Ford Motor: Corporate Rap Sheet

Ford Motor

By Philip Mattera

Over the years, Ford has exhibited a wide range of behavior with regard to corporate accountability. On the labor front, the company initially promoted a form of repressive paternalism, then fought unionization in the United States, and later made peace with the United Auto Workers. Subsequently, when economic conditions worsened, it did not hesitate to eliminate vast numbers of jobs. Ford’s image was seriously tarnished in a series of safety scandals in the 1990s and 2000s. After the founder’s great-grandson took over as chairman in 1999, he made unprecedented overtures to environmentalists but was then unable to live up to his green promises. Over the past decade, the company tried to change its environmental profile, but market setbacks often got in the way.

 

Environment and Product Safety

ENVIRONMENT. For more than three decades, Ford has been embroiled in controversies over the environmental impact of its vehicles, and it long resisted higher federal standards for fuel economy. In 1973 the company was fined $7 million for falsifying tests results submitted to the federal government on emissions testing. In 1991 more than 60,000 Ford pickup trucks and vans were recalled for emissions that exceeded federal standards. The following year more than 1.2 million Ford vehicles were recalled for similar reasons.

In 1998 Ford was fined $2.5 million for a pollution-control problem on 60,000 of its 1997 Econoline vans, plus another $3.8 million in other costs and compensatory measures.

After William Clay Ford Jr. took over as chairman in 1999, he tried to improve the company’s image on environmental matters. Ford was the exclusive sponsor of Time magazine’s special Earth Day edition in 2000, and it sponsored a concert in San Francisco to honor the “heroes for the planet” featured in the magazine. In May 2000 the company issued its first corporate citizenship report, which included an admission that the SUVs on which it was so dependent caused serious environmental problems.

While Ford made overtures to environmentalists behind the scenes, the company did not take any steps to end its production of SUVs. It was also embarrassing to the company that its fleet failed to meet federal fuel-economy standards. Yet in July 2000 Ford vowed to increase the average fuel economy of its SUVs by 25 percent over the following five years. Later the company also broke with its Detroit rivals and supported a plan to use federal tax credits to jump-start demand for hybrid vehicles.

Environmentalists grew disillusioned with Ford as the company, citing the difficult market climate, was slow to make significant fuel-economy improvements. In August 2002 Ford abandoned its electric-car project, and the following year it backed away from its pledge to boost the fuel economy of its SUVs. Bluewater Network launched an ad campaign depicting the chairman of Ford as Pinocchio, prompting the company to threaten legal action against the environmental group.

Ford revived its emphasis on fuel economy in late 2008 amid the growing crisis of the industry and pressure from the federal government for structural changes. Ford introduced the Fusion, its most aggressive effort to compete in the hybrid market with Toyota’s Prius.

For years, Ford has been embroiled in a controversy over the toxic dumping that occurred at its Mahwah plant in New Jersey, which closed in 1980. By 2004 local residents had grown frustrated over botched remediation efforts at the Superfund site. A 2007 article in the New York Times said the situation deteriorated into “what environmental experts say is now among the messiest industrial cleanup efforts in Superfund’s 27-year history.”

SAFETY. Ford's reputation as an automaker was seriously blemished in the 1970s, when its new compact Pinto turned out to have a fatal flaw: Its fuel tank was unshielded and located near the back bumper in the fragile car, meaning that rear-end collisions frequently resulted in horrific explosions. Evidence later emerged that Ford was aware of the vulnerability of the gas tank, but went ahead with production of the car. In one civil case a jury awarded $125 million in damages (reduced by the judge to $3.5 million), but in another Pinto case, company executives were found innocent of murder charges. (For more details, see chapter 30 of Russell Mokhiber’s 1988 book Corporate Crime and Violence.)

Ford was also embarrassed by reports that many of its cars with automatic transmissions produced during the 1970s had a tendency to slip from park into reverse. In 1981 federal regulators forced the company to send warning notices to purchasers of some 23 million vehicles about the problem. Ford may not have been happy about this, but it was a lot less onerous than the massive recall of the cars that had been urged by public interest groups.

In 1996 Ford gave in to public pressure and agreed to pay for replacing ignition switches on more than 8 million cars and trucks that were prone to short circuits that could cause fires. In 1998 State Farm, the largest auto insurer in the United States, sued Ford, charging that the company withheld information about the potential fire hazard from federal regulators and the public. State Farm, which sought to recover monies it paid out in claims relating to the faulty switches, also said that Ford’s 1996 recall did not cover enough vehicles. The insurer released nearly 200 pages of internal documents to back up its claim.

