(FORTUNE Magazine) – A BEARDED MAN with burly arms, Mo Murphy, 40, seems typecast as a heavy-press operator, a job in which he earns around $13.50 an hour at the Ford Motor Co. plant in Ypsilanti, Michigan. He speaks, however, in the modulated tones of a professional radio announcer, which makes it hard to believe that until 1985, 20 years after he was first employed at Ford, Murphy could not understand the simple stories he read his children. ''It was just words,'' he says. ''Now I can comprehend what I'm reading.'' What lifted him out of near-illiteracy was an innovative reading program at the Ford plant. While Murphy talked, he was fingering two clippings from the Wall Street Journal that his teacher had just given him to supplement his homework. He can now take the Journal in stride. While Mo Murphy had purely personal reasons for wanting to read and comprehend, Ford and the United Auto Workers had practical business motives for jointly sponsoring the program. Four years ago the managers at the Ypsilanti plant started to train employees in statistical process control -- a popular new technique to improve quality by closely monitoring a manufacturing process. The ultimate aim at Ypsilanti was to put the entire work force through the course. But the first two classes of 100 students were busts. Half the group couldn't understand the material because of deficient reading or math skills. That was a shock, as the discovery of illiteracy in the workplace always is, and eventually Ford and the UAW agreed to start the reading program. Last year Ford spent $166,783 to improve the performance of 204 Ypsilanti employees, including Mo Murphy. Many corporations are joining the campaign against illiteracy. Some contribute money to community efforts, others solicit volunteers for tutoring the disadvantaged. By all odds the boldest moves are in the workplace. Dozens of companies, from Ford and GM to Polaroid, Prudential, and Reynolds Tobacco, have turned themselves into educators of last resort, providing the basic instruction that in an ideal world would be found in the schools. The need could not be more urgent, given the enhanced skills required on the job. The situation may well have been worse 50 years ago, for while schools may have been better, fewer people attended them, and in many jobs illiteracy did not matter. Today it is a national blight, stunting personal development and diminishing the capabilities of the employed labor force. Last April a nationwide survey sponsored by the U.S. Department of Education indicated that 17 million to 21 million adults are illiterate. A sample of 3,400 people age 20 and over had taken a multiple-choice test with 26 questions of surpassing simplicity (see box). A score of fewer than 20 correct answers constituted failure -- and nearly 13% failed. Functional illiteracy -- defined as the inability to use reading skills to cope with everyday tasks -- is apparently an even greater problem. A study by the Adult Performance Level project of the University of Texas showed that 14% of adults age 18 and over could not fill out a bank check properly; 38% could not match personal characteristics with job requirements in help-wanted ads; 26% could not identify the deduction for Social Security on a monthly earnings statement. ''Overall,'' the APL study concluded, ''approximately one- fifth of U.S. adults are 'functionally incompetent,' '' varying from 16% for writing to / 33% for computation. The APL final report is now nine years old, but little has changed. Ron Bradley, director of corporate training for Blue Cross Blue Shield of Massachusetts, finds that of clerical workers tested for promotion, 50% read below a median 12th-grade level and some as low as an eighth-grade level. A supervisor's job requires a 12th-grade capacity. Many insurance documents are even more demanding. So Blue Cross runs remedial reading classes in its Boston headquarters for prospective supervisors. In addition it offers all employees catch-up courses conducted by the Continuing Education Institute of Medford, Massachusetts, a nonprofit organization whose other clients include Bank of Boston, Bank of New England, Massachusetts General Hospital, and Data General. Employers of large clerical staffs are often more poignantly aware than factory managers of the startling gaps in new employees' verbal skills. The situation may sometimes be fairly blamed on the schools, but not always; many students in CEI classes are dropouts. If they persist long enough with CEI they will get high school diplomas. Some employers even go so far as to train job applicants in basic skills. A few years ago Prudential Insurance was hit by a Labor Department investigation of its hiring policies. The Newark, New Jersey, company denied discriminating against minorities but finally in 1984 agreed to run a remedial program for rejected job applicants. Classes are held at night in downtown Newark, using a computerized teaching program devised by Control Data Corp. Students sit at computer terminals, setting their own pace of instruction by responding to questions displayed on the screen. As of mid-August 317 job applicants had completed the course, of whom 115 were hired by Prudential; another 12 were offered jobs but