It’s a rainy Friday night in Detroit, and Bill Ford would much rather be on an ice rink playing pond hockey with his buddies or at home watching 24 with his wife, Lisa—anywhere but here, the Cobo Center, where he’s feeling hot and confined in his black tie, taking part in the kind of pomp and pageantry for which he has little patience. Tonight is Detroit’s Charity Preview gala, the biggest social event of the year and the triumphant finale of the opening week of the North American International Auto Show in January.

Ladies in department-store ball gowns sweep past dazzling Maseratis and Mustangs, sipping champagne and trying to catch a glimpse of the glitterati—captains of industry like former Chrysler chair Lee Iacocca, G.M. vice chair Bob Lutz, and Bill Ford, the executive chair of Ford Motor. There is an aura of old Vienna. This is truly Detroit in denial, or maybe pretending that it is still the center of the universe. Never mind that Ford will soon post its biggest-ever annual loss, $12.7 billion, or that Chrysler will be put up for sale, or that before long the Big Three might become the Big Two and eventually, God forbid, the Only One. Toyota is the real star of this show, but for tonight at least, everybody acts blissfully unaware, and that’s driving Bill Ford crazy. He’s always been an iconoclast in macho Motor City. He shakes hands and makes pleasantries until beads of sweat break out on his forehead, and he tugs at his collar and says under his breath, “Can you believe this? My least favorite night of the year.”

He’s trying to keep it from becoming his least favorite year too. For a long time, U.S. automakers have avoided dealing with a seemingly insurmountable problem: too few buyers for too many cars and trucks. In 2006, under the heated glare of Wall Street, Bill Ford and his board considered every option—mergers, alliances, selling the company wholesale or in pieces. A nervous Ford family—which effectively holds a controlling stake—even talked about taking the company private but dropped the idea, spooked by the debt that would involve. Recruiting a hotshot like Carlos Ghosn, the C.E.O. of Renault and Nissan Motor, had been another possibility, but Ford’s leadership doubted that Renault’s recovery was sustainable.

Ultimately, Bill Ford and his board bet on what they hope will prove to be a long-term fix, hiring a turnaround expert from Boeing to overhaul the company from the factory floor on up. The president and C.E.O. they chose, Alan Mulally, is expected to shrink and refocus the company, killing some brands and selling off others, as evidenced in the deal announced in March to sell Aston Martin for nearly $1 billion. All of this will require a delicate dance with dealers, suppliers, the U.A.W., and some increasingly impatient shareholders who plan to call for an end to family control at the annual meeting in May. “It’s a high-wire act, no question,” says lead director Irv Hockaday.

Meanwhile, an onslaught of private equity types has turned gritty Detroit into a gold-rush town. Every out-of-work auto executive, it seems, has transformed himself into a speculator. In this charged atmosphere, everybody waits to see who will start the action, and when. Is consolidation inevitable? If so, does the advantage go to the first movers or to the strongest partners? Bill Ford is bracing for anything. The family is considering hiring boutique investment bankers to analyze how the company might be affected, and to watch out for its interests if Ford is drawn into the fray.

Two conflicting forces in American business—the long-term players and the short-term opportunists—are engaged in a heated debate, and there’s no better vantage than Bill Ford’s office atop the company’s green glass headquarters in Dearborn for beholding the clash between the sharply differing outlooks. The debate is not new. But the struggle has intensified as private equity has afforded executives a quick way to dispose of troubled companies. On one side are the long-haul believers like Ford and his family.