Lutz/Poling: 2 ways of seeing the auto world
Richard Johnson is managing editor of Automotive News.
In the 1970s, when Red Poling was chairman of Ford of Europe and Bob Lutz was president, they each took the Myers-Briggs personality test and came out as complete opposites. It was amazing the two men could even understand each other.
Poling, who died last week, was 100 percent numerate: He wanted data on everything. Lutz was a feel player.
"In business he and I were absolutely at opposite ends of it," Lutz once remarked. "He would drive me crazy."
One day Poling told Lutz that Ford should withdraw from the French market because it was not showing a profit on its operations there. Ford was selling lots of cars in France, but when all of the expenses that could be charged against doing business in the country were added up, Ford was breaking even at best.
"He said, 'We don't have a fully accounted profit in France,'" recalled Lutz.
"We were doing 100,000 units in France. I said, 'No, we aren't making a fully accounted profit, but there is a huge contribution to fixed costs.'"
Poling said: "'Well, if we don't make a net fully accounted profit in France, I'm not interested. We're not going to do business anywhere we don't make a fully accounted profit.'
"'Red, we're fully accounted breakeven,' " Lutz responded.
"'That means we've got 100,000 units soaking up $4,000 to $5,000 worth of fixed costs each.'"
"'I don't care about that,'" Poling said. "'We've got to get out of France.'"
"'Where are the absorbed fixed costs going to go?'" Lutz asked.
"'It's going to be 100,000 units times $4,000 -- $400 million of fixed costs that are going to have to be absorbed somewhere else. So now the fixed costs get allocated over fewer units, so now the German ones are under water, so are you going to stop business in Germany?'"
And back and forth they went. Of course, Ford stuck it out in France, but the men continued to clash -- famously. Still, Lutz learned from his old boss.
"He was bent on teaching me to be anal, some of which took," Lutz said. "I always respected that the business needs people like him."
You can reach Richard Johnson at email@example.com.