Once Upon a Car Part 14

Wagoner looked grim. He wore a gray suit, a yellow striped tie, and a long face, the corners of his mouth frozen in a frown. As he sat with his hands folded in front of the bright blue GM logo, he appeared to be trying to convince reporters of something he had a hard time accepting himself. "Our plan is not a plan to survive," he said flatly. "It is a plan to win." The executives took questions but didn't really answer them. Henderson dodged every attempt to get clarity on this mysterious borrowing power GM claimed it had. Before the press conference even ended, the influential Moody's credit rating service downgraded GM's existing debt deeper into junk status.

And when Henderson made the first calls to the major banks in New York, it was like no one even wanted to answer the phone. Wall Street had shut down the debt market-period. The dominos were falling in an epic financial crisis. Bear Stearns had crashed a few months earlier and had been sold to JPMorgan Chase. Lehman Brothers was on life support. Merrill Lynch was up for sale.

Henderson found out quickly that going to the investment banks to raise a few billion dollars was a joke. "It was bad," he said. "The market was pretty much closed. . . . To raise any equity from your balance sheet, you needed an event. You needed something as a catalyst. And the only catalyst big enough would be a combination."

And it was with that realization that Henderson suggested to Wagoner that they approach Ford about a merger. To his surprise, Wagoner thought it was a great idea.

Bill Ford was told by his secretary that Rick Wagoner from GM was calling. He picked up in his office and heard Wagoner's familiar voice on the line.

"Hi, Bill, its Rick Wagoner. . . . I'd like to get together. You know, I think it's really time we put our companies together. We should talk."

What?

"We could come over there and talk," Wagoner said.

Bill wasn't sure he'd heard him right. Wagoner wanted to come to the Gla.s.s House to talk about a merger between Ford and General Motors?

Yes, said Wagoner. He'd bring Fritz Henderson, and Bill could get Mulally and Leclair to come. And then, he said, they could talk.

Bill was caught completely off guard. He'd had no clue this was coming. First Kerkorian, now GM? But he couldn't just turn Wagoner down. He had known him a long time, and they had worked together closely on the UAW, fuel economy regulations, the environment, and trade issues. They were as collegial as compet.i.tors could be.

So Bill said sure. Why don't you come on over, and bring Fritz.

The idea had been a subject of debate in Detroit for years. What if GM and Ford merged? What if the two biggest car companies in American history joined forces? Even in their shrunken state, they would have a combined 38 percent U.S. market share and an enormous international presence. All that purchasing power, manufacturing capacity, and technical skill would be under one roof. There would be thousands of overlapping jobs that could be eliminated to save money. A combination of Ford and GM would theoretically be a frightening prospect for compet.i.tors. Chrysler wouldn't even be included anymore in the discussion. Instead of the Big Three, there would just be a Big One.

But could it even be done? Could the Yankees merge with the Red Sox, or the Celtics with the Lakers? GM and Ford had competed head-on in every vehicle segment for the last fifty years. This was not just a rivalry; this was opposite sides of town, you-stay-on-yours-and-I'll-stay-on-mine. It had never seriously been considered by any senior executive at either company-until now.

Bill Ford didn't like the sound of this at all. GM must be in serious trouble if its execs were coming to Ford for help or answers. The whole concept of a merger made him nauseated, not to mention that this would be the ultimate hot b.u.t.ton with the union. Gettelfinger would go nuts at the job cuts. It would make the health care talks look easy by comparison.

Bill met with Mulally, and they agreed they had to talk to GM, if for no other reason than to find out what was going on with Wagoner. This approach was very out of character. But maybe GM was in even worse shape than it was letting on.

It was a meeting that would profoundly affect the course of both automakers. Wagoner and Henderson arrived at the meeting with Ray Young, and they sat down with Bill Ford, Alan Mulally, and Don Leclair.

Wagoner led off the discussion. GM and Ford should merge, he said. The synergies would be phenomenal. There would be savings on administrative costs, R&D, and s.h.i.+pping and purchasing. The possibilities, he said, were endless.

Bill was shocked. GM seriously wanted to merge with Ford. Who, he asked, would be majority owner? As bad as Ford's stock price was, the company still had a higher market value than GM. And who would run the new company?

