To Educate… To Preserve… To Support...

Generous support from the Ellen Browning Scripps Foundaon Fall 2019 “The Informaon Place” Volume 21 # 2 Lido Anthony “Lee” Iacocca 1924‐2019 The Embodiment of the American Spirit Americans love the underdog. They love the un- derdog because that’s how Americans identify them- selves. Nobody loves a success story like the Ameri- can public, and Americans know there is no better success story than the impossible comeback. In 1979, Lee Iacocca gave the American public one of the greatest comeback stories in history - by pulling off the resurrection of the Chrysler Corporation. In doing so, he sent ripples through the corporate world, the world of finance, and the U.S. Government that we still feel to this day. Some say that what Iacocca actually did was simply bankruptcy under a different name, and that the losses were in fact worse than if the weakest of the Big Three had gone ahead and filed for Chapter 11. Some say that Iacocca, a lifelong advocate of keeping the Government and their cash-stifling regulatory tendencies out of indus- try, was a turncoat that changed the rules of free- enterprise forever by going to his sworn enemies and asking for money to save a dying company that should have been left for dead. Others view him as an American Hero – an em- this article, we look back on the man and his meteoric bodiment of the American Spirit that stoked patriot- rise to success within the ranks of the automotive in- ism by not giving up on an American company during dustry, taking his place in history as one of the great- a time when our enemies (new and old, foreign and est businessmen of our time. domestic) were tightening their grip on this country in the worst possible ways. He gave the American peo- Lido Anthony Iacocca was born in Allentown, ple hope by delivering on his promises in the face of Pennsylvania to Italian-Catholic immigrant parents. impossible adversity – so much so that after he turned His father was a driving force behind young Lido’s Chrysler around, there were whispers about this ex- success; it was through his father’s rent-a-car business traordinary businessman running for the highest office that Lido fell in love with the automobile, retail, and in the land. One thing is for sure, the name Lee marketing. During a bout of Rheumatic Fever that Iacocca will forever be conflated with the impossible confined him to bed for six months, he devoured success story. books – any book he could get his hands on. It was this study that propelled him to the top of his classes, We lost Lee Iacocca on July 2, 2019, two days earning straight A’s. Lee found himself getting ready before our Independence Day; a day on which we cel- to head off to college, well versed in all of the funda- ebrate our impossible success story as Americans. In Connue on Page 2 “Lee” Iacocca pleased, but relented. He eventual- wildfire. Wilkes-Barre went from Continued from Page 1 ly settled in at a fleet sales office in worst to first in only three months, Chester, PA, where he spent the and Ford executives in the corpo- mentals needed for success. When first couple of years developing his rate offices decided to make it part the Japanese attacked Pearl Har- talent. Soon he was out in the field, of their national advertising cam- bor, Lee tried to sign up for the where he gave selling points to paign. It had also gotten the atten- service, but was denied due to his dealers as a fleet representative. tion of Robert S. McNamara in past bout with Rheumatic Fever. That eventually led to him becom- Dearborn, who was VP of the Ford Through his voracious appetite for ing a zone manager in Wilkes- division. reading, Lee had developed a spe- Barre, PA. As a result, Lee was promoted cial interest in engineering. After There he learned that it was to district manager of the Wash- his application to Perdue was de- the dealers that were the heart of ington D.C. area, and his future at nied, he set his sights on Lehigh the industry, because they are real- Ford was finally looking up. With- University in Bethlehem, and was ly the only true customers that a in a year at Dearborn, Lee had accepted. manufacturer has, and that was a been promoted again, this time to The war was a factor in his lesson that he remembered national manager of both car and success at Lehigh, as more and throughout his life; he would al- truck marketing. Once at Dear- more students were getting drafted ways make a point of keeping the born, Lee found himself under the into the war effort. As a result, the dealer happy. It was also at Wilkes wing of Robert McNamara, his class sizes dwindled to tiny num- -Barre that Lee met the man he new boss (who would eventually bers, allowing for teachers to considered his mentor, Charlie become president of Ford – as well spend more individual time with Beacham. Beacham was a no- as Secretary of Defense for the remaining students. Despite his nonsense southerner who was Kennedy Administration). best efforts, Iacocca got a D in tough but fair as far as bosses go, McNamara was also responsible physics, and quickly realized that and imparted all of his wisdom for introducing the Ford Falcon, the smart move was switching ma- about sales to the budding young one of the most successful automo- jors from mechanical to industrial apprentice. biles Ford Ever produced, though engineering. His grades improved In the early 1950’s, the country it failed where it counted most: the drastically and he completed his was hit with a recession, and profit margin. final year with straight A’s and a though Lee made the cut at Ford One year later in 1960, at the 3.53 GPA. by taking a demotion, many of his recommendation of both Beacham Lee was now focusing on his friends and coworkers were let go. and McNamara, Lee was promoted dream job: working for the Ford For a brief moment, he doubted his to head of the Ford division. Now Motor Co. He had sent a letter to decision to stay, but decided to that Ford Motor Company was a Ford’s recruiting office, and had stick it out. Not long after that, he publicly traded company and an- secured a position in the training came up with the idea that would swered to stockholders, Lee bor- program. It was in August of 1946 set him on a course to the bigtime rowed the idea of the quarterly re- that Iacocca began his training at and overnight success after ten port for Ford’s executives. It al- Ford. It was designed so that the years of toiling away in virtual ob- lowed employees at every level to trainees would spend