Donald Petersen, CEO who pulled Ford out of 1980s crisis, dies at 97

By Keith Naughton

Donald Petersen, the Ford Motor Co chief executive officer who helped pull the automaker out of a financial crisis in the 1980s with the introduction of the Taurus sedan, the best-selling car in America for four years, has died. He was 97.

Petersen died of natural causes April 24 at his home in Bloomfield Hills, Michigan, according to his niece Laura Peterson.

Only the second Ford CEO who wasn’t a Ford himself, Petersen ushered in a period of prosperity while leading the Dearborn, Michigan-based automaker from 1985 to 1990. During his tenure, Ford posted record profits after overhauling its lineup with more fuel-efficient offerings such as the Taurus. But his legacy was complicated by friction with the Ford family.

The Taurus represented Ford’s most successful response to an onslaught of competition from Japanese automakers when it debuted in 1985. Its aerodynamic look, which some called “jelly-bean styling,” sprang from Petersen challenging designers to come up with a car they’d be proud to have in their driveways.

That is “a standard to which we still hold ourselves,” Ford said in a statement, adding that Petersen “insisted on teamwork and excellence in the name of customers and guided Ford through a period of revitalization and intense competition in the global auto industry.”  

Petersen sought the counsel of W. Edwards Deming, the renowned statistician and quality expert whose ideas heavily influenced Japanese manufacturing after World War II. That led to a push to improve the reliability of Ford’s cars to try to compete with higher-quality offerings from Toyota Motor Corp. and Honda Motor Co. 

Under Petersen, Ford’s ad slogan became “Quality is Job One.”

“More than anything, he would want to be remembered by the impact he had on how people work together, while focusing on quality and the customer with the driver’s car,” Laura Peterson, his niece and a former Boeing executive, told Bloomberg News a few years ago. “Taurus is such a symbol of all those things.”

As CEO, Petersen endeavored to change a corrosive culture at Ford that he blamed for abuses he said he endured in his 40-year career there. Culture change was hard for Ford — and for Petersen himself, who was a product of the company’s rigidly hierarchical management structure. 

“Time and again, Petersen would tell interviewers and audiences he didn’t want Ford employees to be subjected to the same abusive treatment that he himself had encountered during his climb up the corporate ladder,” Paul Ingrassia and Joseph B. White wrote in Comeback: The Fall and Rise of the American Automobile Industry (1994).

But Petersen sometimes had trouble practicing what he preached, Ingrassia and White wrote, citing anecdotes of him dressing down subordinates. “You can live with a tendency to anger and at the same time have a real caring about people,” Petersen told the authors. “The two are not incompatible.”

Petersen was the second consecutive CEO in the company’s then-82-year history who wasn’t a member of the company’s founding family, taking the helm after Philip Caldwell retired. He ultimately encountered tension with the Ford clan — which still controls the automaker through a special class of stock — after limiting the board duties of two of its scions: Edsel Ford II and William Clay Ford Jr., now Ford’s executive chair.

Family members went public with their concerns about Petersen and his management team in a Fortune magazine story published in early 1989.

Severance Package

“I’ve made it clear on one or two occasions to Mr. Petersen that it does seem a bit odd to me that there are three classes of directors: inside, outside and Billy and me,” Edsel Ford II told Fortune.

Soon thereafter, the CEO departed with a $10 million severance package, Ingrassia and White wrote. 

Petersen said he retired voluntarily. “It’s time to repot myself,” he said at a news conference at Ford headquarters.

In 2006, he was among the prominent voices who recommended Alan Mulally to succeed Bill Ford as Ford’s CEO. Mulally went on to become one of the company’s most successful leaders, steering it through the Great Recession of 2008-2009.

Donald Eugene Petersen was born on Sept. 4, 1926, in Pipestone, Minnesota, to William and Mae Petersen. The family moved to Long Beach, California, when he was 2 years old. Later they settled in Portland, Oregon, where he went to high school, according to a 1984 New York Times story.

Marine Corps

He earned a bachelor’s degree in mechanical engineering from the University of Washington in 1946 and served in the US Marine Corps in World War II and the Korean War.

He joined Ford in 1949, the same year he received a master’s degree in business administration from Stanford University, according to a Ford biography.

He held a variety of senior-level positions and became executive vice president of international automotive operations in 1977. He joined Ford’s board that same year and worked as president and chief operating officer from 1980 until 1985.

After leaving Ford, Petersen became a member of Boeing Co.’s board. He also served as a director for Hewlett-Packard Co. and Dow Jones & Co.

Petersen married the former Jo Anne Leonard in 1948. They had two children, Leslie and Donald, according to Marquis Who’s Who.