Wagoner pointed out that General Motors was a much larger company in terms of revenue than Ford. By all rights, GM probably should be in charge. But maybe they could share management, or talk about that later, he suggested.

Mulally mostly listened. He was dying to know more about the true state of GM. He sure didn't want any part of any merger. As far as he was concerned, General Motors was a roaring five-alarm fire that he didn't even want to get close to. But why, he asked, were they coming to Ford now?

Wagoner and Henderson took turns describing the liquidity crisis at GM and how they were running low on cash. By merging with Ford, they could go back to Wall Street and borrow more money.

So that's what this is about. GM is going broke, Bill realized. All he could think about was Ford's $30 billion in the bank. That's what they really want. This wasn't about Ford at all. It was about saving GM.

Bill didn't need to hear any more. "No thanks," he said. "This would never work out. You know what? We're too much alike. We're right on top of each other in every segment."

Now Henderson jumped in, trying to get this meeting focused on how good it could be. "Don and I did a lot of work on this earlier," he said. "I know GM inside and out, and Don knows Ford inside and out. Between the two of us we could figure it out pretty quickly."

But Leclair kept his mouth shut. Bill was doing the talking.

"No," Bill said. "No thanks."

Wagoner understood now. This wasn't happening. "Well, if you don't do it with us," he said, "we're going to look elsewhere." And then they left.

At first Bill was angry. "GM can be so arrogant," he said. "We were known as a culture of infighting. And they are a culture of arrogance."

But this whole approach was disturbing. If General Motors went bankrupt, a big part of the automotive supply chain in the United States could collapse within days. That would impact the entire industry, including Ford. Bill quickly became more worried than irritated. He respected GM's immense power and ma.s.s like no one else at Ford ever could. "I grew up in this town, and GM was the giant," he said. "We were a very tough compet.i.tor, but they were the giant. They set the tone in many ways for the whole industry. That was just the reality of life for me from childhood." And now GM was reeling. It just drove home to him how vulnerable Ford was too.

Mulally was slightly amazed at how desperate GM had become. He may have been an outsider, but he was as compet.i.tive an executive as had ever set foot in Detroit. From the day he came to Ford, he wanted to beat GM and beat them bad. If they were going belly-up or merging with someone, he wanted to know about it for sure. But Ford was on its own road. And he wasn't turning the wheel over to Rick Wagoner or anyone else.

Henderson felt like someone had popped his balloon. So much for the event that would convince Wall Street to lend money to GM. "That would have been the catalyst," he groaned. "You could actually use it to raise capital because the amount of synergies would be ma.s.sive. Ma.s.sive!"

He felt a growing sense of dread. He had been counting on Ford to be a lifeline. At this point he knew GM's financial status better than anyone, even Wagoner. And as disappointed as he was, he couldn't blame Ford for slamming the door on his idea. "I thought we would find a way to make it work," he said glumly. "But sitting in their shoes, I could understand why they didn't want to do it. It wasn't a simple call for them."

Lutz was disappointed too when he heard how the meeting had gone. To him, a GM-Ford merger would prove once and for all that an American auto company could whip Toyota and anyone else in the world. "It could be one large, enormously powerful global automobile company," Lutz said. "You could shut one proving ground, one finance department, one tax department, a bunch of plants, get rid of a lot of engineering. We could get rid of the fixed costs even before the acquisition."

But Wagoner didn't even want to talk about it. They tried. It didn't work. Let's move on. It was another example of GM's dysfunction at the top. There was something missing between Wagoner, Lutz, and Henderson-chemistry or a cover-my-back mentality. They worked together, but not together like the Ford guys.

n.o.body outside the two tight inner circles knew about the secret meeting between GM and Ford. To most of the outside world, the two companies were already joined at the hip as Detroit's version of Dumb and Dumber. The public, the media, and the talking heads on cable TV weren't distinguis.h.i.+ng between any of the Big Three now; it was everybody's turn in the barrel.

