(FORTUNE Magazine) – IN FAMILIAR antique script on a blue oval field, their name appeared on six million new cars and trucks in 1988. But there hasn't been a family member running Ford Motor Co. since Henry Ford II retired as CEO in 1979. So it comes as a bit of a jolt to realize that Ford remains an enormous family business. Direct descendants of old Henry Ford, who founded the company in 1903, still own $2 billion worth of special stock that gives them 40% of shareholder votes -- effective control of the U.S.'s third-largest industrial corporation.

Now a new generation of Fords is trying to work its way back to the company's highest levels. The younger Fords want more representation on the board of directors, a bigger voice in strategic decisions, and larger roles in management. Though he denies having a ''Machiavellian streak,'' CEO Donald Petersen, 62, appears to oppose them on all counts. He has led Ford to its greatest success in 60 years and strongly feels that ''we must deal with shareholders on an equal basis.'' Some analysts and investors argue that since Ford is so prosperous, it is difficult to make a case for any change, much less giving the family more say. This is a struggle of historic proportions, and at its vortex are two pleasant young men no one would ever mistake for street fighters: Henry II's son, Edsel Ford II, 40; and Edsel's cousin, William Clay Ford Jr., 31, known as Billy. Both are members of the board, rank among the company's top 400 executives, and have their eyes on the CEO's job. Close observers say that Edsel and Billy feel stifled by Petersen and resentful at being treated as junior board members. Says Edsel: ''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's sisters, Charlotte, 47, and Anne, 45, are also agitating for bigger family roles. Charlotte concedes, ''Daddy never liked to talk about business at home, so we never did. If we asked a question, we got a two-second answer. It wasn't that informative.'' Still, she and Anne want to screen nominees to the board and interview candidates for the two or three top management positions, including chairman. The fourth-generation Fords are at odds not just with Petersen but also with William Clay Ford, 63, Henry II's brother and the grandson of old Henry (see chart). As the leader of the family and a vice chairman of the company, William Clay tries to maintain a ''harmonious relationship'' between the family and the company, mostly by keeping his relatives out of top management decisions. ''Suppose we had six candidates for CEO,'' he says. ''I don't think she ((Charlotte)) would learn too much if she had a two-hour interview with them. I don't think she would be able to make a very intelligent judgment about who would be the most qualified.'' The outcome of this struggle and the future of the Ford family's 40% voting stake are critically important to shareholders. The family vote makes the company impregnable to a hostile takeover. And the Fords have already rejected a leveraged buyout as too risky, both for the company and its bondholders. That means, of course, that Ford stock commands no takeover premium in today's deal-oriented market. Moreover, investors' confidence in the stock could be eroded by the possibility that a family member, rather than a professional manager, could run the company. As America's best-known industrial dynasty, the Fords have been the subject of two popular family histories and a television miniseries in the past three years. But the books and broadcasts focused on the past and paid no attention to the emerging conflict between family and management. While Fords generally keep personal matters to themselves -- except when they are dragged into court as they recently were in a dispute over Henry II's estate (see box) -- 12 family members and in-laws spoke with FORTUNE for this story. The younger Fords' activism dates from the death of Henry II in September 1987. While he was alive, he short-circuited questions about a divergence of interests between the family and the company because, in effect, he was the company. Since his death, family members have held two extraordinary meetings -- the first in nearly a decade -- to discuss everything from product strategy to boosting the price of Ford stock. They have formed a trust that will help them vote their stock with a single voice, and they have begun raising money to buy back shares from family members who want to sell. Petersen has taken a few small steps to accommodate family members. He added them to the company's mailing list for important announcements. During his vacation last year, he visited several family members in Seal Harbor, Maine, where they maintain summer homes, and he agreed to brief the family regularly on corporate matters. In September the company arranged a day-long meeting for 30 members of the third, fourth, and fifth generations at its Dearborn design center. The Fords drove a specially