Legends of wheels Part III: Lee Iacocca
Following up with Legends of Wheels Part I: Sergio Marchionne
http://boyracer.blogspot.com/2012/04/legends-of-wheels-part-isergio.html
and Legends of Wheels Part II: Carlos Ghosn
http://boyracer.blogspot.com/2012/04/legends-of-wheels-part-ii-carlos-ghosn.html
The third part is on a person who is currently 88 years old and still as much in the news as any of his counterparts. Lee Iacocca known mostly for the Success for Ford Mustang and Chryslers turnaround, is not just another American fake like those thousands out there selling outrageous reality tv shows but the man who made his mark by giving results.
The Man
Iacocca is the former chairman of Chrysler Corporation and he also became a passionate advocate of U.S. business exports during the 1980s.
Beginning his career at Ford, Iacocca successfully developed many automobiles at Ford, including the Ford Mustang. Ultimately, he became the president of Ford Motor Company but his shaky relationship with Henry Ford II forced him out of the company. But Ford’s loss was Chrysler’s gain and Iacocca was not without a job long. Iacocca engineered a transformation that brought Chrysler from the brink of bankruptcy to the most envied of the Big Three automakers.
He served as President and CEO of Chrysler from 1978 and additionally as chairman from 1979, until his retirement at the end of 1992.
At Ford
In 1960 Iacocca was named Ford's vice-president, car and truck group; in 1967, executive vice-president; and in 1970-1978, president. Iacocca participated in the design of several successful Ford automobiles, most notably the Ford Mustang, the Lincoln Continental Mark III, the Ford Escort and the revival of the Mercury brand in the late 1960s, including the introduction of the successful Mercury Cougar and Mercury Marquis.
The 1965 Ford Mustang was unveiled to hundreds of reporters by Lee Iacocca at the New York World's Fair on April 13, 1964. The Mustang had been championed by Iacocca, an ambitious car salesman who rose through the ranks on smarts and self-assurance to become head of the Ford division. Many would argue that the Plymouth Barracuda was launched full two weeks before the Mustang but the way Iacocca's marketing blitz was so full of lights, the Barracuda was sidelined even being as succesfull as the Mustang. Ford was also quick on going back to Lee Iacocca for a special edition Mustang named after the man himself.
Reviving Chrysler
The 70's had started on an excellent note for the Big three. The makers of Huge cars were reliant on big muscle cars which sold like hot cakes. Gas was cheap and Americans believed they ruled the world and all the gas in the world was at their disposal. But when the Japanese arrived with their smaller, fuel-efficient, cheaper and reliable cars, the fortunes started turning at the Three Americans. Chrysler being the smallest was the most affected.
In July 1979, John Riccardo, the then Chrysler chairman, went public with the depth of Chrysler’s difficulties, admitting that Chrysler was bleeding red ink. Second-quarter losses reached $207 million. As summer turned to fall, the news from Chrysler was bleak. Chrysler’s 1979 $1.2 billion loss was the largest recorded in US corporate history. By the end of 1979, the company was teetering on the brink of bankruptcy. Chrysler owed $4 billion, nearly 10% of all US corporate debt. Eighty thousand unsold vehicles worth over $700 million sat on dealer lots. Riccardo called for immediate federal assistance: a $1 billion US tax holiday, a two-year postponement of federal exhaust emission standards (worth $600 million to the company), and concessions from the United Auto Workers. Otherwise, he warned, the company would fail.
Second-quarter losses reached $207 million. As summer turned to fall, the news from Chrysler was bleak. Chrysler’s 1979 $1.2 billion loss was the largest recorded in US corporate history. By the end of 1979, the company was teetering on the brink of bankruptcy. Chrysler owed $4 billion, nearly 10% of all US corporate debt. In seeking funding support, Iacocca and colleagues exhaustively sought assistance prior to the Federal Government eventually coming on board. At one stage, they examined 156 possible lifelines alone from among the wealthy of Saudi Arabia, the same people the nation annexed the following decade.
Chrysler was in desperate need and going out of business. As soon as Iacocca started building Chrysler from the ground up, he laid off many employees, and sold the plant in Europe . Despite these moves the company was still in dire straights, so Iacocca made an amazing move by asking Congress for a loan. To the surprise to all, he received it. After receiving the loan, Chrysler released the Dodge Aires and Plymouth Reliant automobiles, which were inexpensive and great on fuel economy since the United States was just coming out of an oil shortage.