That was driven home when the financial wreckage was released for the spring quarter: an $8.7 billion loss at Ford, the worst quarter in its 105-year history, and a $15.5 billion loss at GM, its third worst in a hundred years. The numbers were staggering. GM's revenue in North America fell $10 billion-a breathtaking 33 percent decline-from the second quarter a year earlier. Ford took an $8 billion charge just to write down a.s.sets and offset the shrinking value of pickups and SUVs in its lease portfolios. The U.S. car market had imploded. GMAC and Ford Credit could barely loan money to consumers to buy cars anymore because no financial inst.i.tution in America would securitize the loans. Auto leasing-for years a spectacularly effective way to move new models-was basically gone, over, nonexistent.

But the GM board was still in denial. In what had become a ritual every time the company took a big pratfall, lead director George Fisher couldn't wait to stand up and defend it. "I'm reading too much stuff in the papers these days that is wrong," he grumbled in an interview. "It's a distraction to the board and a distraction to management." Was GM in any danger of filing for bankruptcy? "The answer is no, absolutely not," he said. "It's our job to make sure that doesn't happen." How could it be avoided? "Rick and his team are taking some really significant actions," he said. "We've got some pretty astute people around here."

It was hard to understand Fisher's optimism. Wagoner and Henderson had just tried a Hail Mary pa.s.s to merge with Ford and it flopped. Sales were atrocious and getting worse. The cash reserves were dwindling by the day, and more expenses were coming in. Delphi was trying to find a private equity buyer to emerge from bankruptcy after three years, and it looked like GM would be on the hook for another $3 billion to $4 billion to cover its pension obligations.

There was no happy talk coming from Ford. In Mulally's daily sessions with his senior execs, the intensity level just kept rising. "What does a sustainable Ford look like, gentlemen?" Mulally asked them. "Why are we in business? We are in business to create value. And we can't create value if we go out of business." Excuses were unacceptable. Ford's survival was a matter of pride, determination, and conviction. "Why can't we make money on small cars?" he said. "Do you think Toyota can't make money on small cars?"

On the day Ford reported its huge loss, it rolled out the next phase of its transformation plan-converting three truck plants in Michigan, Kentucky, and Mexico to small-car production, ramping up the output of four-cylinder engines, and introducing Derrick Kuzak's new wrinkle in engine technology branded "Ecoboost" that simultaneously increased power and fuel economy.

Industry a.n.a.lysts were floored that Dearborn was pouring so much money into capital improvements under such dire circ.u.mstances. But Mulally was so composed and seemingly impervious to the state of panic building in Detroit. "It's just so volatile now that we thought the best thing that we can do is really focus on what we're doing on the product side," he said.

Jerry York was ecstatic about Ford's determination to charge forward with its small-car plans despite its terrible financial results. "This is beautiful stuff, my friend," he told Leclair on the phone. "Pa.s.s our best regards on to Alan."

As long as Ford kept chugging, Kirk Kerkorian would keep buying. He owned 141 million shares now, almost 6.5 percent of its common stock. And he was convinced he had finally bet on a winner in Detroit.

In early August, Kerkorian walked into the Beverly Wils.h.i.+re Hotel for lunch, his impressive-sized bodyguard at his side. Ninety-one years old, but as fit and trim as a man decades younger, he wore a white s.h.i.+rt, dark slacks, and a b.u.t.tery soft white leather jacket. The maitre d' at the hotel's posh restaurant, The Blvd, escorted him to his usual corner table, in the back near the kitchen. He ordered Evian water, a special vegetable soup the chef made just for him, a "small portion" of broiled chicken, and a little bowl of blueberries and strawberries for dessert. It was the daily repast of a billionaire who still drove himself around L.A. in an old-model Jeep and waited on line at the movie theater for tickets. Kerkorian wasn't at all like the caricature of the big-money mogul or tough takeover artist. He never felt comfortable talking a lot, never felt educated enough. "If I could talk like Trump, I would," he joked. "But I can't."

He was old-school. And that's what he liked about Ford. They talked the talk and walked the walk. "I really like them," he said over lunch. "Bill Ford is a really nice guy. Alan Mulally has been a success before. And we want success." The mention of Rick Wagoner's name caused Kerkorian to show a rare flash of anger. "He said he'd look at the Nissan deal honestly, and they never did," he said. "Now why would he say that when he didn't mean it?"