time in every scurity. set goals and be held accountable department, and get to know how In 1956, Ford decided on a for either reaching them or falling they worked independently and program that promoted safety in- short. It also allowed an open line with one another. He studied at the stead of performance, and custom- of communication between all de- famous River Rouge plant, at the ers reacted poorly. As a result, na- time the world’s largest manufac- tionwide sales slumped. Iacocca’s turing complex. There, he got to district was dead last in sales, and see the entire process from start to Lee knew he needed to come up finish. It was hands-on work, and with something fast. That was Lee was literally working every- when he came up with the “56 for where from the foundry furnaces 56” program. The program was to the assembly line. simple but effective: the customer Although it was invaluable puts 20% down, followed by three training, he had lost interest in en- years of payments of $56. It made gineering and wanted to transition it possible for virtually anyone to to sales. His supervisors were not afford a car, and it caught on like Connue on Page 3 “Lee” Iacocca Continued from Page 2 partments, which in turn assured productivity and streamlined future planning. With his new promotion, Lee started to develop his own idea about a car that could propel the Ford Motor Company back to the top. He knew he needed a team of the most promising minds to help, and started conducting meetings with a small circle of coworkers that dubbed themselves “the Fair- lane Committee” because they met in secrecy at the Fairlane Inn not far from Ford’s corporate offices. Market research had made it clear that there was a younger, more ed- ucated consumer that was respond- ing to vehicles like the Corvair that GM had just produced, and that the demographic they were shooting for needed something affordable and sporty – not unlike the econo- still develop an exterior that was rolled off the assembly line and my cars that were coming here completely original. changed the history of the afforda- from overseas. They had less than two years ble sports car in America. It was to make it happen, without even difficult to keep up with the de- Lee had recognized that the mand; so much so that other plants previous approach in Detroit was having a design. Putting his moti- vational skills to the test, Lee de- were being converted to produce to put out a car and see if there was the Mustang. Lee had come up a market for it. He decided to do cided to make its design a competi- tion, and gave the design team a with the target for the Mustang’s the opposite, noticing that there sales after looking at what the Fal- was a market in search of a car in- timeline to complete clay models of the prototype. At the deadline, con had sold, which was 417,174. stead of the other way around. The The slogan became “417 by 4/17” car they were to develop would be seven models were displayed to the styling director. The winner had – the birthday of the Mustang, and tailor-made for this new market. It they beat it on April 16, 1965. The had to be, according to Lee, “a car been calling his model Cougar (during the planning stages, they average customer was also spend- you could drive to the country club ing $1,000 on options for the Mus- on Friday night, the drag strip on had been calling the undeveloped car the “Special Falcon”). It would tang, which sent profits into the Saturday, and to church on Sun- stratosphere: 1.1 billion in the first day,” a car that would appeal to go through many names during its development, but the team settled two years. It was an instant hit, and multiple markets simultaneously. Iacocca was quickly promoted to Instead of multiple versions, they on Mustang - which had been the name of another clay model proto- VP of corporate car and truck would offer one version with mul- group, which meant he was now tiple options, that way, the custom- type in the competition (named af- ter the fighter plane, not the ani- Henry Ford’s right-hand man in er could tailor the car to their own Ford’s World Headquarters. personal needs. They realized that mal). if they used the platform of an ex- The real question was the prop- Where he barely saw the man isting vehicle, they could drastical- er method to market the Mustang, before, now he was with him every ly cut the cost of development. In but that quickly became obvious day. Ford told his new executive to the end, they all decided on when those who said they wouldn’t rejuvenate the Lincoln-Mercury McNamara’s Falcon as the plat- buy such an extravagant vehicle Division, which he did by intro- form. By using the Falcon’s were told the price: $2,368. On ducing the Cougar and the Marquis drivetrain and axles, they could March 9, 1964, the first Mustang Connue on Page 4 “Lee” Iacocca and was inevitably fired in 1921, rope and Asia in the midst of the Continued from Page 3 where he quickly ended up work- fuel crisis (as well as his competi- ing at General Motors, where he tors stateside, who were now be- as luxury sports cars, and re- would later become president. ginning to produce smaller fuel- imagining the Mark line, which Now the tables had turned, and efficient cars to be competitive started in the 30’s and continued Henry Ford II was hiring Knud- with foreign offerings that were with the Mark II the 50’s. Lee took sen’s son to be president of Ford now flooding the U.S. market). a Thunderbird chassis, put a conti- after being fired at General Motors. Henry Ford II was having none of nental package and a Rolls-Royce In the end, Bunkie only lasted it. style grille on it, and called it the nineteen months, and got fired Despite Lee’s “Fiesta” doing Mark III. It was a remarkable suc- again – and the reason was aston- great in Europe, its success in cess, considering that the Lincoln- ishing to Iacocca: he was fired be- America would be nearly impossi- Mercury Division had been losing cause he walked into Henry Ford ble; for to produce the powertrains tons of money before the Mark III, II’s office without knocking. for an American model would have and now stood to make a billion on Bunkie had mistakenly begun been too costly. To compensate, that car’s sales alone. In 1968 Lee thinking he was on an equal plane Lee had put together a deal with Iacocca was 44 years old, and was with Ford and that they were bud- Honda Motors in Japan to produce convinced that he was next in line dies, which couldn’t have been fur- complete powertrains at a ridicu- for