Ford does not mention the government bailout they received when they had the largest recall in automotive history. Had they not been able to get the Reagan Administration to pull strings behind the scenes, they would have been bankrupt in the early eighties.
The notoriously bad quality of Ford products came home to roost in the late seventies, when their transmissions jumped from “park” into “reverse” and ran over people getting stuff out of the trunk. Nearly 200 people were killed, and over 1400 were injured. According to the Wall Street Journal, Ford lawyers went into action to keep this problem out of the news, and paid over $20,000,000 in shutup money to relatives of Ford victums. But it was such a massive problem that even an army of Ford lawyers with open check books could not keep a lid on it.
I worked at the Sharonville Transmission Plant during the time that these defective transmissions were manufactured, and that was part of the motivation for me to write my book “A Savage Factory” about conditions in the plant, especially how those defective transmissions were built. Of course I had other motivations, also, such as how Ford treated people: employees and customers. I felt that you cannot run a company like it is still 1930, you cannot treat customers and employees like leftover garbage, and you cannot sell low quality products in a competitive global economy. I wanted people to see how the auto industry functioned so changes could be made and our most important manufacturing industry could be saved.
When stacks of complaints piled up in government offices about transmissions that were killing and injuring people, the Federal Government issued the largest recall in automotive history to Ford Motor Company: 23,000,000 vehicles were to be recalled for defective transmissions. Ford went to President Reagan and told him that if they had to recall and repair 23,000,000 defective cars, it would drive the company into bankruptcy. We were still recovering from the deepest recession since the Great Depression, and Ford was already losing billions of dollars. This recall would put an end to Ford Motor Company and cause hundreds of thousands to be unemployed at a time when Chrysler, because of their horrible quality, was also facing bankruptcy.
President Reagan, new in office, and facing the economic mess left by Jimmy Carter, had no intention of having his presidency forever marked by the bankruptcy of our auto industy. He did what any astute politician would do. He made a few phone calls. In a matter of days the Federal Government no longer had the authority to issue mandatory recalls. They could issue safety advisories. But they could no longer require companies to recall products.
Ford negotiated with the government, and got off the hook by agreeing to send out, via U.S. Mail, warning stickers to be placed on the dashboard of 23,000,000 defective Fords, warning that the transmissions could cause injury or death. I often wondered who would buy a car with a warning sticker saying that the transmission could cause injury or death. Apparently a whole lot of people, because Ford survived the largest recall in history, and, within a few years, was again earning billions.
I wondered how many times the government would be able to throw taxpayer money at a failed industry before they faced a taxpayer revolt. Now I am amused by Ford using, very effectively, the fact that they have not taken any governement money (yet) as a marketing ploy to steal customers from their struggling Detroit competitors. They fail to mention that they would have been out of business decades ago if the government had not given them a bailout at the expense of the safety of the American People.