Kerkorian didn't want to meddle at Ford. If they needed money, he was there to help. He was already talking with his partners in Las Vegas-a group of oil-rich Saudi investors-about partic.i.p.ating in a financial aid package for Ford Credit. And he saw no rush to do anything about the Ford family. "Why?" he asked innocently. "I prefer just buying the common shares." And how high was he willing to go? "I'd say that 9.9 percent sounds about right," he said. "Then we'll see."

One thing about Detroit always bugged him, and that was the notion that the Big Three's fates were intertwined, that failure was contagious in the American auto industry. Kerkorian didn't believe that for a second. "They say if one goes down, they'll all go down together," he said. "Now who would say that? Why?" If Ford had a better plan and better people, it could win. That, he said, was the way the game was played.

What about GM? Did he see a possibility that an investor might ride in and save General Motors? "Buy GM?" he said over a last bite of berries. "Well, now's the time for somebody to do it . . . before it really gets bad."

On August 4, 2008, while Mulally was strategizing with the Ford team in Dearborn, Bill Ford was on his way to the Michigan state capital, Lansing, to meet Senator Barack Obama.

The one-on-one with the frontrunner for the Democratic presidential nomination had been arranged by Governor Jennifer Granholm, who was a close personal friend and ally of Bill's. It was critical for him to get to know this young, environmentally minded candidate for president. The election was just three months away, and the Illinois senator was starting to look like a winner.

So much of what was happening to the domestic auto industry had political overtones. Ford was now aware that GM was planning to go to Was.h.i.+ngton soon to lobby for aid money. Specifically, Wagoner wanted to get his hands on some of the $25 billion in Department of Energy loans that had been authorized by Congress when it pa.s.sed new fuel economy standards for cars and trucks. The loans were designed to be seed money for technology to meet the tougher standards.

But the $25 billion wasn't in the budget yet, and GM was taking no chances. It needed that money, and not just for greener cars. Bill had a growing sense that the federal government would be intimately involved with whatever went down in Detroit in the coming months. And he wanted to make a personal connection with Obama now and gain insight into how the industry would fit into his presidential agenda.

Obama had gotten a huge, enthusiastic crowd for his speech on energy at Michigan State University. And he had received a powerful introduction from Granholm, the second-term Democratic governor who was determined to deliver the state's electoral votes for Obama in the November election. The cheers came in waves when Obama promised to help Michigan out of its economic woes. "I know how much the auto industry and the autoworkers of this state have struggled over the last decade or so," Obama said. "But I also know where I want the fuel-efficient cars of tomorrow to be built-not in j.a.pan, not in China, but right here in the United States of America. Right here in the state of Michigan!"

Afterward, the senator and Bill Ford met alone. Obama had been very forthright on the campaign trail about Detroit's past sins, such as its opposition to higher fuel economy rules, its dependence on gas-guzzling trucks, and its inability to change. He had echoed those points in his speech, which centered on his plans to end America's addiction to foreign oil.

"We desperately need a new energy policy in this country," Obama told Bill. "And I would like the domestic auto industry to be part of the solution, not part of the problem."

"I for one am really excited about that," Bill said. "We'd love to work with your administration. I pa.s.sionately believe that Ford can and should be part of the solution. That's why I'm here. Frankly, we've been on this path now for some time, and I don't think we've told our story terribly well."

Then he went through Ford's transformation-smaller cars, cleaner engines, electric vehicles in development. "The vision I have is for us to be a global, green, high-tech company," Bill said. "And that's not just a vision. We have lots of concrete examples of what's here and what's coming."

The two men hit it off and then got technical-how to build batteries for electric cars, create an infrastructure of charging stations, target tax credits to s.h.i.+ft consumers into superefficient vehicles. When it was over, they shook hands like new friends. Bill felt great. Everything Obama wanted, he wanted too. "I think he's exactly in line," Bill said, "with where society wants us to go."

Green cars were also very much on Rick Wagoner's mind. In late summer, Wagoner told Lutz that the single biggest product responsibility on his plate was to deliver a working version of the Chevrolet Volt plug-in hybrid by September 16-the day General Motors would celebrate its one hundredth birthday at a lavish ceremony at the Renaissance Center. "Bob, we need it then," he said.