the presidency at Ford Motor ther from the truth. The truth was lously inexpensive $711 each - and Company - as were most of his that Bunkie’s firing said more they could be dropped into any car peers. He had made a name for about Ford than anything else. they cared to build. Lee returned himself with Mustang, and made The following year around from Japan to pitch the idea to lightning strike twice by turning Christmas in 1970, Lee Iacocca Ford, whose response was that no around the Lincoln-Mercury Divi- was made President of Ford Motor car bearing his name would ever sion. He was Henry Ford II’s right- Company. He wasted no time mak- have a ‘Jap Engine’ inside. Henry hand man and protégé. Then the ing his presence felt, and started to Ford II fancied himself “old unthinkable happened: his name focus on where the company was world” wealth, and considered Eu- was Semon “Bunkie” Knudsen. losing money. The result was an- rope his domain. When Iacocca “Bunkie,” as he was known, other Iacocca program he dubbed started getting noticed there for the was another young phenomenon “Four Fifties,” which meant cut- Fiesta, Ford felt threatened. rising through the ranks, but at ting operating expenses by $50 At a stockbrokers meeting, he General Motors. His story mirrored million in four key problem areas. got up to speak, clearly intoxicat- that of Iacocca’s in that he had also He argued that if this could be im- ed, rambling incoherently about started as an engineer, and had plemented within three years, Ford how the company was unravelling. made it to the head of the Pontiac could improve profits 40% (or After his departure from the stage, Division by the age of 44 (the $200 million); going so far as to Lee was forced to get up and speak youngest in GM’s history). When trim bumper sizes to fit more cars to provide damage control to the he was passed over for head of GM into railroad freight containers. He shocked stockholders. He was in 1968, he realized his career was also came up with a program that called into Ford’s office the fol- over there, and was promptly (and he called “Shuck the Losers,” lowing day and reprimanded for secretly) recruited by none other which found Lee trimming depart- participating in stockholder meet- than Henry Ford II himself. A deal ments that had continually lost ings in the first place, informing was struck, and Bunkie was made money (and in some cases, had him that the preceding gathering President of Ford Motor Company never even made any at all), get- was the last, and promptly can- within weeks of his leaving GM. ting rid of at least 20 problem pro- celled any future meetings that Lee was devastated; so much so he grams. were on the calendar. seriously considered leaving Ford After making a point of doing In Lee’s opinion, Ford had seen – but ultimately stayed on after everything he could to boost the hearing rumors of Bunkie’s short- his face-saving speech as stepping profit margin for Ford by finding on Ford’s toes – making it seem as comings – particularly in admin- and cutting off problem areas, istration. if Iacocca was now the face of Iacocca again began to focus on Ford, and he did not care for it. Lee There was some irony in the bringing a new car to the market – saw it as the beginning of the end. “Bunkie” situation as well. As it this time, a car that would chal- Ford was by nature a paranoid and turned out, Knudsen’s father lenge the small fuel-sipping im- suspicious man, and now he saw worked for the first Henry Ford, ports that were coming from Eu- Connue on Page 5 “Lee” Iacocca Bill, it was made official – that ef- now became Iacocca’s goal. Continued from Page 4 fective October 15, 1978 (Lee’s Despite their enormous prob- birthday), that he was being fired lems, Iacocca knew he had a solid an enemy in Iacocca. Ford began from the Ford Motor Company. foundation in engineering at the calling managerial meetings when Ford never even gave him a rea- Chrysler Corporation to work with. Lee was overseas, letting everyone son. In the most cowardly move After all, this was the company had know that he was “in charge.” He yet, Ford was rumored to have per- Frederick Zeder, the man who in- had also begun an investigation sonally gone to the employee gar- vented motor mounts, the high- into the business dealings of age and placed memos on the compression engine, as well as oil Iacocca, hoping to find some dirt windshields of all the employees and air filters. Chrysler engineers he could bury him with. After stating that Caldwell was now in were also responsible for designing spending two million dollars and charge. the electronic ignition, the lock-up coming up with nothing, Ford be- It was almost as if Iacocca was torque converter, the voltage regu- gan firing friends and coworkers of blacklisted – that is, until fate in- lator, hydraulic brakes, and argua- Lee’s – simply out of spite. Where tervened once again in the form of bly the best powertrains in the en- Iacocca and his colleague and the first clandestine overture from tire industry. It seemed that every- friend Hal Sperlich (who partnered board members of the Chrysler thing he had learned up to that with Iacocca on the Mustang and Corporation two weeks later. After point – from his time at Lehigh, the Fiesta) used to sit together in several meetings where it seemed through his graduate program at meetings, they were now separated as if the board members weren’t Princeton, and finally his extensive because Ford thought they were being forthcoming in their inten- training at Ford – had prepared him conspiring against him. Not soon tions, Iacocca asked them point for this battle, and he was deter- after, Ford made Iacocca fire Sper- blank what it was they were look- mined to succeed. In his first tour lich. Ironically, he wound up at ing to accomplish. They responded of the company, the cracks began Chrysler with Lee, making the by offering him the job of presi- to appear to Lee in the form of the small fuel efficient cars and dent of the Chrysler Corporation. breakdowns he noticed in order minivans with Iacocca that Ford and discipline. Then he began to was so dead-set against. It was agreed that Iacocca would become chairman and CEO see large fissures in the manage- Several months later, the man- of Chrysler on January 1, 1980, but ment structure. It became obvious agement structure was changed to chairman John Ricardo resigned that there were drastic differences a three-pronged arrangement, and several months earlier, and Lee in the way Chrysler had been