assembled collection of 1989 cars, got a peek at future models from design boss Jack Telnack, and listened to Petersen give a 40-minute review of company operations. . BUT WITH strong support from William Clay Ford, Petersen is standing tough on two big matters. The first involves the number of family members on the 21- member board of directors. Right now there are three -- William Clay, Edsel, and Billy. Charlotte, in particular, wants to see more. ''It would be nice to have a woman,'' she says, without specifically nominating herself. Adds Charlotte: ''The criterion doesn't have to be the same as it is for other board seats. It should be family representation, period.'' Uncle William Clay succinctly disagrees. ''There are three of us on the board,'' he says. ''I don't see a need for any more.'' Ford director Drew Lewis, a Petersen appointee who is a former Secretary of Transportation and is now CEO of Union Pacific, concurs. ''I think we have adequate family representation,'' he says. ''If we get too much, then the public doesn't feel it has proper representation.'' The second source of conflict involves Edsel's and Billy's ambitions to run the company. There is no overt rivalry between them; as they both point out, Edsel is nearly nine years older than Billy, so both could eventually become CEO. Anne and Charlotte support Edsel and Billy. ''They will have earned the job,'' says Charlotte. ''It is not as if they had walked in and gotten a free pass.'' William Clay, on the other hand, believes his nephew and his son should go as far as their talents allow, without using family ties. ''I don't think CEO is necessary,'' he says, ''but I do think there ought to be a Ford in some clearly visible management spot.'' Affable on most matters, Petersen freezes over at the mention of another Ford as CEO. He discourages as unthinkable the notion that he is keeping the chair warm for the next generation. ''I'm not a caretaker for anybody,'' he says. ''I admire the fact that ((Edsel and Billy)) are trying very hard to go as far as they can. But being a Ford does not give them a leg up. The principle we must operate on is that selection to top management is based solely on merit.'' That principle will surely apply when Petersen retires in 1991. No family member is in line to succeed him, and it is likely to be a decade or more before Edsel is a candidate for the job. On the question of whether it is valuable to have a Ford near the top of the company, Petersen sounds oddly vague: ''We have always assumed that it is, but it's a little hard to tell.'' PETERSEN HAS even made life uncomfortable for Edsel and Billy as directors. Before his death, Henry II let it be known that he wanted both his son and his nephew to replace him on the board. But William Clay says he had ''eight or ten meetings'' with Petersen before getting him to agree, and Edsel recalls the board ''struggling with the idea.'' Among the objections: their relative youth and inexperience, the inconvenience of flying Billy in ten times a year from his post as managing director of Ford's Switzerland operations, and the awkwardness of having Edsel and Billy report to non-board members in the course of their day-to-day jobs. Edsel and Billy finally joined the board a year ago, but since then neither has uttered a word at a formal meeting. While former Ford chairman Philip Caldwell calls them ''good freshman members,'' Edsel jokes that ''typically we walk in, shake a few hands, and leave after the meeting.'' They are the only directors who do not serve on one of five board committees. According to a company spokesman, Edsel and Billy do not qualify for committees because their jobs rank lower than those of other inside directors. Petersen's coolness to the young Fords surprises industry observers. As a personal favorite of Henry II's and only the second non-family member to run the company (Caldwell was the first), he has won wide acclaim for his team management. Some Ford watchers believe that he wants to dramatize the company's success under professional management by keeping the family at arm's length. Others see a deeper split growing out of a reaction to Henry II's autocratic reign. Many top Ford executives apparently regard the family as not-very-shrewd owners who have contributed little to the company's prosperity. One industry intimate says that Ford executives ''have complete and total disdain'' for the family and will go to any extreme to avoid showing favoritism. Petersen flatly denies any such sentiments. Says he: ''That is absolutely, utterly not true.'' COMPANY TIES, geography, and prescient estate planning have kept the Fords tightly knit and close to Detroit for almost a century. Old Henry lived in Dearborn on the west side of Detroit near the fabled Rouge plant. His only child, Edsel (shown in the left portrait on FORTUNE's cover), established a homestead across town in Grosse Pointe Shores, where he raised