In 1999 the National Highway Traffic Safety Administration hit Ford with a $425,000 fine in the matter. An investigation later revealed evidence that Ford knew about ignition defects, which also sometimes caused vehicles to stall out while making turns, but remained silent. A California judge then ordered the recall of an additional two million vehicles—the first time a U.S. court had ever taken such an action against automaker.

In August 2000 Bridgestone/Firestone announced a massive recall of tires, most of which had been installed on Ford sport-utility vehicles and light trucks. Ford alleged that the tire company had known of the defects for several years. Information later came out suggesting that Ford, as well as Bridgestone/Firestone, had known of the tire defects long before the recalls were announced.

A December 2000 investigation by the New York Times found that in the 1980s Ford had taken a number of design shortcuts that raised the risk of rollover accidents in what would become its wildly popular Explorer SUV.

Ford and Bridgestone/Firestone continued pointing fingers at one another. In May 2001 the tire maker said it would stop selling tires to Ford, accusing it of using the tire issue to divert attention from the safety of its SUVs. Later, the tire maker called on the U.S. Transportation Department to open a safety investigation of the Ford Explorer and its tendency to experience rollover crashes when a tire failed. In June 2001 the feud between the two companies was displayed as chief executives of the two companies attacked each other during a congressional hearing.

In 2013 Ford was fined $17.4 million by the National Highway Traffic Safety Administration for taking too long to recall unsafe sport utility vehicles.

In 2014 federal regulators forced Ford to expand nationwide a recall of vehicles with airbags made by the Japanese supplier Takata.

 

Labor

Henry Ford gained fame as the man who instituted the Five Dollar Day plan for his workers in the 1910s. The facts were somewhat more complicated: Not all workers qualified for that amount, which in any event was not the base pay. A large part of the $5 consisted of a "profit-sharing" bonus that had to be earned—on the job, workers had to maintain a high level of intensity, and off the job, they had to conform to a lifestyle that Ford considered appropriate.

To enforce the lifestyle regulations, Ford created a Sociological Department with inspectors who visited workers' homes, and interviewed family members and neighbors. The company wanted to be sure that workers were not spending their share of Ford profits in a frivolous or irresponsible manner.

Ford also became famous for the diversity of the workers he hired. Critics have pointed out that the varied nationalities and languages made union organizing more difficult, yet at the same time Ford pioneered the hiring of ex-convicts, people with disabilities, and blacks in industrial jobs.

The benign image of the Ford Motor began to dissolve during the Depression. In 1932 a protest march to the company's Rouge plant was met with tear gas and machine-gun fire that killed four people. Dearborn police officers were supplemented by members of the Service Department, Ford's own security force. Headed by Harry Bennett, the Service Department became notorious for its surveillance of workers both on and off the job.

Over the next few years, labor relations in the automobile industry were transformed. A wave of job actions in the industry paved the way for the creation of the United Automobile Workers of America in 1935 as an affiliate of the American Federation of Labor. The commitment of the UAW's activists to industrial unionism clashed with the craft-orientation and general conservatism of the AFL. In 1936 the UAW joined the newly established Committee for Industrial Organization, and set out to organize the big automakers.

General Motors was the first target. Short strikes at various sites around the country were followed by a nationwide action against the company in January 1937. The UAW successfully employed the tactic of sit-down strikes and plant occupations, most notably at the Fisher Body plant in Flint, Michigan. GM capitulated in February 1937, and Chrysler followed suit later in the year.

Things were more difficult at Ford. The organizing effort was curtailed after the infamous 1937 "Battle of the Overpass," in which Bennett's security force and freelance thugs attacked UAW organizers who attempted to distribute leaflets outside the Rouge plant. Although the company had clearly violated the National Labor Relations Act, Bennett bought time by co-opting some UAW leaders and exploiting divisions within the union (which included the creation of a new UAW allied with the AFL). In 1941, shortly after the charges against Ford were finally upheld by the Supreme Court, a wildcat strike spread through the company's plants. Henry Ford, reportedly under pressure from his son Edsel, finally relented and agreed to a representation election. The CIO-affiliated union won the vote overwhelmingly.

Once the presence of the union was an established fact, Bennett took an entirely different approach toward the UAW. Apparently seeking to co-opt the union, he negotiated an extremely generous contract, agreeing to a closed shop, dues checkoff, and a provision that Ford would match the highest wage rate paid by anyone in the industry.