run- Lee was the odd-man out, now bean his reign at Chrysler in Sep- ning as opposed to the streamlined third in command behind Phil tember of 1979. When word got to system that Lee had implemented Caldwell, the new Chief Executive Henry Ford II of Chrysler’s new at Ford, and as a result, the compa- Officer - or Vice Chairman as Ford CEO, his now well-known pension ny’s divisions were virtually una- had put it - and Ford remained as for drinking became the stuff of ware of what each other was doing, Chairman. In a memo, he made it legend. Iacocca was a student of and it showed. The reason for the clear to the rest of the company the history of the automobile in- lack of discipline, Iacocca found, that in the absence of the Chair- dustry, and began to reflect on the appeared to be lack of oversight by man, Caldwell was in charge. It legacy of Walter P. Chrysler. Here the former management team, who was a clear shot at Lee. A little was a man who was fired by GM’s were spending all of their time try- over a year later, during another re- William Durant in 1920 because he ing to appease all the banks that structuring meeting that Iacocca didn’t want Chrysler (who was they had borrowed money from in was not privy to until the day be- chairman of the Buick division) to the past. fore, he was demoted again. When run it the way he wanted to. A cou- It was time to clean house, and Ford informed the board of direc- ple of years later, Chrysler came everybody knew it. Lee began with tors that he was going to fire Lee, out of retirement to rebuild the finance, and requested a list of all they challenged him. In response, Chalmers and Maxwell Motor Car Chrysler’s plants and the return on Ford gave them an ultimatum: it’s Companies successfully. He then investment for each. Letting people him or me, and they had twenty bought Dodge and Plymouth, and go was not something that Lee did minutes to decide. Ford also made the Chrysler Corporation was born. lightly, having felt the sting him- sure that the press called Lee to ask By 1940, when Chrysler passed self not long before. He listened as if the rumors of his departure from away, the Chrysler Corporation people pleaded their cases, but Ford were true. The next day, in a was second in sales only to GM, many of the employees were actu- meeting with Ford and his brother putting Ford in third place. This ally relieved that they were being “Lee” Iacocca would lease them, and then buy and Fiesta. Having been at Chrys- Continued from Page 5 them back six months later. Lee ler for several years before Lee’s solved that problem by refusing to arrival, he had a working let go, because they hated their buy back any more leased cars, knowledge of who was valuable jobs - mostly because they were and sold the rest at auctions. All and who wasn’t. Finally, Lee be- doing something they weren’t told, Chrysler lost $88 million on gan to get the answers he was trained for. According to his biog- the leased car fiasco. Add that to looking for. As a result, there were raphy, he let go one vice-president the sales bank problem of invento- many ‘diamonds in the rough’ type a month – thirty-three in total. ry cars, and Chrysler had already employees that Lee was able to Then there were the cars, if written off $500 million in losses keep on that thrived at Chrysler, you could call them that. Iacocca in the first year of Iacocca’s ten- despite having been working in would state that the successors to ure. It was time to put together a virtual obscurity doing jobs they the super successful Dodge Dart team that would financially turn had no formal training in. Further and Plymouth Valiant, the Aspen the company around. As it turned tapping into former Ford execu- and Volare were basically released out, Lee had meticulously kept tives, Iacocca called on Gar Laux, to the public in their developmen- track of all the Ford executives that who was Ford’s sales manager at tal stages, and would basically fall he had worked with over the years, the time of the Mustang. He had apart after a couple of months, so he had a starting point. He start- the experience and personality to with Chrysler footing the bill for ed making phone calls. win back the dealers that were cur- repairs. Iacocca had his experience Iacocca’s first call was to for- rently in a hate/hate relationship with bad cars himself, having dealt mer Ford financial controller Ger- with Chrysler. He eventually be- with the problems related to the ald Greenwald, who was currently came head of sales and marketing Ford Pinto in the months before he managing Ford in Venezuela. It for the new Chrysler Corporation. departed. was a hard sell, but after a few se- Next, it was time to regain the Iacocca’s stomach sank even cret meetings, Greenwald agreed public’s trust in Chrysler and its further when in the first three to join the team, and resigned from products. To achieve that, former weeks on the job, upwards of sixty Ford – much to the dismay of Hen- Ford engineer and quality control thousand cars were taken out of ry Ford II. Greenwald would be manager Hans Matthias was production that were built without responsible for turning around ac- brought into the fold. He was the having any dealer orders for them. counts payable at Chrysler. He also man who imparted the importance By that time, they had a surplus was tasked with finding out who of the engineers and the plant inventory of anywhere between and why the warranty department workers to get on the same page eighty and one hundred thousand of Chrysler was costing the com- and the discipline to enforce it. It vehicles stashed in huge lots pany $350 million annually. Since was said that he would take five around Michigan. The reason was there was no system in place to get Chryslers off the line randomly one he had already dealt with in that information, he had to create every morning and bring in a brand the past: the backward practice of the system himself to get the infor- new Toyota for the line workers to building cars without orders, and mation he needed. Greenwald compare it to, and see the differ- hoping that the dealers would be would become second under ences in quality workmanship able to move them. It was yet an- Iacocca within two years. Green- themselves. The line workers got other problem that had to be ad- wald was also responsible for the picture. dressed - and quickly. It was $600 bringing in the next member of the The last of the retired Ford ex- million in completed cars that had team – his main financial man in ecs to be