rejected them. EMPLOYEES are acutely aware of their own deficiencies. Recently the 10,000 employees at GM's Hydra-matic division, located like the Ford plant in Ypsilanti, Michigan, were polled to determine the kind of basic skills training they thought would be helpful. The pollsters helped workers who had trouble filling out the questionnaire. Some 22% of the 5,700 who responded said that they needed training in ''understanding simple words, signs, and labels.'' The total swelled to 31% for help in ''understanding basic written directions, charts, procedures, and instructions.'' The plant's management and the local union leadership thought that the workers' self-assessment was accurate. What accounts for the persistence of illiteracy among people with decent jobs, earning far above the minimum wage, with long tenure and good performance records? Someone like Richard Eppes, for example, a towering 50- year-old black man who works at a metal-cutting machine at the Ford Ypsilanti plant and earns $13 an hour. Eppes, who spent 11 years in one of Alabama's ''separate but equal'' schools, has been at the Ford plant for 20 years. Until he entered the remedial course last autumn, he could not read even a newspaper because of ''too many big words.'' The buttons to ''increase'' and ''decrease'' the amount of material cut on his machine baffled him for a time, for the decrease button was on top, which he thought was illogical. ''How did you manage?'' I asked, and he grinned, explaining, ''I have friends.'' THE BUDDY SYSTEM is one of many stratagems illiterates use to disguise their handicaps. If they have to fill out a job application, they ask to take the form home. If something must be read on the job, they have suddenly misplaced their glasses, whereupon assistance is offered. Linda Stoker, who runs the Polaroid in-house educational program for hourly workers, recalls a highly skilled design technician who couldn't read the instructions to call up a particular computer program. He color-coded the keys on his board and memorized their sequence. Once he had the program on screen he could deal with it, for it consisted entirely of numbers. He doted on numbers. Occasionally the nonreader betrays himself. The GM metal fabrication plant in Grand Blanc, Michigan, recently has been running a hazardous-materials information program, presented in skit form on a TV screen. On occasion the skit is halted and a question appears on the screen. The viewer is supposed to respond by touching the screen in the appropriate place. From time to time a viewer sits immobilized before the machine. The instructor then diplomatically explains what's going on. Employed illiterates are adept at picking up information by watching and listening. (''If you let me see it once, I'll do it,'' boasts Eppes.) An onlooker wonders, however, how they got hired in the first place. The answer is that personnel departments ask questions about schooling -- which reveal little about reading ability -- but often do not administer pre-employment tests, which have been held by the courts to be discriminatory if they have an adverse impact on minorities. Only tests that can be proved to be directly ) ''job related'' are likely to be invulnerable. Devising them is expensive, and many employers avoid all tests. Many industrial and clerical jobs have long required only a low order of literacy. The computer revolution has changed all that. Middle-aged workers, the ones with enough seniority to survive the widespread layoffs in manufacturing, are facing new demands. The Onan Corp., which employs 650 production workers in Fridley, Minnesota, a suburb of Minneapolis, collided head on with the skills problem a few years ago. The manufacturer of electrical generating and allied equipment decided in 1981 to embark on a $50- million capital investment program to increase productivity. Among other things, the new program meant adapting machining operations to a dazzling new system called computer numeric control. In this system an operator monitoring a computer screen and manipulating a keyboard controls two, three, or even four drilling machines, lathes, or punch presses, rather than one as before. Bill Iacoe, the plant manager, recognized that his staff would have trouble handling the new technology. He authorized a study in which employees were asked to fill out a questionnaire about educational backgrounds and attainments. THIRTY RESPONDENTS could not handle the questionnaire. They either could not understand the questions or could not compose their replies -- or both. Apart from the illiterates, others were innumerate, to use a British term -- that is, they were incapable of dealing with numbers. Long division was a problem for some; many could not add fractions, handle decimal points, or compute an average, let alone solve an algebraic equation. To cope with the problem, Onan instituted an elaborate in-plant educational program, starting with basic reading and math. Students advanced by stages to trigonometry and computer numeric control. The company spends $20,000 to $25,000 a year on the program, with a quarterly enrollment of up to 120 students. GM and Ford run the largest number of basic skills programs. Under the 1984 contract with the UAW, more