Labor unrest escalated again after the Second World War. Yet while GM suffered a 113-day strike over wage increases, Ford settled with the UAW without an interruption of work. In the following years, the UAW won steady improvements for its members, including pioneering provisions such as supplementary unemployment benefits and company-paid pensions. The union's cooperative relationship with management averted strikes, but it heightened tension between rank and file workers and the UAW leadership. The result was periodic insurgencies on the shop floor, especially when a new generation of workers entered the factories in the late 1960s.

The ability of the UAW to win steady contract improvements came to an end with the auto industry crisis in the late 1970s. In 1979 the union agreed to $243 million in concessions to ailing Chrysler, and the federal government insisted on another $200 million as one term for the government bailout of the company. By the early 1980s, with several hundred thousand autoworkers indefinitely out of work, the UAW felt it had to give in to concessions sought by Ford and GM as well. In some cases Ford was ruthless in its demands for givebacks. At a plant in Sheffield, Alabama, for instance, the company told workers in 1981 that it would shut the plant unless they took a 50 percent cut in pay and benefits, or else bought the money-losing operation.

Some of this lost ground was regained when the industry rebounded in 1983. Still, a tug-of-war remained between company claims that the labor-cost differential with Japan had to be narrowed, and worker resistance to erosion in their standard of living. The leadership of the UAW, dealt with the problem by promoting a more cooperative relationship with management while seeking to expand job security and worker participation. The union also agreed to take part of a wage increase in the form of bonuses tied to the company's profit level.

The UAW continued to cooperate with Ford management in easing work rules and raising productivity, in exchange for modest improvements in job security. The union's strategy of using “jointness” as a way of trying to save jobs was also applied at joint manufacturing operations set up by Japanese companies and the Big Three in the United States, including the Ford-Mazda plant in Michigan. The contract at that facility went particularly far in allowing flexibility, thereby giving management the right to make broad use of temporary workers.

In 1996 the UAW reached a new agreement with Ford that guaranteed a minimum number of jobs and provided incentives—in the form of lower wages—if the company began producing more parts that were previously purchased from outside suppliers. The union also got Ford to indirectly assist the UAW’s efforts against supplier companies by refusing to accept parts produced by replacement workers during strikes. After Ford announced plans in 1999 to spin off its parts operation into a new company called Visteon, it negotiated a deal with the UAW that guaranteed that affected workers would maintain the same wages and benefits as the workforce remaining at Ford.

Despite the spirit of cooperation, Ford announced major cuts in its North American workforce in 2002 and 2006. The company further angered UAW members by announcing that a new assembly plant would be built in Mexico. In September 2006 the company offered buyouts to all of its 75,000 hourly workers in the United States. Almost half accepted the offer.

Faced with a shrinking company and mounting losses, the UAW agreed to additional job reductions in 2007. And in 2009 the union helped the company by allowing it to pay off up to half of its $13 billion obligation to retirees in stock rather than cash. In 2011, Ford’s workers followed the lead of their counterparts at bailed-out General Motors and approved a contract allowed the company to hire more low-wage, entry-level workers. Existing workers received bonuses but no wage increases.

Virtually all of the company’s hourly employees around the world are members of, or represented by, labor unions. Ford has had a mixed labor relations record outside the United States. For many years a hot spot was Britain, the site of major strikes in 1978 and 1988. In the latter case more than 30,000 British Ford workers went on strike to resist company demands for additional workplace reorganization. Company demands went beyond what the unions had consented to in 1985--which Ford had said were necessary to compete with the Japanese car makers that were entering the British market. Other strikes occurred in 1990 and 1999, but labor-management relations quieted down in the 2000s.

In 1985 the first worldwide conference of rank and file Ford workers took place in Liverpool, England. Representatives came not only from plants in Europe--which had previously held such meetings--but also from Brazil, Malaysia, South Africa, Australia, New Zealand, Japan, and North America. Subsequent gatherings of Ford workers from different parts of the world were held under the auspices of the International Metalworkers' Federation and the Transnational Information Exchange. During the 2000s, there was labor unrest at Ford’s operations in Russia, including slowdowns in 2005 and a strike in 2007.

 

Employment Discrimination 

In September 1999 Ford reached a $17.5 million settlement with the U.S. Equal Employment Opportunity Commission to resolve charges of racial and sexual harassment brought by female workers at two of the company’s plants. The company paid $7.5 million in damages to the women and agreed to spend $10 million to train its employees throughout the country on preventing discrimination and harassment.

