There's a saying inside Chrysler Corp. that Chrysler couldn't have done without Lee Iacocca in the '70s and '80s, but could have done without him in the '90s.
It's not uncommon throughout history, whether it be in business, government, politics or war for people to become famous only for what they accomplished in a particular period. It's because they happen to be the right people with the right talent in the right place at the right time.
And it's not unusual that their accomplishments are not particularly notable and often lacking before their rise to glory. It's also not rare that when conditions change and their talents are no longer suitable, their shining star flames out like a spent meteorite. The careers of Winston Churchill and Ulysses S. Grant come to mind as some notable examples in history.
There are many examples in the automotive industry's history. Take Henry Ford, for example. He created a company to build cars almost from scratch, overcoming all kinds of odds, and developed it into a mammoth corporation. Yet, he was not the right person to run the Ford Motor Co. in later years.
Lee Iacocca had a notable career at Ford, rising to president. He gained public attention when he was fired by Henry Ford II in 1978. Shortly after, he joined Chrysler when it was barely alive. Years later, he recalled that when he first arrived he didn't realize how bad things were at Chrysler; he said that he felt like he had just signed on to captain the Titanic.
From 1979 to 1986 is the period when Mr. Iacocca really made his mark in automotive history. It covered the Chrysler bailout, its turnaround and its return to prosperity. It's my personal association with him during that period as head of manufacturing for Chrysler that I want to talk about.
When Lee said the company was in worse shape than what he had imagined, he wasn't exaggerating. Before he came aboard, manpower had already been cut to the bone, all discretionary costs had been run out of the system, cash flow could barely meet the payroll, and paying suppliers was a problem.
Talking about product development was pointless; we had to make do with what was already in the system: the subcompact Omni and Horizon, the Fifth Avenue (an old version of the M-body) and the new K-Car. On top of all the problems we had building these cars, dealers were hesitant to take them because they were afraid if the company went broke they would be stuck with them.
There was only one way Chrysler could survive and that was with a leader who knew what he was doing -- who everyone respected -- to take charge, assume dictatorial powers and start calling the shots. This was a script ready-made for Lee Iacocca.
Inwardly, he might have cringed when he first became aware of what the situation really was. Despite this, I think there was no question in his mind that he believed he could turn things around. This tremendous self-confidence (bordering on arrogance, some say) began to radiate to whomever he talked to -- workers, suppliers, banks, the government. By the time he joined Chrysler, he was already somewhat of a household word with a reputation as the mastermind of the Mustang. He was articulate and a motivator. There was no doubt in his mind that he could turn Chrysler around and people began to believe he really could. This was the leader everyone was looking for, their white knight.
He quickly took complete charge and assumed almost dictatorial powers. There was no breaking-in period that outsiders always seem to have to go through when they take over a company; no power plays by ambitious insiders or sandbagging by disgruntled overlooked employees.
It was a sink-or-swim situation. Mr. Iacocca convinced everybody that sinking was no longer an option, things started to turn around, and -- like they say -- the rest is history. His stature began to assume bigger-than-life proportions not only inside, but outside Chrysler.
Here are a few episodes involving Mr. Iacocca that I remember taking place during this period. It may give you a little more insight as to how he operated.
A competitive advantage
Finding ways to improve corrosion protection has always been a priority. When Chrysler went to a unitized body, it became an even higher priority. So, when National Steel Co. came to me and said they had developed a process to produce a one-sided galvanized steel, I became immediately interested.
The steel cost more, but the additional costs could be easily justified by the added corrosion protection it provided. We first started using one-sided galvanized steel on the Omni and Horizon in 1977.
By the time Mr. Iacocca arrived, we had converted all of our car lines to one-sided galvanized steel with the exception of the M-body. At this time, Chrysler was the only automaker using one-sided galvanized steel. I thought this would be a great sales promotion: "Rust-free bodies." Unfortunately, I could get no one in upper management interested. So, when Mr. Iacocca came on board, I decided to give him a shot. This was my first encounter with him.
I told him our bodies had a coating that could guarantee corrosion protection up to five years and we should use it as a sales promotion.
Because we didn't have too many things to offer, he grabbed at this and Chrysler came out with the first, and, at that time, the only, 50,000-mile (80,500 km) warranty for corrosion protection.