Iacocca echoed Riccardo warning that without some sort of federal aid, Chrysler would most certainly fail. Chrysler’s impending demise was potentially the largest in history, and for many the company’s crisis represented the end of American postwar economic hegemony and the deindustrialization of North America. As Congress and the Carter administration haggled over the final aspects of a bailout bill, Chrysler faced its darkest days. To avoid running out of money, the company simply stopped paying suppliers. Finally, to the relief of over 250,000 Chrysler workers, in January 1980, President Jimmy Carter signed the bill Chrysler Corporation Loan Guarantee Act of 1979. The plan provided $1.5 billion in loan guarantees, but required the company to secure another $1.43 billion in private financing, concessions from banks and suppliers.
In those days, Iacocca recalls, gas was cheap and Detroit gave little thought to fuel efficiency. The legendary CEO says he's become a big fan of the hybrid cars that Toyota has been marketing for years. The mini-max project for the minivans was also conceived from the success Toyota found in other markets based on minivans. When Lee Iacocca was running Chrysler, he put his "follow-the-market" philosophy behind a product that became the company's cash cow – the minivan. The Minivan till this day brings major revenues for the company. The gas-guzzlers reflected the changing lifestyles of the baby boomers, who traded in their Ford Mustangs for a way to get the kids to soccer practice.
Iacocca was also responsible for the acquisition of AMC (American Motors Corporation) in 1987, which brought over the money making Jeep division. The Jeep division today is the most profitable of all Chrysler divisions now owned by FIAT. He eventually stepped down from Chrysler in 1992 and currently works with a company designing electric bikes.
Iacocca successfully managed and negotiated the myriad networks of management, unions, suppliers, and banks within the Chrysler constellation to position the company to take advantage of the government loan package. Among Chrysler employees, Iacocca had to fire thousands of managers and salaried staff.
The Future
Lee believes the Detroit's automakers need to move faster on hybrid electric cars. G.M., he added, should have invested in hybrids long ago. They need to make cars that stand out from models that look ready-made for Avis or Hertz lots. Though Chrysler has shown the most tangible signs of success, it faces many of the same fundamental challenges as G.M. and Ford.
http://boyracer.blogspot.com/2012/04/legends-of-wheels-part-isergio.html
and Legends of Wheels Part II: Carlos Ghosn
http://boyracer.blogspot.com/2012/04/legends-of-wheels-part-ii-carlos-ghosn.html
The third part is on a person who is currently 88 years old and still as much in the news as any of his counterparts. Lee Iacocca known mostly for the Success for Ford Mustang and Chryslers turnaround, is not just another American fake like those thousands out there selling outrageous reality tv shows but the man who made his mark by giving results.
The Man
Iacocca is the former chairman of Chrysler Corporation and he also became a passionate advocate of U.S. business exports during the 1980s.
Beginning his career at Ford, Iacocca successfully developed many automobiles at Ford, including the Ford Mustang. Ultimately, he became the president of Ford Motor Company but his shaky relationship with Henry Ford II forced him out of the company. But Ford’s loss was Chrysler’s gain and Iacocca was not without a job long. Iacocca engineered a transformation that brought Chrysler from the brink of bankruptcy to the most envied of the Big Three automakers.
He served as President and CEO of Chrysler from 1978 and additionally as chairman from 1979, until his retirement at the end of 1992.
At Ford
In 1960 Iacocca was named Ford's vice-president, car and truck group; in 1967, executive vice-president; and in 1970-1978, president. Iacocca participated in the design of several successful Ford automobiles, most notably the Ford Mustang, the Lincoln Continental Mark III, the Ford Escort and the revival of the Mercury brand in the late 1960s, including the introduction of the successful Mercury Cougar and Mercury Marquis.
The 1965 Ford Mustang was unveiled to hundreds of reporters by Lee Iacocca at the New York World's Fair on April 13, 1964. The Mustang had been championed by Iacocca, an ambitious car salesman who rose through the ranks on smarts and self-assurance to become head of the Ford division. Many would argue that the Plymouth Barracuda was launched full two weeks before the Mustang but the way Iacocca's marketing blitz was so full of lights, the Barracuda was sidelined even being as succesfull as the Mustang. Ford was also quick on going back to Lee Iacocca for a special edition Mustang named after the man himself.
Reviving Chrysler
The 70's had started on an excellent note for the Big three. The makers of Huge cars were reliant on big muscle cars which sold like hot cakes. Gas was cheap and Americans believed they ruled the world and all the gas in the world was at their disposal. But when the Japanese arrived with their smaller, fuel-efficient, cheaper and reliable cars, the fortunes started turning at the Three Americans. Chrysler being the smallest was the most affected.