than $200 million a year is available at GM and at least $120 million over three years at Ford. Basic language training is only part of the program, which covers almost all forms of adult education, including tuition assistance for college studies. Last year Ford had basic reading courses operating at 25 plants (out of 90), enrolling 3,400 students. Ford and GM run the programs themselves but sometimes cut costs by getting local adult-education systems to teach the courses, with the state and federal authorities footing a bit of the bill. Most of the courses, at the auto companies as elsewhere in industry, are at the work site. Part of the reason is convenience, for in-plant classes can be scheduled before and after shifts, sparing the student a trek to a night school following a hard day's work. Moreover the formal atmosphere of a classroom is intimidating to many adult students, recalling painful episodes in their youth. Many are also skittish about reciting in class before younger students and prefer the company of their peers. Enrollment is voluntary in all the programs, and if the purpose or subject matter is job related, instruction is generally on company time. But even if the purpose is ''personal enhancement,'' as the adult-ed fraternity calls it, the classes are free. The best programs keep the classes small, providing time for a lot of individual instruction. Ford limits enrollment to eight people per class in its Ypsilanti reading program. They meet 90 minutes at a time, twice a week for ten weeks. The first class begins at 5 A.M., the last at 8 P.M. After a week's break 60% of the students re-enroll for more advanced work. The reading material, most of it created by the four teachers, is not directly job-related but tailored to the presumed interests of autoworkers -- new car models, the import problem, union activities, even personality sketches of the men who run Ford. A typical class begins with 20 minutes of what is called USSR -- uninterrupted sustained silent reading. Then the teacher reads aloud and there is general discussion, followed by essay writing. The teacher roams the room working out knotty problems with each student in turn. Oddly, despite all the efforts in the field, only sketchy or impressionistic information exists about the programs' effectiveness. Many of the programs are too young to have generated precise data as to, say, the percentage of students who achieved various levels of reading skills. Ron Bradley maintains that all his Blue Cross students who complete the course for prospective supervisors attain the goal of a 12th-grade reading level; 25% of those who start drop out. At Ypsilanti, as elsewhere, teachers point to the high re-enrollment rate as proof that the students are benefiting. It is a reasonable assumption, for a student has little motive to persist if he is getting nowhere. What is even more significant, perhaps, is that employers regard the programs as useful and generally continue them as long as the need remains. In some cases, as with New York Telephone Co., a shrinking work force has led to a much diminished need for basic skills courses; New York Tel now puts emphasis on more advanced courses. Polaroid, however, which cut its work force some years ago, still prizes basic skills training. As technology imposes new literacy demands, many more companies are going to become part- time educators. The teachers in the various programs, many with a missionary zeal about their work, tend to gauge success by the students they have visibly aided. A prized example at a Pratt & Whitney aircraft engine plant in East Hartford, Connecticut, is Cephus Nolen, 58, who worked as a foreman for over a year without being able to read. He was a good actor, and when a notice came around, he would say, ''I'll take care of it,'' and find a friend to read it to him. Then the company started an in-house basic skills program. Nolen took courses for four years in basic and advanced English and math. In his third year came a sense of relaxed fluency. ''We could read, we could write, it seemed a light was turned on,'' he says. After finishing the company program in 1979, he took a course at a community college. Nolen, understandably, regards himself as a success story. So do Pratt & Whitney, Ford, GM, and other companies around the country who have found it in their corporate interest to make the classroom an adjunct to the factory floor. BOX: A LITERACY TEST Here are questions from the U.S. Department of Education test on literacy. Choose a synonym for the italicized word or phrase. 1) Persons may receive benefits if they are eligible. a. qualified b. complete c. single d. logical 2) We cannot see you today. When can you return? a. When was the last time you came? b. Who should you call when you come? c. On what date can you come again? d. Are those the papers you can return? 3) Enter your Social Security number here. a. Find b. Check c. Show d. Write 4) You may request a review of the decision made on the application or recertification for assistance and may request a fair hearing concerning any action affecting receipt or termination of assistance. a. will get the service b. must help the worker c. must sign the application form d. have a right to an appeal