tapped for Chrysler’s little or no chance of being sold. Venezuela, Steve Miller, who dream team was former VP in Having gotten accustomed to would become CFO. Miller was charge of purchasing, Paul Berg- working with dealers, he explained crucial in negotiations with hun- moser, who started as a consultant to them that it was unfortunately dreds of banks and lenders during but would soon become president on them to get rid of all of the in- the first years of Chrysler’s clean- of the new Chrysler Corporation. ventory, and within two years, they up years. He was in charge of getting the were all gone. Hal Sperlich – who had already suppliers to once again trust Then there was the question of been fired from Ford for being a Chrysler, and that was no easy how Chrysler had gotten into the friend of Iacocca’s, had already task, as they had been treated poor- car leasing business. The problem made the move to Chrysler, and ly in the past. there was that instead of selling became the third team member. George Butts and Steve Sharf cars to rental companies, they They were old friends, and had were kept on; both men were in- worked together on the Mustang “Lee” Iacocca it after thirty days, they would buy was only one alternative left. He Continued from Page 6 it back. It was a resounding suc- had no choice: he had to go to the cess. The team was now in place. U.S. Government to find out if strumental in addressing quality It was time to turn Chrysler they could put a freeze on the reg- control issues and brining Chrysler around. Then, the unthinkable hap- ulations that were stifling their back to the forefront of making pened. progress. The man hours alone quality cars. One of the last pieces The Islamic Revolution of spent putting together reports an- of the puzzle was former GM and 1979 ousted the Shah of Iran, and nually for the EPA was staggering Volkswagen executive Dick oil production from the world’s and expensive. It wasn’t entirely Dauch, who brought with him fif- fourth largest oil producer ground the government’s fault that Chrys- teen more people from both com- to a screeching halt, creating the ler was in financial ruin, but they panies to round out the team. energy crisis, which in turn created were certainly responsible for Iacocca now had the top finance, a recession. Now it was clear that helping a great deal. John Ricardo, and purchasing people from Ford, all non-essential company func- former CEO of Chrysler (who had and the best manufacturing people tions would have to be cut. They stuck around as a consultant) and from GM and Volkswagen, and started closing plants. Then they Iacocca concluded that the govern- they all got along swimmingly. had to retain their suppliers and ment should take some responsi- The only thing remaining was the convince them they weren’t going bility and meet them somewhere in marketing division. A press con- under. Every expense was scruti- the middle to help get them out of ference was called to announce nized. So much so that the annual trouble. that Lincoln-Mercury Division’s report for 1979, which used to be That plan didn’t fly. John Ri- current ad agency Kenyon and resplendent in full-color magazine- cardo had flown to D.C. to find out Eckhardt would be replacing like stock, became a truncated re- what he could get done, but no- Chrysler’s two current ad agen- port of recycled white paper with body was listening. Then he pro- cies, Young and Rubicam and plain black ink. Chrysler also be- posed a refundable tax credit, BBDO. Having an agency that was gan selling off real estate to gener- which was something that had al- already familiar with how Iacocca ate capital to pay its bills. It be- ready been done by other manu- did things was crucial because came obvious that to survive, facturers before, including AMC, time was of the essence. Having Iacocca would have to remove VW, GM, and Renault – but Ricar- stolen an ad agency out from under Chrysler from making tanks for do was denied yet again. Chairman Henry Ford II with only two the military, and sold its tank divi- of the Federal Reserve Board G. hours’ notice was just icing on the sion to General Dynamics. Then William Miller had suggested they cake. came the layoffs. By April of file for bankruptcy, but filing In fact, the association between 1980, Chrysler had let more than Chapter 11 didn’t guarantee that K&E and Chrysler became so seven thousand people go – white Chrysler would survive. Miller close that they were considered the and blue collar alike. After a then was appointed to Secretary of marketing and communication arm while, Iacocca realized that having the Treasury during the Carter ad- of Chrysler. They were responsible fewer people made things easier, ministration, and abruptly changed for bringing back the Dodge Ram and there had been simply far his mind, announcing as his first symbol and the “Ram Tough” more people at Chrysler than there act in his new position that the theme, as well as the foundation really needed to be, which could government should support Chrys- for getting people to come back explain some of the financial and ler for the public interest. It was into Chrysler dealerships again. communication problems that had Miller that proposed loan guaran- They came up with an idea that brought the company to its knees tees to help save Chrysler. They stated they wanted people to con- in the first place. were told to put together a plan sider a Chrysler product, so if they Iacocca had also lined up a mapping out their plans of surviv- test drive one and end up buying plethora of potential investors, in- al, and submit it to the govern- from a competitor, Chrysler would cluding John Delorean (formally ment. pay them $50. It only lasted a few of General Motors fame, who had Iacocca knew that they would months, but Iacocca concluded just struck out on his own), and be under the microscope, so he that it got a great many people into Volkswagen, a merger that Lee hunkered down and began doing showrooms across the country, and was convinced could be the perfect research. What he found was baf- in turn sold a lot of cars. Their deal. However, after VW had tak- fling: there were multiple prece- next program stated that if you en a look at the ledgers, they dents of loan guarantees, including bought a Chrysler, and didn’t like pulled out. Iacocca knew that there to the City of New York. At the minds in their favor. When House out considerably ahead. “Lee” Iacocca Speaker Tip O’Neil got on board, Continued from Page 7 Iacocca decided