What do you get when you cross a concept with an afterthought? Edsel, a name synonymous with failure. Edsel was a story of calamity, intrigue, ineptitude and plain bad timing. It was the answer to a post-industrial age riddle that no one ever asked. It’s been six decades since the Edsel’s brief existence on the automotive stage and people still know of it. The 22-year old, guitar-playing, non-car guy barista at our local Starbucks has heard of the Edsel, “That old car that flopped because it was funny looking?” Edsel even earned unfortunate recognition in Webster’s New Colligate Dictionary, “a product, project, etc. that fails to gain public acceptance despite high expectations, costly promotional efforts” How did the pathetically proud, lovably odd Edsel earn a spot alongside New Coke, the Susan B. Anthony dollar and Betamax atop the pantheon of product blunders, a universal symbol for failure? Let’s find out.
Timing Is Everything…Especially When its Bad
When work began on the Edsel in the early days of 1955, America was at an apex of optimism. The post war decade that proceeded brought tremendous expansion. Job opportunities were aplenty. Incomes were soaring. An affluent new middle class had emerged to power the nation on a quantum leap in consumerism. The Baby Boom was in full swing. As cities overflowed with growing families new suburbs sprouted. Sprawl entered the nation’s lexicon. This exodus to the hinterlands was made smooth by a new interstate highway system, and made painless by dirt cheap gasoline. It was a revolutionary time in personal transportation.
The automobile was at the epicenter of this newly suburbanized society. Between 1940 and 1955, car registrations more than doubled. A rapidly expanding American middle class had money to burn and 2-car garages to fill. The bigger and shinier the machine the better. And in the mid-1950s no one did big and shiny better than General Motors. The General’s motto since the 1920s was “A make for every purpose and purse.” That meant that when a customer was ready to trade in his plain-Jane Chevy, he could trade up to a more powerful Pontiac, a larger fancier Oldsmobile, or the professional man’s car, a Buick, and never leave the GM family. This strategy was alive and strong in 1955. Sales of GM’s mid-range brands were up over 150% since 1940.
The Chrysler Corporation also had a trio of brands fancier than their basic Plymouth. The Dodge, DeSoto and Chrysler marques roughly matched their competitors from GM in size and price. The Ford Motor Company had its own Mercury brand competing in this profitable niche. But while the stylish Mercury did well, it was still a bit player. Its share of the mid-priced market was dwarfed by GM’s triple powerhouses. Ford management – a number of whom had been recently hired away from GM – was determined to close the gap. The Edsel, would lead the charge.
Not only would Edsel be the first new make of automobile in more than a dozen years, it was also the first car ever to be created not by engineers or entrepreneurs but by marketers, a new group of management that had arisen during those heady days. Prior to Edsel, cars were designed, built and then offered to the public. Price, performance and features determined how customers would perceive it. With the Edsel, the perception was created first. The car followed, and it was designed to reflect an image laid out by the research. This new way of creating a product wasn’t cheap. More was spent on Edsel’s development and promotion than any consumer product in history to that point – nearly $3 billion in today’s dollars. With a booming market in front of it and massive resources behind it, the stars seemed aligned for Edsel’s resplendent success.
But the stars, they can be mesmerizing. Gazing at that those beautiful shinning lights one can forget that they emanate from millions or even billions of years in the past. A product as complex as an automobile required about 3 years to get from the drawing board to the showroom. The Edsel was conceived with 1955’s animating spirit of abundance. By the time the 1958 Edsel was unveiled, the market for which it was so painstakingly created had changed dramatically.
Literally days before the car was introduced to America’s upwardly mobile middle class, the roaring U.S. economy that paid their salaries had lurched into a deep and painful recession. Selling cars in a recession is hard. Selling an unproven car that was designed for good times aplenty is doubly so. But with the resources of one of the world’s largest companies behind it, Edsel might have been able to ride out the storm…had that been its only handicap.
Born of a House Divided
In 1945, just as light shown on the horizon of a world at war, darkness had descended on the Ford Motor Company. Crushed by loss and guilt over the untimely death of his only child, founder Henry Ford had descended into senility. The relationship between Henry and his son, Edsel Bryant Ford, had been a difficult one to say the least. But together they made the Ford Motor Company go. Now it was rudderless. That was a problem for the U.S government. For while the end of WWII was in sight, it wasn’t over yet. Ford was still one of the nation’s most important military suppliers. The Ford Motor could not be allowed to falter. So when the Pentagon released Edsel’s eldest son, 27-year old Henry Ford II, from his naval service several months before VE-Day to take the helm of the company that bore his name, it may have been the 1945 equivalent of To Big to Fail.
Growing up, Henry II had always seemed more interested in sports and women than running the family business. Now he faced a daunting task. The Ford Motor Company was estimated to be losing $10 million a week. The management team he’d inherited had been decimated over the years from purges by his vindictive and arbitrary grandfather. Young, untested and suddenly thrust into the head chair, Henry II possessed the sense and good instincts to know that he needed help.
