Where Have All the Leaders Gone? (15 page)

Here, I have to say, the news is actually very good.

At GM, Rick Wagoner has exhibited amazing cool in the face of a serious arm-twisting by Kirk Kerkorian, Jerry York, and Carlos Ghosn. They pushed a merger with Renault-Nissan that would have solved exactly
none
of GM’s problems. Kerkorian and York, as I mentioned earlier, know how to play those high-stakes poker games, but Wagoner didn’t fold. Instead, in his low-key, under-the-radar way, he showed the merger specialists to the door, and has instituted a new drive for improved product design, with the help of a savvy veteran, Bob Lutz.

Chrysler’s Tom LaSorda may be just the guy the company needs for a back-to-basics drive to reverse its slump. As a former factory boss (and the son and grandson of labor leaders), LaSorda understands the nuts and bolts of the business. He also has the ability to inspire trust among the workers. When he says, “I know what you’re experiencing,” he means it.

It’s too early to know how Ford’s new chief, former Boeing executive Bill Mulally, will adapt to the car industry. Sometimes an outsider’s perspective can reenergize a tired business plan. I will say one thing about the leadership change. Bill Ford earns my admiration for stepping up and acknowledging the crisis—and admitting that maybe he was in a little over his head and needed help. His move took a lot of guts.

A leader in the auto industry has to have a passion for cars and an enthusiasm for innovation. The leader sets the tone for the entire company, and when I was CEO I always wanted my tone to communicate that we could do great things together. I hope the current leaders feel that way, too. Wouldn’t it be something if the best days of America’s arsenal of democracy were still ahead of us?

I
’ve been looking for the middle class, and I have to admit that I’m having a hard time finding it. No one seems to know how to define it. A lot of economists say that the middle class is a state of mind. Well, that doesn’t seem right. When I read the newspapers, they talk about the
Middle Class Vote,
and the
Middle Class Financial Crunch,
and the
Middle Class Health Care Crisis
. They talk about the
Middle Class Losing Jobs to Globalization,
and the
Middle Class Tax Burden,
and the
Middle Class Credit Card Debt.
That doesn’t sound like a state of mind to me. We’re talking about real people here. But who are they?

Even the middle class has trouble defining itself. When pollsters ask people if they consider themselves middle class, they get “yes” answers from those who have income levels anywhere between $20,000 and $100,000. Obviously, you can’t pin it down based solely on income. There are too many variables—like where you live, the size of your family, and whether or not your job has benefits.

When I think of the middle class, what comes to mind are the hardworking people I’ve known in my life who have dreams and aspirations for themselves and their children. I grew up in that kind of family. Like most immigrants, my parents believed in the American dream: Anything was possible if you worked hard and got a good education. They made sure our family always had a roof over its head and plenty of good home-cooked food on the table. My parents knew how to stretch a nickel, and we never wanted for the important things—even during the Depression. We always had everything we needed, and then some.

It never occurred to my dad that I wouldn’t do better than he did in life. He was always teaching me, always imparting lessons. He wasn’t surprised that I prospered. He expected it. When I became president of Ford, the first call I made was to my wife, and the second was to my father in Allentown, Pennsylvania. He was eighty years old, and he’d seen a lot in his life, but this was one of his high points.

It’s been a long time since I was a member of the middle class. I’m not going to pretend that I experience the stresses and strains or feel the pinch that is a way of life for most Americans. But I’ll tell you one thing. I’ve never stopped appreciating the hopes and aspirations of the middle class. That was my father’s legacy. I got where I am through the grace of God, a little talent, hard work, a lot of luck, and because I lived in the land of opportunity. And I’ve always wanted to see others have the same chance.

America needs the middle class. You can’t run a country with just the very rich and the very poor. The middle class keeps the economy rolling. As long as a family is making enough to meet its mortgage payments, eat fairly well, have two cars in the garage, send a kid to college, go out once a week for dinner and a movie, and have a little extra left over, they’re fairly content. We used to talk about “Joe Lunchbucket.” I guess now it’s Soccer Mom and NASCAR Dad. But the reality is the same.

The middle class has been called “the silent majority.” But it hasn’t been so silent lately, because people are scared. I have to say I’ve never before seen this level of anxiety from working people.

CAN UNIONS SAVE THE MIDDLE CLASS?

