In late 1959, Ford Motor Company released the smallest car it had sold in the U.S. since the 1930s: the 1960 Ford Falcon. The Falcon proved to be the most successful of Detroit’s new breed of compact cars and it gave birth to many spin-offs and derivatives, from the Ford Mustang to the plush Granada. More significantly, though, the Falcon marked the flash point of a conflict between two different philosophies of management, and two very different men: Lido Anthony Iacocca and Robert Strange McNamara. This week, the history of the 1960-1970 American Ford Falcon.
In the 1980s, Ford engineer and executive Don Frey related to the late David Halberstam a highly revealing (albeit probably apocryphal) anecdote about the origins of the Ford Falcon. Frey claimed that the car that became Ford’s first compact was born as a doodle on the back of a church leaflet. That is hardly unusual in the lexicon of engineering history — many famous cars and airplanes allegedly began as sketches on the backs of napkins. But the doodler in this case was Robert McNamara, and the “sketch” was not the image of a car, but a set of figures for volume, weight, and cost. It was not a drawing, but a set of statistics.
The science of statistics was something of a black art before World War Two. Businesses kept ledgers, of course, but the use of statistical analysis in business management was rare, and the idea of using statistical modeling to drive business decisions was an extremely radical one.
Even before America entered the war, military planners quickly recognized that the sheer scale of the war effort — and the vast mass-production enterprise supporting it — presented unprecedented organizational and management challenges. A few bright lights decided that it was time to bring the latest developments in business management and organizational theory to military logistics.
One of the key advocates of this plan was Robert Lovett, the assistant Secretary of War for air power. In the late 1930s, Lovett encountered a young man named Charles Bates “Tex” Thornton, then a functionary in the Department of the Interior. Lovett was impressed by Thornton’s analytical prowess and ability to draw sophisticated conclusions from disparate and seemingly unconnected information. He soon arranged for Thornton to be commissioned into the Air Corps. Shortly after America entered the war, Lovett assigned Thornton to recruit and develop a cadre of Air Force officers trained in statistical analysis and business theory.
Thornton recruited his staff from top business school graduates. Each candidate was sent through Officer Candidate School and the top graduates were sent to a two-month course in statistics provided by Harvard Business School.
One of the teachers of that course was a young professor named Robert S. McNamara. A graduate of the University of California at Berkeley with a degree in economics and minors in mathematics and philosophy, McNamara had gone on to earn his MBA from Harvard in 1939. After a brief stint at Price Waterhouse, he joined Harvard’s faculty in 1940, the youngest professor in the business school’s history. In May 1942, McNamara became one of the teachers recruited by Tex Thornton to run the Air Force statistics training program. Early the following year, McNamara himself was commissioned as a captain in the Army Air Forces and assigned to Thornton’s command: the Statistical Control Office.
The Statistical Control Office was responsible for the formidable task of efficiently managing the global air war. Thornton and his officers were brilliant, highly educated, and exceedingly cocksure. They were young (Thornton himself, the old man of the group, turned 30 in 1943) and they were arrogant in a way that only the young can manage with impunity. Their conclusions and recommendations were often controversial, but they were seldom wrong, at least from a standpoint of military efficiency. It was McNamara’s analysis, for example, that led Major General Curtis LeMay to switch from high-altitude bombing of Japan to low-altitude, incendiary attacks on Japanese population centers. The firebombing of the civilian population led to devastation of 64 Japanese cities and more than one million civilian casualties — far more than the eventual dropping of the atomic bomb.
THE WHIZ KIDS
Tex Thornton realized early on that his group would have little future in the postwar army. Theirs was not an especially politic science and their recommendations had led to the cancellation of many a general’s pet project or personal crusade. During wartime, they were tolerated, even indulged, because they benefited the war effort. However, captains and majors who make a habit of stymieing generals rarely have fulfilling careers in a peacetime army. Besides, there was far more money to be made in private industry.
Not long after the war ended, Thornton saw an article in LIFE magazine about the financial crisis at Ford Motor Company. In late 1945, Thornton, McNamara, and eight of their colleagues sent a telegram to Henry Ford II, boldly claiming that they could save his company.