Wagoner was gearing up for the ultimate sales job-to convince the federal government to help GM in its hour of need. The presidential campaign was about to kick into overdrive, with Obama, the liberal agent of change, matching up with the way more conservative Republican candidate, Senator John McCain of Arizona. The inc.u.mbent Bush administration was already swamped with the financial crisis on Wall Street, and Congress was in the midst of its own reelection frenzy. If GM was to get any kind of positive reception on Capitol Hill and in the White House, it needed a powerful message. It could not come limping in and begging for a bailout. GM had to represent progress, innovation, and a bright future. That's where the Volt came in. It was the one car that GM had that n.o.body else had, and the perfect blend of electric power and consumer convenience. When the battery ran down, a little motor kicked in and kept it going. What could be smarter than that?

Lutz had already been riding the Volt team hard. He was just as psyched up about the car as Wagoner. For once, he could stick it to Toyota with a hybrid model that was better than theirs. But he wasn't sure about the September timetable. The Volt wouldn't even go on sale for another two years. Was it really necessary to have it ready for the GM birthday party?

Yes, said Wagoner. It wasn't an option. GM needed that car.

Chapter Twenty-Seven.

How does a company celebrate its one hundredth anniversary? In GM's case, the planning had started three years early, with a special team, a multimillion-dollar budget, and a set of goals. Rick Wagoner was intimately involved from the start. "I want this to be 85 percent about the future and 15 percent history," he told his staff. Sometime along the way, he approved the theme: "GMnext." For all of its storied past, General Motors was looking ahead, secure in the belief that it would continue to lead the industry for years to come.

At 8:00 A.M. on September 16, hundreds of invited guests and employees took their seats and lined the balconies in the Renaissance Center's Wintergarden-a soaring, gla.s.s-roofed atrium of shops and restaurants overlooking the Detroit River. Outside, scores of people gathered to watch the proceedings on giant video screens. Fifty polished Corvettes gleamed in the autumn sun on the riverfront plaza, near a large map of the world inlaid in the walkway, with twinkling lights representing every GM factory on the planet.

But for all the pre-party buildup, GMnext Day was oddly static. For more than an hour, the a.s.sembled watched a stream of live videos beamed from around the world, as international executives made speeches into the camera about their GM business units in Mexico, Canada, Brazil, Germany, Italy, South Africa, Australia, Korea, China, India, and on and on and on. When that finally ended, Wagoner stepped to the podium.

General Motors has an "awesome" history and a "tremendous" heritage, Wagoner said. But its first century was only the beginning. GM had a responsibility to mankind, a duty to improve and perfect the machine that transformed people's lives. Then Wagoner told a story of how twenty months earlier, GM had set out to produce the most practical and fuel-efficient car ever made. "The Volt is symbolic of what GM stands for today," he said. "The Volt symbolizes GM's commitment to the future. General Motors' second century starts right . . . now." And then the Volt came onstage, with Bob Lutz behind the wheel-a small silver car powered by a four-hundred-pound battery pack, capable of going forty miles on electricity and another three hundred miles with the aid of a little four-cylinder engine. It was the answer, the statement, the proof that GM was still the king of the car world. The Wintergarden erupted in applause and cheers. The second the speech was over, the crowd swarmed around the car, drawn to it like a magnet. Lutz held court in the middle of the horde, like a proud father basking in the glow of his latest creation.

But Wagoner bolted right after the Volt arrived. A corporate jet was waiting at Detroit Metropolitan Airport to take him to Was.h.i.+ngton for meetings with House Democrats about the $25 billion in energy loans. That night, he addressed the Economic Club of Was.h.i.+ngton. In his speech, Wagoner emphasized that the energy loans were a key part of the 2007 legislation mandating a 40 percent increase in corporate average fuel economy (also known as CAFE). These loans were part of those regulations, not anything like the taxpayer dollars being spent to bail out Wall Street. "n.o.body called it a bailout then, because it wasn't," he said. "And it still isn't."