The middle class may be hard to define, but it’s not an abstraction to me. I spent my life in the auto industry, and you can make a good argument that the auto industry
created
the middle class. Henry Ford took the first step. Way back in 1914, before there were industrial labor unions, Ford did a smart thing. He figured out that the best way to motivate employees was to give them a stake in success—and that meant a living wage and a reasonable workday. He shortened the workday from nine hours to eight, and raised the minimum wage from $2.34 to $5 a day. In spite of his critics—mostly from Wall Street—Ford’s idea worked. Profits soared, and for the first time the workers in his plants could also afford to become his customers. He once said, “The payment of five dollars for an eight-hour day was one of the finest cost-cutting moves we ever made.”

Of course, Henry Ford wasn’t being purely altruistic. Part of Ford’s goal was to block efforts to unionize his plants. He always said that his company would unionize over his dead body, and it almost came to that. Ford was the last automaker to let the UAW in.

Now, there are plenty of people who would say that the unions built the middle class in the twentieth century, and there’s some truth to that. Unionized workers didn’t have to depend on the paternalistic instincts of owners like Ford. The rights and dignity of the worker were upheld through fair wages, safe work environments, adequate health care, insurance for old age or disability, reasonable work schedules, and time off. It was a pretty radical idea, when you think about it. Through unions, ordinary working men and women could join together to exert real power. They could get a fair shake.

Walter Reuther, who founded the UAW, was one of the clear leaders of the twentieth century. I met him once, and I always regretted that I never had a chance to get to know him better. He died in a plane crash shortly after I became president of Ford. He was a powerful speaker and a brilliant negotiator. Reuther had a gift for putting things simply. He always said that labor’s task came down to one thing: carving up the pie as fairly as possible. And the bigger the pie, the bigger the slice for the workers.

I was told that Reuther would actually sit down at negotiating sessions and draw a picture of a pie. He’d divide the pie into slices, showing how much of it was going for raw materials, overhead, executive salaries, and labor. Then he’d tell them: “We’re not satisfied with our slice”—and he’d show them how he wanted to cut the pie differently.

In a sense, the labor unions were
too
successful in the decades after World War II. They kept upping the ante, and we all went along because we had the cash and we were terrified of strikes. We set in motion the automatic cost-of-living allowance (COLA), which was adopted by industries across America. We caved in to the union proposal of “thirty and out,” which stipulated that after a worker had been on the payroll for thirty years, he or she was free to retire early, no matter how old, with a full pension. Now,
you
do the math: Say a worker starts at age eighteen. Thirty years puts him or her at the creaky old age of forty-eight. What were we thinking? It was one bonanza after another for labor. We gave away the store, and the UAW just asked for more. Nobody was planning for what might happen if times got tough—which they did. The automakers were forced to close plants and lay off workers in huge numbers. It’s still happening today.

The “jobs bank” is a perfect example of an asinine concession the automakers made to the UAW in the 1980s. The jobs bank arranged to give workers who got laid off due to new technology, plant restructuring, or outsourcing full salaries for doing
nothing,
until such a time—maybe
never
—when they would be called back to work. Today, there are still over ten thousand workers sitting around playing cards or watching TV on company time. Does this make any sense?

The glory days of the UAW are over, and that’s true for most unions. Today in the private sector, labor unions represent only 11 percent of manufacturing workers, and their membership continues to dwindle. Why? Well, a basic premise of business also applies to the unions: If you’re filling a need, you’ll do well. If you’re not filling a need, you’ll die. The unions haven’t changed with the times. They haven’t reinvented themselves to meet the new challenges of a global workforce and a global marketplace. Like many organizations that start out with high ideals, the unions have become too politicized and have lost some of their relevance. The question is, Can they get it back?

THE MIDDLE-CLASS FEAR

I talk to a lot of people in the course of a year. For one thing, wherever I go people come up to me and tell me about their dads who worked in a Ford plant, or their uncles who were Chrysler dealers, or their brothers who lost their jobs to plant closings. If I’m in a restaurant, there are always people coming over to shake my hand, to reminisce, to thank me for saving somebody’s job thirty years ago, or to give me a piece of their mind. There aren’t too many happy faces these days. Everybody is worried.