Henry Ford II had recently inherited his grandfather’s auto company, which was in desperate straits. Old Henry’s intransigence had come close to destroying the corporation by the early 1940s and its survival was an open question. The elder Ford had for years surrounded himself with cronies and yes-men and no one around him had dared tell him anything other than what he wanted to hear. Ford detested accountants and by the time of his death, no one in the company had any idea of how much it actually cost to build a car, how much the corporation was earning, or how much it owed. Henry II knew that he needed help and he decided to hire Thornton’s entire group at handsome salaries.
Unlike the previous generation of auto industry executives, who were driven by a fascination with machinery, the Whiz Kids, as Thornton, McNamara, and the rest became known, knew little about cars and many of them cared even less; they were the vanguard of a new philosophical movement in business that insisted that processes were far more important than products. It was a huge shift for Ford, which had been dominated for decades by the mercurial, arbitrary whims of its founder.
The Whiz Kids transformed Ford Motor Company, instituting the latest financial controls and ordering the first real audit the company had ever had. By 1948, Ford had coordinated production schedules, cash-flow projections, and an organized divisional structure. Thornton was fired early that year (he went on to become chairman of Litton Industries), but seven of the 10 Whiz Kids went on to senior executive positions at Ford.
ROBERT MCNAMARA: THE TECHNOCRAT
None of the Whiz Kids was as ascendant as Robert McNamara. McNamara became Ford’s controller in mid-1948, by January 1955, he was vice president and general manager of Ford Division. In May 1957, he became group vice president, running all of the company’s car and truck divisions.
McNamara’s reputation at Ford has become legendary. He could be cold-blooded; he had little interest in ingratiating himself with his fellow executives if they were not already on his wavelength and he used his rhetorical training and command of statistics to steamroller any opposition. He was not, by any stretch of the imagination, a “car guy.” McNamara’s passion, if that is the right word, was for systems and efficiency. He had frequently antagonistic relationships with engineering, production, and particularly with sales — salesmen were almost beneath his contempt. McNamara saw himself as a champion of rationality, which he saw not just as a goal, but a kind of moral imperative, which he pursued with zeal.
The problem with this supremely rational approach was that a statistical model alone does not make a car. Don Frey told David Halberstam that when McNamara showed him his church program doodle, Frey asked McNamara what kind of car it was, at what audience it was aimed. McNamara seemed puzzled by the question; he hadn’t thought about any of that.
This is not to say that the cars that originated during McNamara’s tenure were all Spartan and bland — he was responsible for the Ford Skyliner, the 1961 Lincoln Continental, and the four-seat Thunderbird, for which he fought quite tenaciously. It would be fair to say, however, that McNamara had little personal interest in the traditional fascinations of the American auto industry: power, size, and prestige. He was one of the earliest serious advocates of automotive safety, of greater fuel economy, and even of emissions control. Although he recognized that there was a business case for cars like the Thunderbird or Continental, McNamara felt that the median American car had simply become too big. By 1956, he was pushing for the creation of a new, compact Ford.
THE FORD FALCON
Ford had played with compact car designs for years, but while they had seriously considered offering a so-called Light Car after the war, it was canceled when it became clear that it would cost almost as much to build as a standard car. McNamara’s predecessor, Lewis Crusoe, had insisted for years that compacts could never be profitable, but McNamara felt that there would be a market for a fuel-efficient, smaller car, something more like Ford’s European products. Like AMC’s George Romney, McNamara saw smaller cars as a social obligation, not just a business imperative — an uncommon attitude in American business during the Eisenhower era.
Even McNamara might not have succeeded in selling the compact idea to Henry Ford II had it not been for the sharp recession that hit the U.S. in the fall of 1957. The recession, which continued well into 1958, led to steep declines in the sales of big, glitzy, middle-market cars like Ford’s new Edsel (which McNamara had been looking for an excuse to kill). At the same time, sales of Nash’s compact Rambler and small imports like the Volkswagen Beetle were soaring. McNamara argued forcefully that Ford should introduce a compact of its own and in March 1958, his project was approved for production.