his four children. Overshadowed by his father, Edsel served as company president until 1943, when he died at 49 of stomach cancer. Henry lingered on, managing with increasing whimsy. In 1945, two years before old Henry's death at 83, Henry II, the eldest member of the third generation, stepped in to rescue the failing enterprise. He served as CEO for 34 years. The two surviving members of the third generation live within a few miles of where they grew up in the Grosse Pointes. William Clay Ford is probably better known as owner of the Detroit Lions, longtime doormats of the National Football League, than as a Ford executive. Married to a granddaughter of Harvey Firestone, the rubber company founder, and considered a clever investor, he has amassed considerable assets beyond his inheritance. FORTUNE estimates his worth at about $500 million, including $405 million in company stock, making him by far the wealthiest Ford. (Edsel owns $87 million of Ford stock, Billy owns $81 million, and Charlotte and Anne own about $40 million each.) Along with his four children, William Clay controls 37% of the family's voting stock. But even though he holds the title of vice chairman, he has not had any operating responsibilities at the company since the mid-1950s, when he was moved aside by Henry II and the Continental division he headed was eliminated. William Clay's sister, Josephine, 65, nicknamed Dodie, owns the second- largest individual block of family stock (18%) and follows her brother's lead on company matters. Dodie is the fun Ford, known for her love of dogs -- she currently keeps eight at home -- and for such pranks as hiding live lobsters in the beds of her children and grandchildren. Unpretentious and uninhibited, she occupies a rambling, clapboard-sided mansion with her husband, Walter Ford (no relation to the family of Henry Ford), an industrial designer. Their art collection, which includes oil paintings by van Gogh, Picasso, Renoir, Matisse, and Modigliani, is anything but unpretentious, and helps boost Dodie's worth to $430 million. Six of the 13 fourth-generation Fords live in the Grosse Pointes, and four work for the company. Among the Fords who have moved away, Charlotte and Anne are the best known, both for their splashy debutante parties in the 1950s and 1960s and later for their well-publicized marriages and divorces. Charlotte lives with her third husband, Edward Downe Jr., who founded a New York publishing company, in a Manhattan penthouse filled with contemporary art. She recently published a new edition of her popular etiquette book, Charlotte Ford's Guide to Modern Manners. Anne, also a New Yorker, is now married to Chuck Scarborough, a handsome local television anchorman. This month she became chairman of a national charity for children with learning disabilities. The sisters remain so close that they finish each other's sentences. Both have residences on Long Island and in Sun Valley, Idaho. The rest of the family is sprinkled throughout the Northeast and Florida, but the Detroit area remains home base. Ford Estates, a small private corporation in Dearborn with ten accountants and bookkeepers, handles the family's financial and tax matters. The Detroit law firm of Bodman Longley & Dahling deals with trusts and estates. Any company perquisites that flowed to the family were cut off a decade ago, after the flamboyant attorney Roy Cohn sued Henry II for, among other things, billing the company for personal use of his Manhattan hotel suite and steering business to his brother-in-law, Walter Ford; the charges were never substantiated and were later dropped. While retired Ford directors get two new cars every year, family members must buy theirs from dealers. Invariably they choose Fords, Mercurys, and Lincolns. EDSEL II, Henry II's only son, has long been regarded within his family and by the public as his father's logical successor as CEO. ''I am dedicated to proving that I have the abilities of a professional manager,'' he says. ''Being a Ford just happens to be my good luck.'' Besides luck, Edsel has had a variety of choice assignments, including jobs in product planning and overseas. Since 1985 he has held the two top sales and marketing positions at the Lincoln-Mercury division; currently he is director of sales and operations and supervises 325 people. The division's performance has been solid but not spectacular, holding steady at 6.5% of the market. ''Edsel has grown up nicely,'' says Bennett E. Bidwell, a former Ford executive and now chairman of Chrysler Motors. ''He handles what could be a difficult relationship with his peers. If his name weren't Ford, he would do okay at the company, but how far he would rise is difficult to say.'' The glare of public attention has not always worked in Edsel's favor. He scraped through high school and college, and a family friend recalls holding discussions with the president of Babson College in Wellesley, Massachusetts, before