In July 1979, John Riccardo, the then Chrysler chairman, went public with the depth of Chrysler’s difficulties, admitting that Chrysler was bleeding red ink. Second-quarter losses reached $207 million. As summer turned to fall, the news from Chrysler was bleak. Chrysler’s 1979 $1.2 billion loss was the largest recorded in US corporate history. By the end of 1979, the company was teetering on the brink of bankruptcy. Chrysler owed $4 billion, nearly 10% of all US corporate debt. Eighty thousand unsold vehicles worth over $700 million sat on dealer lots. Riccardo called for immediate federal assistance: a $1 billion US tax holiday, a two-year postponement of federal exhaust emission standards (worth $600 million to the company), and concessions from the United Auto Workers. Otherwise, he warned, the company would fail.
Second-quarter losses reached $207 million. As summer turned to fall, the news from Chrysler was bleak. Chrysler’s 1979 $1.2 billion loss was the largest recorded in US corporate history. By the end of 1979, the company was teetering on the brink of bankruptcy. Chrysler owed $4 billion, nearly 10% of all US corporate debt. In seeking funding support, Iacocca and colleagues exhaustively sought assistance prior to the Federal Government eventually coming on board. At one stage, they examined 156 possible lifelines alone from among the wealthy of Saudi Arabia, the same people the nation annexed the following decade.
Chrysler was in desperate need and going out of business. As soon as Iacocca started building Chrysler from the ground up, he laid off many employees, and sold the plant in Europe . Despite these moves the company was still in dire straights, so Iacocca made an amazing move by asking Congress for a loan. To the surprise to all, he received it. After receiving the loan, Chrysler released the Dodge Aires and Plymouth Reliant automobiles, which were inexpensive and great on fuel economy since the United States was just coming out of an oil shortage.
Iacocca echoed Riccardo warning that without some sort of federal aid, Chrysler would most certainly fail. Chrysler’s impending demise was potentially the largest in history, and for many the company’s crisis represented the end of American postwar economic hegemony and the deindustrialization of North America. As Congress and the Carter administration haggled over the final aspects of a bailout bill, Chrysler faced its darkest days. To avoid running out of money, the company simply stopped paying suppliers. Finally, to the relief of over 250,000 Chrysler workers, in January 1980, President Jimmy Carter signed the bill Chrysler Corporation Loan Guarantee Act of 1979. The plan provided $1.5 billion in loan guarantees, but required the company to secure another $1.43 billion in private financing, concessions from banks and suppliers.
In those days, Iacocca recalls, gas was cheap and Detroit gave little thought to fuel efficiency. The legendary CEO says he's become a big fan of the hybrid cars that Toyota has been marketing for years. The mini-max project for the minivans was also conceived from the success Toyota found in other markets based on minivans. When Lee Iacocca was running Chrysler, he put his "follow-the-market" philosophy behind a product that became the company's cash cow – the minivan. The Minivan till this day brings major revenues for the company. The gas-guzzlers reflected the changing lifestyles of the baby boomers, who traded in their Ford Mustangs for a way to get the kids to soccer practice.
Iacocca was also responsible for the acquisition of AMC (American Motors Corporation) in 1987, which brought over the money making Jeep division. The Jeep division today is the most profitable of all Chrysler divisions now owned by FIAT. He eventually stepped down from Chrysler in 1992 and currently works with a company designing electric bikes.
The turnaround in Chrysler’s fortunes
came swiftly and stunningly. In July 1981, just two years after
Riccardo’s fateful admission of Chrysler’s dire financial straits,
Iacocca announced that the company had turned a profit for the second
quarter. Although it was a meager $11.6 million (compared to the
company’s 1979-81 losses of $3 billion), these profits were followed by a tidal wave of income, and in 1983 Chrysler paid off its federally guaranteed loans seven years ahead of schedule.
Chrysler’s amazing recovery did seem, indeed, to be a miracle, and
there was no doubt who had been the miracle worker behind the
turnaround. not with government loans, but with $1.5 billion in loan guarantees.
Iacocca repaid the loans ahead of time and the Treasury made a profit of
$300 million.
By the 1980s, Iacocca was heralded as a possible presidential candidate;
motivational speakers talked about “Lessons from the Great Leaders:
From Hannibal to Iacocca.” He was a television celebrity appearing in
Chrysler commercials and in an episode of Miami Vice; even a children’s
play was written about his amazing story. In 1985, Iacocca wound up on the cover of Time magazine.
Iacocca successfully managed and negotiated the myriad networks of management, unions, suppliers, and banks within the Chrysler constellation to position the company to take advantage of the government loan package. Among Chrysler employees, Iacocca had to fire thousands of managers and salaried staff.
The Future
Lee believes the Detroit's automakers need to move faster on hybrid electric cars. G.M., he added, should have invested in hybrids long ago. They need to make cars that stand out from models that look ready-made for Avis or Hertz lots. Though Chrysler has shown the most tangible signs of success, it faces many of the same fundamental challenges as G.M. and Ford.
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