Lee Iacocca isn’t looking for a job. But if the Detroit Three auto makers, struggling to win Congressional approval of a $25 billion bridge loan, were to phone seeking his counsel he’d probably take their calls.
So far, Iacocca has remained uncharacteristically mum about the industry’s crisis, shunning media interviews while perhaps awaiting an invitation to impart his wisdom stemming from his experience in winning government loan guarantees 28 years ago when he was CEO ofCorp.
He was successful,survived and thrived and Iacocca became a legend in the process.
Of course, the Detroit Three CEOs, on the verge of a second round of testimony to Congressional subcommittees today, likely would consider Iacocca a distraction. Then there’s the ego thing: We’re big boys; we can solve our own problems.
Still, at 84, Iacocca remains an automotive industry icon 16 years after his retirement. He’s the only auto exec ever to have gone to Washington seeking a government cash infusion. In short, he knows the ropes and how to “sell” the package.
Against formidable odds, Iacocca during 1979 and 1980 led a massive effort to win $1.5 billion in federal government loans. He shifted to a crisis mode and got everyone involved including United Auto Workers members, dealers, suppliers and stockholders to join the campaign.
And he set an example by cutting his multimillion-dollar salary to $1 a year, as the CEOs of each of the Detroit auto makers now say they’re willing to do. In a 2006 Ward’s interview, Iacocca recalled: “It was symbolic, but it began to make people think we were in this thing together.”
During the Chrysler ordeal, everyone was asked to “take a haircut,” and the UAW came through behind the scenes with $2.5 billion in concessions.
“I will go down in history at Chrysler as the guy who didn’t know what the word ‘concession’ meant, and they (the UAW) did,” Iacocca said in the 2006 interview, pointing out that salaried employees also took a less-publicized 10% pay cut. “That got played down because we felt it was better to go down to Washington with hat-in-hand.
“We were really bankrupt; we just didn’t tell anybody.”
During this period, Iacocca also gave up his revered company jet. When Chrysler launched its front-drive compact K-cars in the fall of 1980 in Washington, Iacocca and his entourage had to fly down from Detroit on a Canada-based chartered plane.
The Detroit Three CEOs were embarrassed last month when, under Congressional grilling, each admitted flying to Washington on his own company’s jet.Corp., Motor Co. and Chrysler LLC now are thinning their jet fleets, and each CEO is driving a company vehicle to this week’s hearings.
Chrysler’s 1979 bailout pitch relied importantly on K-car marketing plans, as well as the industry’s first volume minivan scheduled for an ‘84 model-year introduction, and its turnaround quickly followed.
By July 1983, just before the minivan’s fall debut, Iacocca returned to Washington in triumph. He had borrowed $1.2 billion of the $1.5 billion approved and paid off the remaining $800 million owed seven years early.
Typical of such occasions, he unveiled a large mock check at a National Press Club luncheon attended by, among others, Congressmen and government officials.
President Reagan sent his chief of staff, Donald Regan, who asked Iacocca, “Where’s the real check?”
“’I can’t give it to you because they don’t know where to put it,” Iacocca responded.
He later told Ward’s, “(Reagan) went hysterical. I said they don’t have any ‘in’ baskets, so they kept (the real check) for 30 days and I got $10 million interest. They didn’t know where to put it, because nobody had ever paid back this kind of money.”
Chrysler’s bailout was steeped in controversy, just like Detroit auto makers are experiencing now. Iacocca may have some cogent advice, but the phone apparently is not ringing.