Edsel finally graduated (after taking a year off) at age 25. Edsel denies that anyone intervened on his behalf, but says, without apology, ''College was not my forte. I am a doer, not a thinker. I don't think it's fair to be judged on educational prowess. I think you should be judged on how good a manager you are and what kind of respect you command in the industry you work in.'' In photographs, Edsel looks younger than his years and somehow insubstantial. But at 5 foot 10 and 200 pounds, he has his father's heft and presence -- as well as his weight problem -- and a good bit of his charm. Frequently brandishing a $2 Dunhill cigar, he is candid, forceful, and confident. Says Edsel: ''My father was larger than life to me, and I quite honestly never thought he was going to die.'' Edsel named his eldest son, now 8, Henry III. Under the terms of Henry II's will, the young boy is due to inherit twice as much as his brothers and cousins. A car enthusiast practically from birth, Edsel owns a pair of vintage 12- cylinder Ferraris. He chafes at the notion that his hobby makes him seem frivolous. ''People say that because I go to car races, I'm not a real dedicated kind of guy. I go to car races because I enjoy them. It is just another annoyance in my life that people brand me as a motor-sports enthusiast, as if you can't be one and be a professional manager.'' Edsel's other passions are powerboating and bird shooting. For his 40th birthday in December, he invited 14 male friends to go quail hunting in Georgia. Very much a celebrity around Detroit, he maintains a crushing load of obligations to family charities and recently devoted several weeks to settling the dispute over his father's estate. BILLY, by comparison, has remained almost invisible, both in the company and in Detroit. More studious than Edsel, he graduated from Princeton and earned a master's degree in management from MIT's Sloan School. Unlike Edsel, he has not been groomed from childhood for a company job. ''At Princeton, I felt there were a lot of other companies to work for,'' he says. ''But the more I thought about it, the more I realized that everything I have is due to Ford Motor Co. and that I ought to give it my best shot.'' After joining the company in 1979, he moved through a half-dozen brief assignments that he later characterized to Caldwell as ''summer jobs.'' When he convinced Caldwell that he was serious about a career at the company, he worked in finance and product planning and went overseas in 1986. At Ford's Switzerland headquarters, Billy supervises a sales and dealer support organization of 110 people responsible for moving 25,000 cars a year - -- about 8% of the Swiss market. ''My job is to keep the ship headed in the right direction and to formulate overall strategy,'' says Billy. ''I try to look beyond the day-to-day frenzy.'' He takes German lessons in his office three times a week and is sufficiently fluent to use the language in business. Boyish-looking and slim at 5 feet 9 inches and 155 pounds, Billy lacks Edsel's gravitas and charm but compensates through enthusiasm and sheer likability. He is an accomplished athlete who played rugby in college, runs five miles a day, and participates in triathlons. He is also an earnest fly- fisherman who owns several thousand acres of prime trout country in northern Michigan, as well as a small California fly rod manufacturer. Billy views his family name as something of a mixed blessing. ''I felt when I started to work at Ford that I had to be the first one in and the last one out, and that I had to volunteer for all the jobs nobody else wanted to prove myself,'' he says. ''You never get over that feeling entirely, but it eases a lot as you develop a reputation.'' He also appears less driven than his cousin. Would he like to be CEO? ''Sure I would,'' he answers. ''But if it doesn't work out, I'm going to go do something else I consider important,'' either inside or outside the company. Billy, who is married and the father of two children, says his family, not the company, is the center of his life. ''I don't want to be so consumed with work that it colors everything,'' he says. Edsel and Billy confer often and seem to have an understanding that neither will do anything to undermine the other. Says Billy: ''We both realize that as a team we can accomplish a lot. It would be so destructive and counterproductive for us to break with one another that it is just out of the question.'' Two other Fords work at the company, but neither drives on a fast track. Walter Buhl III, 45, a sales promotion coordinator for Lincoln-Mercury, has been through two messy divorces. Benson Jr., 39, a parts sales zone manager in Detroit, bitterly contested his father's estate in 1978 after his Class B shares were put into a trust rather than given to him outright. Benson and his sister, Lynn, own more shares than any other member of the fourth generation, but even