The next day, Alan Mulally and Bob Nardelli joined Wagoner for a meeting with House Speaker Nancy Pelosi. The energy loans were available to any automaker that met the criteria for improved fuel economy, so it made sense for Ford and Chrysler to be there. Pelosi, a California Democrat and staunch believer in the highest fuel economy standards possible, was very rea.s.suring. The loan money would be put in the federal budget, she told them. And a week later the House approved the $25 billion program, which was meant for projects exactly like the Volt. The Department of Energy had two months to write all the rules, and then it would accept applications. With any luck, the first loans would be available to the Big Three by the end of the year.

When Steve Feinberg found out about the unsuccessful GM-Ford merger talks, he dispatched Bob Nardelli to GM to offer Chrysler as an alternative.

Nardelli and Tom LaSorda had tried to pitch a GM-Chrysler deal in the early summer. But Wagoner hadn't been interested. "We've got too much else going on," he said. "Doing something with you guys would be too much of a distraction." A lot had changed since then. GM was now desperate for cash and had just moved to draw the last $3.5 billion in a long-existing credit line with JPMorgan Chase and Citigroup. As rickety as Chrysler was, it had about $10 billion in borrowed money on its balance sheet, which could stabilize GM in the short run.

Wagoner still wasn't keen on the idea, but this time Henderson and Lutz prevailed upon him. "Rick, we can pick up all their a.s.sets but not the fixed costs," Lutz said. "s.h.i.+t, the first-year synergies alone are like $7 billion."

Nardelli went down to the Renaissance Center with LaSorda and Jim Press and enthusiastically made the case for a merger to Wagoner and Henderson. "Why shouldn't we put GM and Chrysler together?" Nardelli said. "There are billions and billions of dollars' worth of synergies-starting with me. I'm not trying to run it. I'll do everything I can to work through the transition and then leave."

It was a revealing comment. The walls were closing in on Nardelli at Chrysler. The losses were getting uglier and the company was scrambling for partners. In public, Nardelli remained confident, showing off electric concept cars and touting Chrysler's future plans. But in private, he complained about the constant uphill battle to make Chrysler relevant in the marketplace. "This is a million times harder than I thought it would be," he said. A GM merger was the perfect way out.

Nardelli had grown up in General Electric, where acquisitions were a way of life. He got goose b.u.mps talking about the synergies (the code word for job cuts) between GM and Chrysler. "Why am I keeping Sterling Heights open with one s.h.i.+ft when you've got plants open with one s.h.i.+ft?" he told Wagoner. "I know you guys want our Jeep with your Hummer. We could rationalize everything!"

Feinberg and Jimmy Lee, the JPMorgan Chase executive, were agitating for the deal too. Chrysler had become such a burden that Feinberg was prepared to give it away for GM stock. Cerberus could then keep Chrysler Financial, marry it with GMAC, and hopefully salvage the credit side of the business. Feinberg's automotive nightmare kept getting worse. The Germans had come back to haunt him about Chrysler. Daimler was in a frenzy to dump its 19.9 percent interest in Chrysler and wanted Cerberus to buy it. Feinberg was sick of these people. Dieter Zetsche had sold him a sh.e.l.l of a car company with Chrysler, and now Daimler was demanding all sorts of payments for foreign taxes and distribution costs related to the deal. "The Germans are impossible on everything," Feinberg groaned. "I'm pretty sure they wanted us to fail from day one."

He worked hard to persuade the GM executives to take Chrysler. "We'll give our equity away," he told Fritz Henderson. "Bob will stay with it. We'll give you all of our guys, anything to make it a winner. If we put the two companies together, we can save $10 billion." Henderson didn't need any convincing. He was so stressed about GM's downward spiral, he'd try anything. But there were a lot of weird moving parts at Chrysler, especially with the banks that were lending it money.

Jimmy Lee was increasingly anxious to get JPMorgan Chase's money back. But even as he pushed for a sale to GM, he wasn't willing to loosen the banks' stranglehold on Chrysler's a.s.sets.

Nevertheless, Henderson pushed back. "You need to release your collateral so we can actually close some of these plants," he said.

Lee said they were not going to do that.

"Well, then," said Henderson, "how do you expect to do this deal?"