The most pressing problem facing Henry II was restoring order to the company’s finances. For that he hired a group of MBA-trained officers from the Army Air Force’s Office of Statistical Control. They came as a team and billed themselves as efficiency experts. After securing key positions throughout the company, these executives gained the nickname, Whiz Kids, for their youth and all the questions they asked of the old school Ford managers. The group came to be led by the brilliant and ambitious Robert McNamara.
With the Whiz Kids at work repairing Ford’s finances, Henry's next set out to invigorate the product side of the company. McNamara and his finance men were smart but they were not familiar with the ways of the car business. For this task the young CEO hired Ernest R. Breech, chairman of Bendix Corporation and a former top General Motors executive, to be Ford’s chief of operations. Breech in turn placed right-hand man Lewis Crusoe and other former GM men in key positions throughout the company. They set about to recast Ford’s product structure.
The car guys and the bean counters; these two camps represented very different visions for the future of the Ford Motor Company. Breech and his team sought to emulate their former employer. That meant having multiple automotive divisions, each staking claims to different price and status segments of the market. McNamara’s Whiz Kids were focused on the bottom line. Ford was in the business of generating profits. Selling cars were the means to that end. The name on the fender was irrelevant. They looked to maximize sales while keeping overhead to a minimum.
All the while, Henry Ford II seemed content to let the two factions duke it out to see which would plot the best course for his company, while he concentrated on learning how to run a major corporation. What ensued resembled a professional wrestling cage match, only with suits and briefcases.
With the 1950s under way, the U.S. car market had divided into four roughly equal quarters. The popular-priced Ford and Chevrolet brands each split about half of all new car sales. General Motor’s mass class brands, Buick-Oldsmobile-Pontiac combined, held another 25%. That left a dozen other makes, including Ford Motor’s own Mercury, to scramble for the remaining quarter. It was clear to the product men that any significant growth for Ford would have to come at the expense of the General’s B-O-P brands.
Hot to beat their former employer at its own game, the former GMers first foray down the brand expansion path was the Monterey-Lincoln Program. M-L was centered around a handsome and substantial concept car built on a lightened Lincoln platform. Ford’s Mercury brand was competing at the lower end of the mid-range - primarily with Pontiac, Dodge and the Olds 88. With a bigger Lincoln-derived body, the M-L was meant to fill the gap in Fords’ lineup between Mercury and Lincoln, putting it in competition with Buick, Chrysler and the bigger Olds 98.
The project quickly ran into difficulties. The number-crunching Whiz Kids argued that the focus should be on expanding offerings in the volume Ford brand. They contended that the M-L was unnecessary. Henry II’s younger brother, Benson Ford, was currently developing a new ultra-luxury Continental line that would stand at the top of Ford’s brand structure. Lincoln had never had much success against Cadillac. With the Continental soon to be plying the upper status-sphere, they argued, why not bring Lincoln down a notch and let it compete with the upper-middle class brands? Ford Motor could then cover the same markets without incurring the millions in overhead needed to field another automotive division. The bean-counters won the day. The Monterey-Lincoln project was shelved.
Thus was registered the first casualty in the battle for power between the Whiz Kids and the Product Men. Clashes occurred with regularity. Some produced casualties. The Edsel would be the biggest.
Money in the Middle
As the year 1955 approached, the product men had increased their clout in the corporate suites of Dearborn. Ernie Breech’s most trusted lieutenant, Lewis Crusoe, had been running the high volume Ford Division since 1950. In those five years the disposable income of America’s middle class expanded rapidly. Under Crusoe’s direction, his division won an outsized piece of that pie. He approved a fancier version of the basic Ford called the Crestline. The car did well and added incremental volume at fat profit margins. Crusoe also championed the 2-seat Thunderbird, which debuted at the end of 1954. The stylish roadster did not add many sales…nor any profits at all. It did however, cast a halo of coolness over the once stodgy brand. Ford sales rose from 800,000 cars in 1949 to 1.4 million in 1954, earning Crusoe a promotion to head up Ford Motor’s car and truck operations, the #3 spot in the company behind Henry II and Ernie Breech.
With the Breech faction in the ascendency, the time was at hand to again push for that second mid-range car line and begin to match General Motors across the brand spectrum. In a presentation to the Board late in 1954, Crusoe’s team showed research that 87% of the owners of GM’s mainstream Chevy traded up to a Pontiac, Olds or Buick. Over at the Chrysler Corporation, 77% of Plymouth owners moved on to Dodge, DeSoto or Chrysler. Only 26% of Ford owners, however, later bought a Mercury. Ford Motor, with its lone entry in this lucrative category, was losing substantial sales to both its cross town rivals. They argued that Ford had to have another brand in order to fully share in the spoils of this booming mid-range market. It didn’t hurt their cause that 3 months into the 1955 model year, the mid-priced market was off to a red hot start. Pontiac, Oldsmobile and Buick were collectively selling 45% ahead of 1954, while the striking new Chrysler/ DeSoto/ Dodge trio was surging 60%. The facelifted Mercury brand was up by a decent but lagging 38%. Ford needed to up its ante.
Seeing a groundswell of support - Henry II was said to have stood in applause after the presentation - Robert McNamara, who had just taken Crusoe’s place as head of the powerful Ford Division, did not give voice to his opposition. There were more effective means at his disposal.