In 2005 a lawsuit was filed against Ford Motor Credit, a division of Ford Motor, charging that the company allowed auto dealers to discriminate against minorities in setting interest rates on loan agreements provided through its Primus Automotive Financial Services unit. The following year Primus agreed to pay more than $2 million to settle the suit but did not admit any wrongdoing.

 

Human Rights

It was long known that Henry Ford was “soft” on fascism during the 1930s, but since the late 1990s there have been allegations that he and Ford Motor had close ties with Nazi Germany. In 1998 a lawsuit was filed in U.S. federal court alleging that a German subsidiary of Ford made use of forced labor during the 1940s. A November 30, 1998 article in the Washington Post provided details of historical research charging that both Ford and General Motors collaborated extensively with the Nazi regime. Additional documentation appeared in a January 2000 article by Ken Silverstein in The Nation.

Over the past decade there have also been allegations that the management of Ford Motor’s operation in Argentina were involved in the abduction and disappearance of union activists during the “dirty war” against dissidents conducted by the military dictatorship that ruled the country from 1976 to 1983. In 2002 a federal prosecutor in Argentina filed a criminal complaint against the company. In 2006 former union organizers brought a civil suit against Ford.

Ford has been one of the defendants in a long-running lawsuit seeking damages from companies that did business in South Africa during the apartheid era.

 

Subsidies

In October 2008 Ford received approval from the Kentucky Economic Development Finance Authority for some $180 million in corporate income tax rebates. The deal was designed to support the retooling of the automaker’s two Louisville plants to produce both small cars and sport utility vehicles. Gov. Steve Beshear put out a statement claiming that the tax breaks would protect the jobs of more than 5,000 Ford employees and thousands more at its suppliers. The new tax package was a revision of a $60 million deal the state had given to Ford in November 2007.

Despite the subsidies, Ford continued to reduce the numbers of hourly workers at the plants through buyouts.  While getting tax reductions from the state, Ford was sought a reduction in the property tax assessment for one of the Louisville plants. It eventually won a change that allowed it to reduce its tax payment by nearly $1 million. In December 2010 Ford announced plans for a $500 million overhaul of the Louisville facility, saying that it would add 1,000 jobs and become one of the most technologically advanced auto plants in the country.

In late 2009, amid reports that Ford Motor might cut back production at its 4,000-worker assembly plant in the Kansas City suburb of Claycomo, Missouri state officials began discussing subsidies to encourage the automaker to locate a successor product line there. At the urging of Gov. Jay Nixon, legislators approved $150 million in corporate income tax credits for Ford and its major suppliers spread over ten years, with the money coming from the state income taxes paid by workers at the plant. Ford subsequently announced that it would spend $400 million to retool and upgrade the Claycomo plant.

 

Other Information Sources

Violation Tracker summary page

 

Watchdog Groups and Campaigns

Institute for Global Labour and Human Rights (formerly National Labor Committee)

International Metalworkers Federation

Natural Resources Defense Council

Sierra Club

Union of Concerned Scientists

United Auto Workers

 

Key Books and Reports

American Icon: Alan Mulally and the Fight to Save Ford Motor Company by Bryce G. Hoffman (2012).

CIS Anti-Report: Ford 

Dirty Parts/Where Lost Fingers Come Cheap: Ford in China (Institute for Global Labour and Human Rights, March 2011).

Driven by Corporate Responsibility? Ten Top Car Manufacturers--A CSR Analysis (SOMO, February 2010).

Ford (3 vols) by Allan Nevins (1954-1963).

Ford: The Men & the Machine by Robert Lacey (1986).

Henry Ford and the Jews by Neil Baldwin (2001).

Reinventing the Wheels: Ford's Spectacular Comeback by Alan Doody and Ron Bingaman (1988).

Taurus: The Making of the Car that Saved Ford by Eric Taub (1991).

The Five Dollar Day: Labor Management and Social Control in the Ford Motor Company by Stephen Meyer III (1981).

The Fords: An American Epic by Peter Collier and David Horowitz (1987).

Turnaround: The New Ford Motor Company by Robert Shook (1990).

Unsafe at Any Speed by Ralph Nader (1965).

Wheels for the World: Henry Ford, His Company and a Century of Progress by Douglas Brinkley (2003).

 

Note: This page draws from a corporate profile originally prepared by the author for the Crocodyl website in July 2009.

Last updated February 12, 2015.