn

With reporting by Joseph R. Szczesny/Dearborn