though he has made peace with the family, he seems unlikely to play a larger role. Of the 25 members of the fifth generation, only Anne's son, Alessandro, 22, has worked at Ford. He now hopes for a career in movie production. | The Fords have maintained their hold on the company thanks mostly to old Henry's business savvy. Early on he bought out his backers so that he owned Ford himself. In 1936 he created the Ford Foundation as a device to escape death taxes. He and Edsel gave 95% of the company's stock to the foundation; the remaining 5%, which had all the voting power, went to the family. When Ford went public in 1956, the Foundation's stock was arbitrarily assigned 60% of the votes, and the family's Class B shares got the rest. The ambitions of Edsel and Billy, and the family's links to the company, depend entirely on keeping control of the B stock. Old Henry could not create an endless supply of it. Like a vintage wine, the B shares cannot be replenished. When they are sold outside the family, they are converted into common stock and gone forever. TODAY THE FAMILY has 38 million B shares, each of which has the same market value ($52) and pays the same yearly dividend ($2.40) as the common stock; each B share, however, has eight times as many votes. If the family holdings slip below 30 million shares, the corporate charter stipulates that the Fords' 40% vote drops to 30%. Below 17 million shares, the Class B stock is voted just like common stock, one vote per share. Class B shares have a way of disappearing. Earlier this year trustees of Henry II's estate sold 600,000 to diversify. All family members got the opportunity to buy them, but only Edsel and Billy did so, and they took just 45,000 shares between them. The rest were converted into common stock and sold on the open market. The first big challenge to the family's 40% vote will come with the deaths of William Clay and Dodie and their spouses, all of whom are in their 60s. Under federal law, an estate can be passed tax-free to a spouse. But the death of the spouse could create a federal tax bill as high as 55%. Selling enough shares to pay the taxes of the third generation could push the family holdings below 30 million shares. Aside from death and taxes, the other threat to the 40% vote is from family members who violate the sacred rule of inherited money: Don't invade your capital. Henry II, who went through two divorces and lived a genuine jet-set life, broke the rule. Several fourth-generation members, notably Dodie's two sons, Alfred and Buhl, have also spent freely, though both are still very rich. FORTUNE estimates that Alfred and Buhl each own between $10 million and $12 million worth of stock. The wealthiest members of the fourth generation, Lynn and Benson Jr., own about $176 million each. Edsel and Billy would like to raise money to buy more Class B stock from family members who want to sell. Other options would be to use their existing stock as collateral for a loan, or to borrow the money from the company. But Petersen doesn't seem inclined to help the Fords maintain their stake. ''I think the board views the existence of the Class B stock as a very desirable thing,'' he says. ''But the premise when we filed to go public was that the difference in voting power would disappear over time.'' When the family was small and its members younger, such issues mattered less. It was only after Henry II began having heart problems that he began the long process of arranging for his succession. One afternoon in June 1986 he met with Bill and Dodie in the book-lined study of Dodie's Grosse Pointe Farms home. There, over glasses of iced tea, Henry first advanced the idea of creating a legal mechanism to keep the family united and the 40% vote intact: a voting trust. TWO MONTHS AFTER Henry II's death, William Clay called the family together for its first big meeting in nearly a decade. On December 18, 1987, they gathered around a table in the Bugatti Royale room of the Hyatt Regency hotel (built on Dearborn land that once belonged to old Henry). All but two fourth-generation Fords attended: Josephine Clay Ford Ingle, 39, who is married to a winery owner in the Finger Lakes region of New York State, and Alfred Brush Ford, 38. Family members say Josephine dislikes flying and is busy raising four children. Alfred is the lost sheep of the fourth generation. A recovering alcoholic, he joined the Hare Krishna movement in 1974 and took the name Ambarish Das, after the ancient Hindu king who gave up his wealth to serve his god. Alfred told FORTUNE that he has contributed some $3 million to the movement and continues to give at the rate of $200,000 a year. He studies art at the University of Miami, near his home. ''Sometimes I feel inferior because I don't work for the company.'' says Alfred. ''It has always been bigger than the family.'' AT THE MEETING, discussion quickly turned to creation of the trust. In the past, family