Success with the new and the old
The Fifth Avenue was the last of Chrysler's rear-wheel-drive passenger cars and it was being produced at the Windsor plant in Canada. The Fifth Avenue was a high profit-margin car that sold at a steady 200,000 units per year. It was decided that the new minivan -- coming in 1984 -- would be built at Windsor and the Fifth Avenue would be moved to the St. Louis plant. The workers at Windsor and Bob White, president of the Canadian Auto Workers Union (CAW), screamed bloody murder. Despite production ups and downs, the Fifth Avenue had been a very steady producer for the Windsor plant.
Now they were going to lose their means for a steady income to a completely unknown quantity, the minivan. Bob White threatened to shut down the entire Canadian operation and force the Canadian government to withdraw its financial support.
No amount of talking could change his mind. At that time, no one foresaw the sales boom the minivan would create. There was only one solution: Mr. Iacocca had to meet with Bob White. If anyone saw a bigger market for the minivan, it was him, and he convinced Bob White and got full support from the union.
As it turned out, minivan sales took off almost from day one and the Windsor plant continues to work at full production with no down days except for changeover.
Eventually, minivan sales increased to the point where a second plant would be required. St. Louis was chosen. The Fifth Avenue, which was still being built there, would be replaced with a new extended version of the minivan. The forecast for the longer version was only a cautious 90,000 to 100,000 per year. Iacocca told me to forget the forecast and tool the plant up for 250,000 per year. No lengthy study, no big project, just do it. The plant sold out from the first day.
Now, the question was where to build the Fifth Avenue. There was no open capacity anywhere, and it was still selling at a rate of 200,000 units per year, had a high profit margin and was the only rear-wheel-drive car Chrysler had left.
I went to American Motors Corp. (AMC) -- before Chrysler purchased it -- and asked Joe Cappy, then president, if he had any open capacity. He did, at the old Kenosha plant in Wisconsin.
The Fifth Avenue was assembled using the old gate and buck system. The tools were easy to move. We would supply all the components, we would control the quality, and AMC would assemble the car. So, here was what Mr. Iacocca was looking at:
* He could have AMC assemble the Fifth Avenue. Having a competitor produce your car was unheard of at that time.
* Chrysler engineering was against the whole idea.
* Our people figured they could sell at least 100,000 per year.
* Old people and the police loved it.
* The profit margin still looked very good.
Iacocca, in a very short meeting, said, "go ahead," and for the next two years AMC built the Fifth Avenue. This relationship with AMC facilitated the negotiations when Chrysler bought the company in 1987.
The minivan, Job One
The great day had arrived. The first minivan was to roll off the line at Windsor in October 1983.
The press was there, lots of television crews. We were receiving worldwide media coverage. All our hopes were riding on the minivan's success.
Mr. Iacocca drove the first minivan down the line. I was sitting next to him, and the plant manager was riding in the back. As we rolled off the line, we came to a stop in front of the television cameras and the rest of the media. The plant manager started to open the sliding door, but couldn't open it all the way. For some reason, when the first units were produced, you could only open the sliding door part way from the inside. However, the door opened and closed perfectly from the outside.
The reporters, seeing all this, smelled a story in the making. This was something right down their alley.
Without hesitation, I told them there was no problem, we just forgot that the child-proof lock was engaged. This was something they really like to hear; it was almost as good as the original story. I could visualize my picture on the cover of Time with the caption, "Manufacturing expert doesn't know how to operate the child-proof lock." However, Mr. Iacocca really admired me for my quick thinking.
The only question he had was, "What would you have done if they asked you to look at the child-proof locks?" I told him I wasn't worried; reporters are only interested in disasters and not the details.
Back on track
The new Chrysler Technology Center in Auburn Hills, MI, is a beautiful facility that many people admire. The old facility in Highland Park, MI, had long been inadequate to meet current engineering requirements. The buildings were old and cost millions of dollars just to maintain.
Because of Chrysler's brush with disaster, people mostly concentrated on surviving day-to-day. Consequently, there was nothing in the long-range plans to replace these outdated facilities.
This situation changed in 1985 and it began as a result of a casual discussion with the president of Detroit's Comerica Bank and the president of Oakland University. As it turned out, Comerica owned a 1,000-acre plot next to Oakland University that it wanted to sell.
From the time I first became aware the land was available until Mr. Iacocca approved the project was less than six months. Normally, I guarantee you, this whole process probably would have taken five years, requiring various site studies, feasibility evaluations, cost analysis, and whatever.
The Auburn Hills project would quickly bring it back on track as a future contender in the automobile business. It opened in 1992 and the adjacent new Chrysler headquarters opened last December.