It was hard to imagine how Henderson could even concentrate on Chrysler. U.S. auto sales fell below one million units in September, which hadn't happened in fifteen years. The entire market dropped 26 percent. GM actually did better than most of its compet.i.tors, but it was only because the company was pouring inventory into rental fleets. In early October, its stock price plunged below $7-the lowest since 1953. "I knew things were going to get really bad, so therefore I'm not surprised," Henderson said. "But these are the worst of times."

The strain was starting to show at Ford too. Mark Fields and Don Leclair were at each other's throats again. At one meeting, Fields was talking about how a new vehicle could help gain market share, but Leclair stopped him.

"What are you talking about?" Leclair snapped. "We haven't done that in fifteen years."

The situation was becoming toxic, the first fissure in the Mulally team. Leclair had alienated several senior executives with his abrasive comments and secretive ways. So far Mulally had tolerated it, though only because Leclair was valuable as a watchdog on costs. But in September, Fields and two other executives went to see Bill Ford and threatened to resign if Leclair stayed.

Fields had lost all patience with Leclair, and he let Bill know it. "You have got to talk to Alan, and you have got to take care of the situation," he said. "You're running the risk of losing key senior management, including myself." Then he stopped himself, realizing he shouldn't be telling the executive chairman of Ford what to do.

But Bill was ready to oust Leclair anyway. Joe Laymon had been whispering in his ear that Leclair had gotten way too close to Jerry York and couldn't be trusted. Bill had the same concerns.

Bill Ford sent Fields to see Mulally, who reluctantly agreed that Leclair had to go. Fortunately, the company had an able replacement ready in Lewis Booth, who was running Ford of Europe.

It all happened quickly. Leclair agreed to take his retirement package and leave quietly. Ford released an official explanation on October 10, saying that Leclair wanted to spend more time with his family. Mulally had kind words for the departed chief financial officer on his way out the door. "Don's expertise and business ac.u.men have been invaluable," he said.

The praise was little consolation for Leclair, who had been with Ford for thirty-two years. His s.h.i.+ning moment was the big borrowing in 2006 that was now saving the company. But Leclair was stuck in the old Ford, where internal warfare was the norm. He just couldn't adapt to the new culture.

"Don wasn't a team player," said Farley. "He didn't get along with the other executives. And he flat-out said several times that we couldn't stabilize market share . . . that we were dreaming."

Leclair turned down all interview requests and basically took a vow of silence about Ford. But his departure raised lots of questions from his biggest admirer. "What the f.u.c.k happened to Leclair?" Jerry York blurted out to a friend in Detroit. "I'm guessing the family pushed him out because of us. They must be scared s.h.i.+tless."

But it was actually Kirk Kerkorian who was getting worried. In ten days he would start selling off his Ford stock. The dismal economy had ravaged the market value of his casino empire. And as much as he liked Alan Mulally and Ford's long-term prospects, he couldn't afford to keep a big chunk of his fortune in a faltering auto company. In a brief statement, he said it was time to "reallocate" his resources.

The depths of Detroit's troubles were laid bare when the secret GM-Chrysler talks became public in the media on October 11, prompting both sides to characterize the discussions as "preliminary." The news rattled investors and a.n.a.lysts who failed to see how GM would be better off with broken-down Chrysler on board.

No one was more upset than Ron Gettelfinger, who immediately began hounding Fritz Henderson about the details. How many workers would be affected if GM bought Chrysler? When he learned that the estimates started at ten thousand job cuts-and escalated from there-he vowed to oppose the deal with all his might. Feinberg and Nardelli tried to convince Gettelfinger that GM and Chrysler would be stronger together than apart, that the banks would lend them money and Cerberus might even invest more. But he wasn't buying any of it. "Gettelfinger just doesn't like it," Feinberg said. "He's incredibly suspicious. He's afraid GM is just going to pound Chrysler."

Gettelfinger's opposition had major political repercussions. The union was working like mad to get Barack Obama elected president in November. The UAW was still one of most formidable const.i.tuent groups in the Democratic Party. At the same time, the union was a constant thorn for Republicans. Once it entered the picture, political stances hardened like cement. Few Democrats would support an issue the union didn't want. And conversely, anything that favored the UAW was like poison to many Republicans. The union was a lightning rod and added a volatile emotional element to any political debate about Detroit.