to reduce his things started to look up. Iacocca salary to $1 a year. He wanted to time that Chrysler planned to ask visited President Carter, who as- set an example, and figured if he for a loan guarantee, there were sured him that he was on the side could make that kind of sacrifice, $409 billion in outstanding loans to of Chrysler. his employees would follow suit. other companies. The press, how- Despite the seeming upturn in He wanted everyone to know that ever, continually parroted that a events, things back in Detroit everyone was in this together, in- loan guarantee to Chrysler would weren’t going well. Consumer con- cluding him. Then he began lower- set a “dangerous precedent.” fidence had hit an all-time low, and ing everyone’s salaries (with the Iacocca himself tried to explain on it seemed that everyone was con- exception of those at the lowest numerous occasions that the prac- vinced that Chrysler was going un- levels) and got rid of the stock in- tice was virtually commonplace, der. Iacocca’s response was to go centives for executives. Then he but it fell on deaf ears. It was un- on the offensive. He got together went to work on the unions. It took fair, but that didn’t matter. They with Kenyon and Eckhardt and de- him explaining in no uncertain had to press on. Iacocca was going cided to put together an ad cam- terms that ten percent of something to Washington to testify on behalf paign to explain Chrysler’s posi- was better than one hundred per- of the Chrysler Corporation. tion and convince the American cent of nothing. They could take a The hearings in the house and public that Chrysler was here to pay cut like the rest of us, or senate played out much like one stay by answering in print all the Chrysler would declare bankruptcy would imagine. Iacocca was raked tough questions that the public had and they would all be out of jobs. over the coals time and time again been asking. To drive the point His logic worked. by the bureaucrats; most of them home, Iacocca would literally be Now it was time to deal with convinced that Chrysler was putting his signature on the line at the banks. When the Loan Guaran- doomed to repeat its past failures, the bottom of each written state- tee Act passed, Chrysler was in and that his proposals were nothing ment. The ad campaign was a mas- debt $4.75 billion to over four hun- but a con-job of the American pub- sive success, and Iacocca was con- dred banks worldwide. To get lic and the committee itself. Lee vinced that when the time to take a them to concede, he made sure remained undaunted, opening with vote came, they were a game- they knew by sending out a memo a seven-point statement that out- changer. The other game changer that stated if Chrysler went under, lined the steps that had already came in the form of House Speaker the government would be first in been taken to correct problems, Tip O’Neil, who gave an impas- line, and after the courts held up and that what Chrysler was asking sioned speech in favor of saving their money in litigation for the for was not a gift or a handout, but Chrysler just before the vote, not- next decade, they would stand to a lifeline – a loan that would be ing to representatives the half- lose most of their investments. Of paid back in its entirety with inter- million workers that were watch- course, the bank holdout situations est. ing and waiting for a verdict. were far more complicated than He began by pointing out that When the house verdict was read, can be addressed in this article, but the situation that Chrysler was in it was a 2:1 vote in Chrysler’s fa- long story short, they inevitably was a result of several different vor. came around; they had no choice factors; some that were admittedly The senate vote was also in but to meet the deadline according self-inflicted, and some that were Chrysler’s favor. Iacocca had pre- to the Loan Guarantee Act, and completely out of their control – vailed. It was officially known as they did – against all odds. namely the recession and the ener- the Loan Guarantee Act. In es- All of Chrysler’s hopes were gy crisis. He also pounded home sence, the government took all of riding on their next project, the K the effects of excessive regulation Chrysler’s assets as collateral. It Car. It had been the brainchild of by the government itself. He was allowed Chrysler $1.5 billion over Iacocca’s right-hand man Hal particularly annoyed with con- the next two years, to be paid back Sperlich when they were both still gressmen who appeared to be ve- by the end of 1990. In other words, at Ford. It was to compete with the hemently against loaning Chrysler according to Iacocca, the govern- X body cars that GM were offer- money, but whose constituents had ment was taking no risk at all, be- ing, like the Chevrolet Citation. It benefitted themselves from past cause the value of all of Chrysler’s needed to be roomy, comfortable, loan guarantees. Ultimately, weeks assets came to $2.5 billion. If and reliable, with a small engine of lobbying senators in private Chrysler had failed, the govern- and great gas mileage. And it did. meetings were starting to change ment would have actually come They were to be known as the “Lee” Iacocca Continued from Page 8 Dodge Aries and the Chrysler Reli- ant (or as many remember them, the “Reliant K.”) The styling was sleek but unassuming. Iacocca was convinced that they had a winner on their hands with the K car, and predicted that it would turn things at Chrysler around. It had to. If the K car bombed, they were finished. But there were problems at the plants, which led to delays. When they debuted, they were supposed to have had 35,000 cars in show- rooms that October. Because of the plant setbacks, there were only ten thousand. The next problem was the pricing. Instead of paying at- their doom seemed nearer than ev- seemed to concur that it made per- tention to their market research, er. It didn’t help that G. William fect financial sense. they strayed from Iacocca’s prac- Miller had taken the option to Then, Philip Caldwell, the tice of offering options for the car charge Chrysler an annual fee of Chairman at Ford, decided to put a after the base model, and had in- an additional one percent if he felt needle in the balloon. He leaked stalled lots of expensive options the loan was at risk. This meant an the plan to the press, and in a state- that made the K car almost $2,000 additional $12 million per year on ment said that Ford would never be more than GM’s Citation. As a re- top of what Chrysler