I’ve been hearing plenty of sad stories, and, yes, a lot of anger, too. I can understand that. When you’ve worked all your life in a company, with the promise that you can retire with a pension and health care benefits, it’s a devastating betrayal when the company doesn’t hold up its end of the bargain. The average guy just doesn’t understand how this can happen, especially when he sees the guys at the top raking in unimaginable riches.

But the thing that scares people the most is health care. It used to be just the working poor who couldn’t afford health insurance, but now that the price tag for the average family has reached almost $12,000 a year, it’s affecting the entire middle class. Today, 46 million Americans have no health insurance at all.

If you’re going to be outraged about the lack of leadership in this country, health care is a good place to start. The situation is getting worse every year, and nobody’s doing a damn thing about it. The last time Washington even
looked
at health care was back in 1993 with Hillary Clinton’s task force. We all know what a disaster Hillary’s plan was—but hey, folks, that was
fourteen years
ago. Since then, nothing. The folks in Washington basically said, “Your plan is lousy so let’s just forget about it.”

It’s a scandal, and we’re letting it happen.

The burden of health care can single-handedly wipe out the middle class. All it takes is one medical crisis to drop a family from comfortably middle class to poor. It can happen overnight. You have a complicated labor, and suddenly you’re looking at $25,000 for a C-section. Your kid breaks a leg playing soccer, and it’s an $8,000 trip to the emergency room. Bypass surgery after a heart attack: $40,000. No wonder people are scared. And it’s not just the uninsured. Workers are paying an increasing percentage of health insurance costs in industries where companies just can’t afford to foot the whole bill anymore. With job security in the manufacturing sector at an all-time low, millions of workers are just a pink slip away from losing their health benefits. This is a solution that cries out for government leadership.

A PLAN FOR REVIVAL

Twenty-three years ago, in my first book,
Iacocca,
I proposed that we establish something comparable to a Marshall Plan for U.S. industry. I even had a name for it—the Critical Industries Commission. It would provide a setting for government, labor, and management to find a way out of the mess we were in. It would require collaboration. It would also require equality of sacrifice. Everyone would have to give up something for the good of all. Then the commission could get down to the business of figuring out how to strengthen our homegrown industries. In Japan and China, they protect their vital industries to a
fault.
Can’t we make an effort to meet each other in the middle for the good of the nation?

Well, as you probably guessed, nobody took me up on my idea. And here we are, all these years later, much worse off than we were then. So I’ll give it another shot. Look, if the United States could establish the Marshall Plan to rebuild Europe after World War II, and if we could establish the International Monetary Fund to help rebuild the world, and if we can spend a trillion dollars trying to rebuild Iraq, why can’t we do the same thing for our country today? This isn’t charity; it’s necessity. It’s self-interest. Did we rebuild Europe because we were playing Mr. Nice Guy? No, we rebuilt Europe because we had an interest in a strong Europe.

You have to face the problems head-on while they’re happening, or they build up and become catastrophes. Sometimes I think our government and even some of our business leaders believe that if they just ignore the crisis in the middle class, everything will eventually work out.

The middle class is useful to politicians during election season, when the slogans are flying. It doesn’t matter if it’s Democrats or Republicans.
Everyone
presents themselves as champions of the middle class when they’re trolling for votes. They love to shake hands at the factory gates, but once they get to Washington they can’t be bothered with helping to keep those gates open. That’s why we need permanent solutions like the Critical Industries Commission.

THE NEW AMERICAN DREAM

I’ve often been asked to give graduation speeches at colleges and universities. Graduations are happy occasions. You look out on those faces and it’s really uplifting to think these kids have their whole futures ahead of them. But in recent years I’ve had to wonder how bright those futures will be.

When I graduated from Lehigh University in 1946, I already had about twenty offers for employment. I started my first job at Ford the year after World War II ended. Harry Truman was President, and the world felt full of optimism. I remember thinking if only I could earn $10,000 a year I’d be satisfied. I couldn’t wait to get started.

Today we need a new American dream that reflects the hopes and aspirations of the next generation. Let’s give some thought to what that dream might be. Can you think of a political leader who’s articulating it? Has anyone made you feel excited lately about the possibilities that are in store for your children and grandchildren? Nations aren’t built on rhetoric, but they start with good ideas. In the coming election season, there will be a lot of pandering to the middle class. Let’s make a commitment to cut through the bullshit and listen for the plan of action that has a chance of working. Let’s be the adults in the room, and do it for our kids.