The new car was developed under the codename XK Thunderbird, undergoing several changes of nomenclature before being dubbed “Ford Falcon” in April 1958. (That name was originally owned by Chrysler, but Ford obtained it through a bit of inter-corporate quid pro quo.) The Falcon would be the smallest model Ford had offered in the U.S. since well before the war. It was originally intended to weigh 2,100 pounds (952 kg), use a four-cylinder engine, and seat five, although Henry Ford II finally insisted on six-passenger seating. Jack Hooven, the project engineer, pushed for a six-cylinder engine, raising the weight target to 2,300 pounds (1,043 kg).
Despite these distractions and despite the fact that Ford Division was now managed by James O. Wright (another of the Whiz Kids), it was plain throughout the development process that the Ford Falcon was McNamara’s car. According to Hooven, McNamara monitored every step of the engineering and testing, driving Hooven to distraction with constant micromanagement. Any engineer whose parts came in over-budget or failed to perform to specifications would face McNamara’s withering disapproval.
As you would expect, the Ford Falcon emerged as a paragon of efficient design. Unlike Chevrolet’s contemporary rear-engined Corvair, the Falcon was wholly conventional, relying on assiduous refinement of familiar technology rather than attempting anything radical or new. Despite its size — the Falcon would be considered a midsize car by today’s standards — it weighed only 2,400 pounds (1,090 kg), a testament to the virtues of unitary construction and a fanatical attention to design detail.
The Falcon was powered by a new six-cylinder engine of 144 cu. in. (2,365 cc) displacement, the smallest, lightest, and most compact engine Ford had offered since the early 1930s. The entire car was a triumph of packaging, giving away surprisingly little useful passenger room to the full-sized Fords despite being more than 32 inches (82 cm) shorter. Its bench seats were 6 inches (153 mm) narrower than the big Ford’s and the rear seat had about 6 inches (15 cm) less legroom — a modest sacrifice indeed, given that it had about 25% less box volume than the big car and weighed three quarters of a ton less. Not only was it roomy, it was capable of more than 20 miles per gallon (11.8 L/100 km) in routine driving, close to 30 mpg (7.8 L/100 km) in gentle highway cruising. It rode softly, steered easily, and offered excellent visibility. Furthermore, it started at only $1,912, more than $250 less than the cheapest big Ford.
Supremely rational, frugal, and practical, the Ford Falcon was; exciting, it was not. It looked dowdy; scaling down standard Ford design cues had made the Falcon looked smaller than it really was, lending a stubby quality to its essentially boxy shape. The interior was dour, even in deluxe trim. Acceleration and braking were barely adequate, handling timid and imprecise. When operated in the sedate, sensible manner for which it was designed, the Falcon was perfectly livable, but it inspired no lust.
A PYRRHIC VICTORY
Despite those limitations, when the Ford Falcon bowed in the fall of 1959, it quickly established itself as the best seller of the new Detroit compacts. Its styling may have been bland, but many buyers found it far more palatable than Chrysler’s peculiar-looking Valiant. While the Falcon had no engineering innovations to match Chevrolet’s new Corvair, the compact Ford also had no radical technology to alarm conservative shoppers. Falcon sales were an impressive 435,000 for 1960 and even higher for 1961, accounting for around 25% of Ford’s total volume.
Although the Ford Falcon was a hit, it failed to meet McNamara’s ambitious sales projections. Ford had anticipated a volume of more than 600,000 units, but the Falcon didn’t come close to that mark and never would.
Had McNamara remained with Ford, he might have been puzzled by that shortfall, but his time with the company was nearly at an end. Around the time the 1961 models went on sale in the fall of 1960, McNamara was promoted Ford Motor Company president, but less than eight weeks later, he resigned to become secretary of defense for the new Kennedy administration.
The new general manager of Ford Division, Lee Iacocca, had no illusions about why the Falcon had missed its mark. Iacocca had been McNamara’s protégé, but his perspective was very different from that of his former boss, because he was something McNamara had never been: a salesman.