already owed. stupid enough to merge with a dy- sult, sales slumped. They recog- Plus, administrative fees of one ing company like the Chrysler Cor- nized their mistake early, and were million every month were levied poration. By November 1, 1981, able to correct it, sending out base on Chrysler as a condition to the Chrysler was down to its last one models that the public had been additional loan. It was time for million dollars. To put it into per- really asking for all along. Iacocca to start looking for another spective, Chrysler spent an average way out. He came up with the un- Then there was the specter of of $50 million per day. Iacocca got thinkable: a potential merger with on the phone and bought as much high interest rates. Prime rates had Ford Motor Company. climbed five percent, and buyers time with Chrysler’s suppliers as were dubious. To offset this, After looking into and resolv- he could. He was scrambling. Iacocca began offering rebates. ing any questions involving the “What could I do now?” The program was so successful, violation of antitrust laws, there The answer came to him GM and Ford quickly followed was still the question of Henry through his old friends at Kenyon suit. After an abysmal beginning, Ford II. He had already announced and Eckhardt. This time, instead of the K car was off and running, gar- he was stepping down. Iacocca print ads, Iacocca would appeal to nering 20% of the small car market conceded that if a deal was struck, potential customers and skeptics in 1981. It inevitably became the he’d stay on long enough to see it alike by going on television – per- platform for several future Chrys- through, then he’d resign as well. sonally. Iacocca had become a ler offerings like The Le Baron, E- Plans were secretly drawn up, and household name already because Class, 600, New Yorker, and La- on paper, it all seemed to make of the hearings in Washington. It ser. Still, the wolf was at the door, sense: Ford would take over, and made perfect sense to address the and Iacocca again returned to Chrysler and Dodge would simply public as the face of the new com- Washington to ask for an addition- become two other divisions of the pany and tell them that Chrysler al $400 million for Chrysler to stay Ford Motor Company, not unlike was not going under. The first afloat! The bad publicity that fol- Lincoln-Mercury. Besides, a mer- commercials found Lee at the end lowed sent sales into a tailspin, and ger with ford would create a com- of the ad delivering some kind of the future was bleak. pany worthy of competing with clever tagline. Eventually, he got GM toe to toe. The proposal was bolder and began to get aggressive. After everything that Chrysler shown to the bankers, who all had gone through up to that point, It was out of this approach that the “Lee” Iacocca him. In truth, Lee had no ambi- arm was provided by the produc- Continued from Page 9 tions to run for the highest office tion of the T115 Minivan, another in the land. Still, the rumors per- project that Hal Sperlich and most famous commercial was sisted – right up until they were Iacocca had developed during their born, where he delivered the ad-lib permanently put to rest when Lee Ford tenures under the moniker of a lifetime: “If you can find a signed on to Chrysler for three “mini-max.” It had been pitched to better car, buy it.” more years. Henry Ford II in 1974, but he flat- Another famous offering ap- By the end of 1982, the econo- ly refused. When the Dodge Cara- pealed to the patriot in the audi- my finally found itself turning van and the Plymouth Voyager ence, when he said “There was a around. Sales were going through were introduced, it created a whole time when ‘Made in America’ the roof for Chrysler again, and new market of vehicle, and it sent meant something. It meant you they actually turned a profit. The GM and Ford scrambling to offer made the best. Unfortunately, a lot following year, Chrysler had their versions of their own. Now Chrys- of Americans don’t believe that best year ever, posting a profit of ler was leading the pack, and reap- anymore – and maybe with good $925 million. Iacocca and his team ing all the benefits. It was a sweet reason.” Iacocca believed that if had made many promises since the victory for Iacocca, who knew the customers came in to showrooms, loan guarantee, and had made Minivan was a winner ten years they could see the quality of the good on every one of them. By earlier. It ended up leading the products that Chrysler was putting achieving this, Chrysler was final- market in sales for the next twenty out, and chances were good that ly in a position to offer new stock, -five years, and crowned Chrys- they would buy one. His instinct and the buyers lined up in record ler’s financial comeback. paid off. After hitting the airwaves, numbers. They offered 26 million Three years later, Chrysler ac- sales skyrocketed. Everyone shares, which sold out in one hour quired American Motors, and with seemed to take a collective sigh of – a market value of $432 million. it introduced the popular Jeep relief. Following the success that At the time, that was the third larg- brand, and gave birth to the short- came with the television spots, est offering in American History. lived Eagle division. The Jeep there were rumors that the now The stocks began at around $16 a Grand Cherokee was a tremendous famous spokesman of Chrysler share; within two weeks they were success, and was the primary rea- would be running for President. worth $35. After the sale, Chrysler son for the purchase of AMC. Tel- It wasn’t hard to imagine, after paid off $400 million of its guar- evision ads featuring Iacocca re- delivering patriotic lines in one anteed loans, which represented mained prevalent, and the latest commercial that was eerily similar one-third. Two weeks later, on Ju- tagline used was a tribute to the to one used by our current presi- ly 13, 1983, Iacocca announced to turnaround: “The Pride is Back.” dent during his 2016 presidential the National Press Club that In 1995, when he returned as the campaign: “Let’s make America Chrysler was paying back the loan face of Chrysler on their popular mean something again…” The fact in its entirety – seven years early. television commercials. Current was that the public trusted Iacocca. Ironically, it was exactly five years celebrities shared the spotlight, but He wasn’t a politician; he was a to the day that Henry Ford II had the popular Iacocca ad-libs from businessman – a businessman who fired Lee Iacocca from