Iacocca – the Chrysler years.
Reeling from his part-expected firing by Henry Ford, Iacocca was almost immediately offered roles in companies across the globe. One being as a global consultant for Renault, which he turned down, citing a desire for a more hands on role. He also envisaged what he termed Global Motors, a collaboration between Chrysler’s engineering prowess, Volkswagen’s scale and dealer saturation, along with Mitsubishi’s technologies.
Iacocca even had finance plans in hand and seemed openly confident of attracting, if not these car manufacturers, then others such as Honda, Fiat, Nissan or Renault to create a global car superpower to take on the might of GM and now, enemy mine, Ford. Approaching VW with cards on the table, Wolfsburg politely showed the American the door on seeing the troubled financial state Chrysler was in.
Chrysler had opened their doors to Iacocca, ‘an entrepreneur at heart’ only after current president John Riccardo sacrificing his own seat a few months prior to Iacocca’s inauguration in September 1979. The Detroit grapevine told of one, Henry Ford imbibing more than ever upon hearing the news of the Pentastar’s newest acquisition.
Smiles and handshakes over, it took Iacocca very little time to see the dire straits his new comrades were in, liking it to “Italy in the 1860’s – prima Donna run clutches of little duchies and no-one gave a damn about the others!” In his first week, Iacocca was shown Michigan state fairgrounds, where unsold stock, anywhere up to 100,000 cars worth hundreds of millions, lay motionless and decaying.
The old ways of dealers waiting until month end to snap up the inevitable fire sale was stopped immediately, while monthly firings of those duchy vice-presidents lasted three years. However, cutting costs and slashing ‘dead wood’ was still not enough to guarantee any form of financial stability. Plants were closed, thousands of both blue and white collar workers were made redundant, stock and non-automotive investments were sold. Even the lucrative battle tank section, a ‘guaranteed’ $60M per year income stream was sold off – to rival neighbours, GM.
Iacocca learned that Chrysler had entered the second hand car industry by default, leasing cars to rental firms and buying them back six months later leaving even greater stocks of metal sold on at a fraction of their build cost. And then came the banking fiasco.
Chrysler took on over four hundred loans from small town American banks, to such ‘luminaries’ as Lehman Brothers. Add in several London, German and Japanese banks, along with Lebanese, Finnish and Iranian money lenders – amounting to over a billion dollars. Throw in labour and pension costs and the red ink flowed fast and wide. And then he asked the government for more money!
Homework studied, Iacocca spent weeks attempting to engage the Carter administration to loan Chrysler $1.5 Billion. Arguments swung back and forth, meeting after meeting, perfunctory hearings followed by private counsel with some more lenient officials. Iacocca again admits at one stage to suffering vertigo due to the untold stress levels he faced; raising cash on Capitol Hill, whilst simultaneously running a sinking ship. Knives were out, mud was slung and more than egos were bruised.
The printing costs of ten thousand documents to satisfy the paying off of loans and convincing the government (House votes – 271-136, Senate vote 53-44) cost $2M alone. Finally, on 24th June 1980, the first of three half a billion dollar instalments was placed in the now single, Chrysler bank, the Manufacturers Hanover Trust. But only after financial advisers, Salomon Brothers creamed off $13,250,000. And a fire in the tower block holding the paperwork the night before the signing caused yet more heart problems. “Perhaps God, the real God, not Henry was telling me something?”
Chrysler were officially back in business. With the financial monkey off his back, Iacocca proceeded at full tilt. We’ll return to the cars actually produced at the time momentarily, but consider what one man’s (and his many of ex-Ford employees) tenacity and dogged ethics had achieved; a financial situation of previously unheard of complexity unravelled, a company’s precarious position restored.
Whilst reading the book, I warmed to the man. His no-bullshit style must have won Iacocca as many friends as enemies; he seemed genuinely concerned about all those people fired, which many will argue is easy when your personal bank account is bursting. But as he countered with the government, he saved far more from entering an already struggling American economic situation.
Chrysler as a company then had not only got back up after the severest of beatings, it returned as an adversary of not only the Big Two producers but also the government. Iacocca paid back the loan, in full seven years early – that’s confidence. Often such protagonists may not reveal the enjoyment of such battles – living, however frail to fight another day encourages future tussles, the competition continues.
The K-cars, LeBaron convertible and T-115 minivan hardly cut the mustard this side of the pond, though Iacocca’s stoic belief in making great American cars certainly worked for a while. At the time the book was written, Iacocca had lost his wife, propelling his ever stronger endeavours to win over jaded American customers. Admitting to “Detroit selling crap for years”, Iacocca turned Chrysler’s fortunes around and had strong plans to maintain such momentum.
We know the inevitable outcomes but as a point in time, his book enthralled as a story of not only magnitude but also magnanimous understanding, a poignant example of trial by fire and winning. He concluded his tale with some revealing ideas on turning the economy around, along with some profound thoughts on car safety, all sadly counting for little.
Fully expecting and welcoming comments, your author recommends you find a copy in order to form your own opinions.
 Iacocca’s first Chrysler salary was just one dollar for the year. Subsequent remuneration he fails to divulge but with such high stakes, fortune favours the brave. We live in very different times.
 Co-written with journalist William Novak.