LEE IACOCCA: THE SALESMAN
The college-educated, 36-year-old scion of an Italian immigrant, Lido Anthony Iacocca joined Ford engineering in the late 1940s. He quickly realized that there were few opportunities for an Italian engineer, even a highly educated one, in a WASP-dominated company. He switched to sales, which proved a better fit for his personality. In 1956, he caught McNamara’s attention with a highly successful promotional campaign that McNamara determined was responsible for an extra 72,000 sales that year. Iacocca returned to Ford headquarters in Dearborn, where McNamara put him in charge of marketing.
Iacocca respected McNamara, although he was smart enough to realize McNamara’s limitations. He was one of the few at Ford who learned to recognize when McNamara was bluffing, using his intellectual bluster to make points for which he didn’t really have evidence. For his part, McNamara respected Iacocca because while Iacocca was sophisticated enough to understand McNamara’s methods, he was still capable of communicating with the sales and marketing people on their own terms, something of which McNamara himself was largely incapable. Iacocca could also be arrogant and his relationship with his peers was sometimes brusque, but he was far more of a political animal than McNamara was.
Where Iacocca really outshone his boss and mentor was in his feel for the pulse of the marketplace. Compared to Iacocca, many Ford executives were profoundly ignorant of their customers. Few executives, for example, grasped that most car buyers bought with credit, not with cash, and were frequently more concerned with monthly payments than with a car’s actual transaction price. That was why a skilled salesman could easily “upsell” a customer into a more expensive model with the argument, “for only a few dollars more a month, you could be driving …” Iacocca knew that car buyers, even so-called “entry-level” buyers, were driven as much by emotional concerns as rational ones. Logic could easily be overruled by ego, lust, or fear, and success depended not on appealing to buyers’ reason, but on manipulating their emotions. It was a concept alien to McNamara’s way of thinking, but one that Iacocca understood intimately.
Iacocca considered the Ford Falcon fundamentally misguided. Its design reflected McNamara’s assumption that buyers placed the same value he did on efficiency. Iacocca knew, however, that only a comparative handful of buyers were really swayed by the Falcon’s single-minded parsimony. The Falcon sold because it was cheap, not because it was an intrinsically desirable car. It was not a big profit-maker, however well it sold, because it provided salespeople with few opportunities for upselling. The Falcon didn’t have a lot of extra-cost options and its penurious buyers were less likely to order the extras that were offered. Worse, the Falcon’s share of Ford’s total volume did not correspond to any increase in total sales, so its success had come largely at the expense of the company’s bigger, more profitable models.
Even worse, Iacocca felt, was McNamara’s planned follow-up to the Falcon: an even smaller car codenamed Cardinal. The Cardinal, which was eventually sold as the German Ford Taunus P4, was Ford’s first front-wheel-drive car. McNamara had already committed $35 million to the project, but Iacocca strenuously opposed it and convinced Henry Ford II that the Cardinal would be another disaster like the Edsel, persuading Ford to cancel the project and write off its costs. Iacocca did not see cars as a social issue; his concerns were selling points like power, price, and style.
With the Cardinal dispatched, Iacocca started chipping away at the Falcon’s utilitarian image. His first salvo was the Falcon Futura, a new trim series introduced late in the 1961 model year. The Futura dressed up the Falcon’s cabin with Thunderbird-style bucket seats and center console, full carpeting, additional sound insulation, and jazzy vinyl and stainless steel trim. At $248 more than a basic Falcon, the Futura was expensive, but it made for a much more attractive and livable interior. A convertible followed in mid-1963, as well as a hardtop and the new Falcon Sprint, powered by a 260 cu. in. (4,267 cc) V8; all were a long way from the small four-cylinder McNamara had originally advocated.
As with the later Plymouth Barracuda, though, efforts to transform the Falcon’s image were hampered by the blandness of its original conception. Public reaction to Iacocca’s efforts was mixed. The Futura was a hot seller, but the convertible was never more than a niche item and the Sprint was a flop.