members had voted their stock individually, just like any other Ford shareholder. Under the terms of the trust, they would vote among themselves first; the decision of the plurality would then be binding on all. Each share would be worth one vote, and family members could withdraw their participation at any time. The Fords unanimously approved the trust and chose William Clay to vote its shares. The family also agreed to create a purchase fund to acquire Class B shares. In principle, the idea is simple. Family members will contribute part of their dividends to the fund so that when a Ford wants to sell Class B shares, money from the fund can be used to buy them back, thus keeping the stock in the family. In practice, the purchase fund is more complex. Most family members could probably benefit from owning fewer B shares, not more, to diversify their wealth. Moreover, aside from the sentiment attached to the B shares, only the Fords who want to actively influence company policy have a real interest in buying more. Finally, it will be a long time before the fund amounts to anything. Even if family members contributed 100% of their after-tax dividends, which is unlikely, it would take 17 years with compounding at 8% to accumulate enough money from one share to buy a second. ''You have to have a long-term vision,'' says Edsel, defending the fund. ''I don't think maintenance of the 40% vote helps any one person. It helps maintain family control of Ford Motor Co., which is part of our heritage. I think we have a fairly large window, ten to 15 years, to build the purchase fund. If it looked like we were in trouble before that, we might go back to members of the family to raise money.'' Everyone but Alfred is likely to contribute to the purchase fund. Next the discussion turned to how the family could get the most out of its investment in the company. As Billy recalled later, ''There are all kinds of alternatives. The two extremes are the family buying and the family selling.'' The Fords seemed more intrigued by the first extreme: a family-led leveraged buyout. An LBO would have two appealing features: The Fords could cash in their stock, and they could still keep control of the company. But they eventually rejected the idea, partly because the cyclicality of the auto business could make interest payments burdensome in down years, and partly because bonds issued by Ford Motor Credit, the company's finance arm, could be hurt by the new debt. The family also felt an LBO would damage the company's image and the morale of employees. The man who initiated the LBO discussion was the family's most influential non-Ford: Eleanor Clay's husband, Frederic Bourke, 42. Bourke holds an MBA from Columbia University and is part owner of two successful companies: Dooney & Bourke, an upscale leather goods company in Norwalk, Connecticut, and Bourke & Matthews, contractors who build million-dollar homes along Connecticut's Gold Coast. Bourke grew up around the Ford family in Detroit and is close to Edsel. Energetic and loquacious, he engaged Petersen in an intense discussion about the company's future at Seal Harbor last summer. If a Ford in-law is ever considered for board membership, he is the most likely candidate. WITH THEIR voting trust and purchase fund, the Fords clearly have developed some new muscle. But they have no immediate plans to flex it. Says Rick Bourke: ''I believe the family members are united among themselves and united behind the company and its management. While there are differences of opinion on individual issues, they are all minor ones.'' As for the future, much depends on the family itself. Laws of physics dictate that as time passes and numbers increase, its singleness of purpose will erode along with its stake. It is already surprising that more Fords have not opted to spend their inheritances. ''The more family members you get, the more differences of opinion you are likely to get,'' says Billy. ''But I think there is a commitment in the family to retain the 40% control.'' Walter Hayes, vice chairman of Ford of Europe, puts it a little more sentimentally when he says, ''No family member has a divine right to a job at Ford, but I would be very unhappy going to bed at night if I didn't think Henry III was there. The great strength of Ford, especially in this day of the impersonal takeover, is that it is a family company.'' The fourth generation hopes to keep it that way -- with first Edsel, and then Billy, in the driver's seat.

CHART: NOT AVAILABLE CREDIT: NO CREDIT CAPTION: TAKING STOCK OF THE FAMILY The family's Class B shares are split among its four branches. High-living Henry II sold off some of his to pay expenses, while William Clay has added to his shares over the years. Benson Jr. and Lynn inherited all their parents' holdings. Two percent of the B shares are held in family trusts.

CHART: NOT AVAILABLE CREDIT: NO CREDIT CAPTION: INVESTOR'S SNAPSHOT FORD MOTOR