the Ford the 1980’s remained. “If you can had just pulled off the unthinkable. Motor Co. find a better car, buy it,” was now After all, he had a charisma about In 1984, the final shot in the being utilized to promote the “employee pricing plus” program. When he left Chrysler in 1992, Iacocca had bypassed his old friend and co-worker Robert Lutz to succeed him, and instead lent support to GM’s Robert Eaton, who would take over operations at Chrysler - and then oversaw Daim- ler-Benz’s acquisition of Chrysler (which was called a “merger” at the time). Iacocca vehemently op- posed the “merger of equals” as it was known at the time, noting that supporting Eaton and passing over the titans of the old guard in the “Lee” Iacocca automotive industry, but as argua- Continued from Page 10 bly the greatest businessman of Lutz “was one of the biggest mis- our time. He was a celebrity, a New HCFI Members: takes of my life.” As a result of pitchman, a patriot, and a philan- John Carter, Audubon, NJ the “merger,” the Eagle and Plym- thropist. Regardless of which side Jim Nicoloff, El Cajon, CA outh divisions were discontinued. of the fence you sit regarding his Mason Polston, San Diego, CA In 1995, Iacocca joined forces methods, there is no denying that Ronald Sieber, Hillsborough, NC with Kirk Kerkorian in an attempt Lee Iacocca could never be called a hostile takeover of Chrysler, but a quitter. Having lived through Mark Wersal, Remer, MN failed. The effort would have re- virtually all of this and watching it turned a large percentage of the all unfold on TV during my ado- PLATINUM LIFE MEMBERS company’s shares back to the auto lescent years, I recognize Iacocca Don & Becky Sable workers on the factory floors. as an icon of the 1980’s. I rooted Nicholas Fintzelberg Ph. D. The Great Recession that oc- for Chrysler’s success as a kid - I Gordon & Carolyn McGregor curred on 2007 put the existence suppose because I’ve always been Gail Garrison of the Chrysler Corporation back a fan of the underdog, though at Art & Gail Wilson in jeopardy once again, but this the time I was largely unaware of Stan Lucas time, they could not avoid bank- the intricacies of Chrysler’s co- ruptcy. Chrysler filed for Chapter nundrum. I was saddened to learn Looking for AQ’s? 11 in April of 2009, but under re- of his passing, but I know his ac- structuring (after defaulting on complishments will be remem- over $4 billion in loans), bered by the business world for “Chrysler Group LLC” kept them decades to come. I only hope that on life support. It should be noted his unfailing American spirit and here that Chrysler was not the on- “never say die” approach to life ly casualty during the Great Re- will be remembered and embodied cession; GM and Ford both joined by all Americans for much, much Chrysler in peril, and it could be longer. said that the Loan Guarantee Act – Kevin J. Parker that Chrysler was so lambasted for Bibliography: in 1979 was now being utilized by GM and Ford alike under a differ- “Iacocca: His Life by a Former Employee ent moniker: “the Bailout,” which of Chrysler’s Ad Agency,” Abodaher, The Library has many duplicates, appeared to be just as unpopular David, Zebra Books 1982 with 2 complete sets of: to the public. “Talking Straight,” Iacocca/Kleinfeld, Still, through government as- Bantam Books 1988 UTO OBIL sistance, Chrysler would survive, a m e as would Ford and GM. The gov- “Lee Iacocca, star CEO who led Ford, ernment would take a loss on their saved Chrysler, has died,” (Obituary) Quarterly loan to Chrysler, and as a result, Howes, Daniel/Bloomberg News, The FOR SALE the shares owned by the govern- Detroit News website: And many individual issues ment were bought out by Fiat in www.detroitnews.com July 2, 2019 July of 2011. Chrysler now flies to fill your collecon under the banner of FCA, or Fiat- “Lee Iacocca, 1924‐2019,” (Obituary) Chrysler Automobiles. They’re Donnelly, Jim, Hemming’s Daily News, now based in the Netherlands, and July 3, 2019 Next Board Meeng the former Chrysler Financial “Lee Iacocca,” en.wikipedia.org Headquarters is now based in The next Board Meeting will be on London, England. The Chrysler Photo Credits: November 8, 2019 Corporation - once a proud Amer- “Iacocca: An Autobiography,” Iacocca/ 9:00AM ican Company – is now a foreign Novak, Bantam Books 1984 auto maker. at the Library Office: “Talking Straight,” Iacocca/Kleinfeld, The legacy of Lee Iacocca is 8186 Center Street, Suite F undeniable – not just as the last of Bantam Books 1988 La Mesa, CA 91942 LIBRARY INFORMATION Chronicles of the Automotive Industry in America, For 1939 Production this Year: 2,866,796 passenger cars, 710,496 trucks and buses. Horseless Carriage Foundation 8186 Center Street, Suite F Wholesale value of replacement parts and accessories produced this year: La Mesa, CA 91942 $460,408,017 — a 27.56% increase.

Correspond to: Powell Crosley, Jr., introduces the Crosley, a small car. PO Box 369, La Mesa CA 91944-0369 Hudson introduced “Airfoam” cushions, “Autopoise” front—wheel control,

Phone/Fax: 619-464-0301 safety hood hinged in front, and hood lock under dash. E-mail: [email protected] The 27-millionth Ford was produced. Web site: www.hcfi.org

HCFI 2018 Board of Directors The 15-millionth Chevrolet was produced.

President Roberta Watkins Push-button radios appeared in cars. Vice-Pres John Wilkinson Olds offered “Hydra-Matic Drive.” Treasurer Gordon McGregor “Automatic” overdrive became available on several makes of cars. Secretary John Adams Director Gail Garrison Lincoln—Zephyr omitted running boards. Director Nick Fintzelberg Ph. D. Olds offered all-coil-springs suspension, four-way stabilization, and knee- Director Greg Long action front-wheel suspension on all models. Director Terri Cuthbert Proffer Pontiac featured “Torpedo” body, and began production of taxicabs. Director James Nicoloff White built 300 scout cars for U.S. Army. Director Emeritus David Gast Ed. D. Packard designed and built high-speed marine engine for U.S. Navy.

Executive Director D. A. “Mac” MacPherson For the first time since 1919, a foreign car won the Indianapolis

Sweepstakes, when Wilbur Shaw drove an Italian Maserati at an Newsletter Editors average speed of 115.035 m.p.h. D. A. “Mac” MacPherson The 75-millionth motor vehicle was made in the U.S. Established 1984 From: A Chronicle Automove Industry A, Published 1949.

Shedding Light on Automotive Research Library Automotive History of the HCFI PO Box 369, La Mesa, CA 91944-0369

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