Iacocca was not discouraged because he was busily shepherding a purpose-built new model, designed to do what the Falcon Sprint could not. That model, which became the Ford Mustang, was as much Iacocca’s car as the Falcon had been McNamara’s. It was not so much a replacement for the Falcon as a reinvention, representing what Iacocca felt the Falcon should have been in the first place. Iacocca made no secret of the fact that his goal was for the Mustang to beat the Falcon’s first-year sales, which it soundly did. Indeed, the Mustang soon established a lucrative new market segment that would generate substantial profits for Ford for the next 40 years.
EXIT FORD FALCON, ENTER FORD MAVERICK
Once the Mustang debuted, the Ford Falcon was relegated to an increasingly marginal role in Ford’s U.S. lineup. The original package survived through 1965 with a series of minor revisions. For 1966, it was redesigned and enlarged, becoming essentially a cut-down Fairlane and sacrificing a measure of its previous space efficiency for a greater resemblance to its Mustang sibling. Neither interesting enough to tempt sporty-car buyers nor frugal enough to represent a serious competitor to the latest small imports, the Falcon languished in obscurity through 1970.
Ford discontinued the compact Falcon midway through the 1970 model year, although the name was briefly transferred to the base model of Ford’s intermediate Torino line. It was gone by the following year in the U.S., but local versions of it continued to be built in Australia. (The Australian Falcon, famous to moviegoers for its role in the Mad Max film series, underwent a wholly separate evolution, and its descendants are still sold today. That complicated history is outside the scope of this story, but we’ve written about it separately: Australian Falcon part one — part two.)
The supreme irony of the Falcon story is that in mid-1969, Iacocca essentially repackaged the original Falcon’s running gear to create the new Ford Maverick. The Maverick had notably sportier styling than the Falcon ever did, but in size, mechanical components, and under-$2,000 starting price, it was the same wine in a new bottle. The Maverick even emulated the old Falcon’s limited option list, much to the annoyance of Ford dealers.
The reason for this curious backpedaling was that the market for small, more fuel-efficient imported cars like the Volkswagen Beetle, which McNamara had noted a decade earlier, had grown from a trend to a movement. It was one for which Ford (like the rest of Detroit) was wholly unprepared, despite the profits of the Mustang and other Iacocca inspirations like the LTD and Lincoln Continental Mark III. While Ford scrambled to prepare the subcompact Pinto, the only stopgap Iacocca could conceive was a reinvention of the Falcon. As the seventies wore on, with the OPEC embargo and the dawn of CAFE standards, Iacocca was almost sorry he had killed the Cardinal; in his 1984 autobiography, he admitted that by the mid-seventies, it would have been very popular.
Nevertheless, the Maverick proved to be a sturdy, unpretentious car, far better than the inept, problematic Pinto. The Maverick proved a strong seller, lasting until 1977. Even then, Ford repackaged it a third time to create the luxury-oriented Granada, which lasted into the early 1980s, several years after Iacocca’s departure from Ford.
Although it isn’t one of Ford’s most famous cars, the Ford Falcon remains one of the more successful. Including its Mustang, Maverick, and Granada derivatives, its basic package sold more than 11 million cars, not even counting the Australian Falcon line. The early Falcons, little loved and often invisible in their day, have survived to become modestly collectible, a fact that would probably perplex both Iacocca and McNamara.
The Ford Falcon embodies a fundamental tension at the heart of the modern economy, and not simply within the auto industry. At one pole of that tension is the statistician, the “bean counter” who seeks efficiency at any cost and fights tooth and nail against every “unnecessary” penny spent. At the other pole is the salesman, willing to go to any extreme, however illogical, that might earn an extra sale. Such tension is an inherent, perhaps necessary part of any consumer economy.
In an ideal world, the two poles would be neatly balanced, producing products that are desirable and innovative without sacrificing efficiency. Sadly, that is all too rarely the case. Where pure rationality prevails, the result is technical and conceptual stagnation. Where marketing wins out, the ultimate results tend to be useless bulk, needless gimmickry, excessive thirst, and financial over-extension. The consequences of decades of oscillation between those extremes are readily apparent to anyone who has recently picked up a newspaper or turned on a television.
Lee Iacocca has said that his later success owed a great deal to his former boss, but he and McNamara rarely saw eye to eye. More importantly, they never really created a synthesis of their divergent philosophies. McNamara may have respected Iacocca’s ability to communicate with the salespeople and engineers, but he never used it or learned from it. Both at Ford and in Washington, he seemed more interested in imposing his will on others than hearing their points of view, and he was often despised by his colleagues and underlings. Iacocca, for his part, learned from McNamara how to use numbers as a sales tool, but it was many years before he acknowledged that McNamara’s interest in fuel efficiency, downsizing, safety, and emissions had been ahead of the curve — after the market and the public mood had already shifted in that direction.
In Errol Morris’s 2003 documentary, The Fog of War – Eleven Lessons from the Life of Robert S. McNamara, Robert McNamara admitted (albeit obliquely) that his greatest weakness was his lack of empathy: his inability — or unwillingness — to view a situation through anyone’s perspective but his own. Had he realized that 50 years ago, had he and his fellow Whiz Kids attempted to make allies of the salesmen and the “irrational” thinkers, rather than establishing themselves as obstacles to be overcome, both the American auto industry and the American economy might look very different today.
Background on Robert McNamara and Lee Iacocca came from Thomas R. Bonsall, Disaster in Dearborn: The Story of the Edsel (Automotive History and Personalities) (Stanford, CA: Stanford General Books, 2002); Douglas Brinkley, Wheels for the World: Henry Ford, His Company, and a Century of Progress (New York: Viking Press, 2003); David Halberstam, The Reckoning (New York: William Morrow and Company, 1986); Lee Iacocca’s memoir, Iacocca: An Autobiography (New York: Bantam Books, 1984); Richard A. Johnson, “The Outsider,” American Heritage Summer 2007, www.americanheritage. com/ articles/magazine/ it/2007/1/2007_1_29.shtml, retrieved 27 October 2007; Tim Darling, “The Whiz Kids: How 10 Men Saved America (and Then Almost Destroyed It),” Amnesta.net, July 2008, www.amnesta. net/other/whizKids/, retrieved 27 October 2008; Randy Leffingwell and David Newhardt, Mustang: Forty Years (St. Paul, MN: Crestline/MBI Publishing/Barnes & Noble Publishing Inc., 2003, 2006); and The Fog of War – Eleven Lessons from the Life of Robert S. McNamara (produced by Errol Morris, Julie Ahlberg, and Michael Williams, directed by Errol Morris, United States: Sony Pictures Classics, 2003).
Information on the origins and performance of the Falcon came from Tim Howley, “Full Dress Falcon: 1963 Sprint V-8,” Special Interest Autos #67 (January-February 1982), reprinted in The Hemmings Motor News Book of Postwar Fords: driveReports from Special Interest Autos magazine, ed. Terry Ehrich (Bennington, VT: Hemmings Motor News, 2000), pp. 96-103, and the road tests “Preliminary Road Test: Ford Falcon” Sports Cars Illustrated November 1959; John R. Bond, “Road Test: Ford Falcon,” Road & Track November 1959; Duncan Maxwell, “Testing the Ford Falcon,” Cars January 1960; “The FORD FALCON Fordor Sedan (The Motor Road Test No. 2/60),” The Motor 15 January 1960; “Design Development of a Car – The Ford Falcon,” Canada Track & Traffic March 1961; “Road Test: Ford Falcon Futura,” Motor Trend September 1961; “New Car Classic, Cars April 1963); Jim Wright, “Falcon Sprint,” Motor Trend February 1964; “Ford Falcon Sprint,” Car Life June 1964; and “Ford Falcon: What Is a Falcon?” Road Test March 1965, all of which are reprinted in Falcon Performance Portfolio 1960-1970, ed. R.M. Clarke (Cobham, Surrey: Brooklands Books Ltd., 1998).