Lee Iacocca, American Auto Executive Legend, Is Dead at 94
Chrysler savior was also key exec behind the birth of the Mustang.
Lee Iacocca, one of America's most recognizable automotive executives who was widely credited with bringing the Ford Mustang to market and saving Chrysler Corporation from bankruptcy in the late 1970s and early '80s, has died. He was 94. Iacocca was with Ford for 32 years before he was forced out and quickly moved to Chrysler, where he achieved fame for his turnaround of the ailing company. Below is an interview Automobile founder and former editor-in-chief David E. Davis did with Iacocca in 2005, as well as an official statement from Fiat Chrysler Automobiles.
FCA Statement Regarding the Passing of Lee Iacocca
The Company is saddened by the news of Lee Iacocca's passing. He played a historic role in steering Chrysler through crisis and making it a true competitive force. He was one of the great leaders of our company and the auto industry as a whole. He also played a profound and tireless role on the national stage as a business statesman and philanthropist. Lee gave us a mindset that still drives us today—one that is characterized by hard work, dedication and grit. We are committed to ensuring that Chrysler, now FCA, is such a company, an example of commitment and respect, known for excellence as well as for its contribution to society. His legacy is the resiliency and unshakeable faith in the future that live on in the men and women of FCA who strive every day to live up to the high standards he set.
INTERVIEW: LEE IACOCCA, THE IDEA MAN
Autodom's rock of ages Lee Iacocca stays engaged in the present, focused on the future
For more than a century, the Ford Motor Company has been the soap opera of the automobile industry. The original Henry Ford created a working atmosphere of insecurity and distrust among his executives, and that Machiavellian approach to human resources has become his legacy. The undermining of his son, Edsel, is probably his most famous achievement, but Edsel differed from other misused and abused Ford executives only in that he was family. Most recently, we've watched the purge of those people who came into Ford during Jac Nasser's regime as, inevitably, they were directed up the steps to the corporate guillotine.
Every promising Ford manager understood that the path grew steep
er and more slippery with each promotion, but it was easier for career bureaucrats and faceless apparatchiks. For huge numbers of young Midwesterners, the automobile industry was the local equivalent of cradle-to-grave civil-service work. It was the hotshots, the fast-track guys, the big-idea men, who found themselves ambushed and cut off from support. They were the men who wound up running, among many other kinds of businesses, the newly arrived Japanese car companies in Southern California.
And then there was Lee Iacocca. Iacocca was the hottest hotshot and the biggest idea man at Ford for 32 years. In his day, he rose higher and enjoyed greater authority than anybody in the company who wasn't named Ford. He was dazzling in his ability to make things happen, to be constantly in the limelight, to somehow escape the Ford Curse. But it didn't last forever. His luck ran out in the 1970s, and Henry Ford II fired him in mid-1978, saying, "I just don't like you." Within weeks, Iacocca was hired as the new president/COO of the deeply troubled Chrysler Corporation, with the promise that he would become chairman/CEO when the man who hired him, John Riccardo, retired the following year. Iacocca had always yearned to have his own car company, and his dream was about to come true--for better or for worse.
I visited Lee Iacocca in his office in Boston--one of two, the other being on the West Coast--from which he runs the Iacocca foundation. The foundation is powerful and handsomely endowed in the field of diabetes research, established as part of a pledge to his wife, Mary, to fight the disease that killed her. He doesn't dwell on the past. He's totally engaged in the present and the future. Asked about Ford's assault on Le Mans in the 1960s, he made a couple of backhanded remarks, then quickly returned to his current interests. Questions about Bob Lutz and Carroll Shelby got snappy telegraphic answers, but no in-depth analysis. If this "focus on the now" makes him an elusive subject for an interview, it's also kept him from becoming a boring old buffalo, forever fighting yesterday's battles.
DED, Jr.: You went to work at Ford when?
Iacocca: In 1946. I started as a trainee, I went through the Rouge plant, one or two weeks in every department. They wanted me to work on automatic transmissions because I'd done some torque converter work at Princeton. They put me on a drafting board, and I said, "Bullshit, I'm not doing this for a year." So I went east and wound up in sales.
DED, Jr.: When did you go to Chrysler?
Iacocca: I was at Ford for 32 years. I went to Chrysler in 1978, four or five months after I got canned by Henry Ford.
DED, Jr.: From your start at Ford until your start at Chrysler, what happened in the industry? What was the event, or series of events, that changed everything?
Iacocca: In 1950, the war was over, the Depression was over, and everybody wanted new cars. The guys had come home to the GI Bill, and they got educations and started moving to the suburbs. It sounds mundane, but that was the beginning of two-car middle-class families. The Korean War came and went. We got Eisenhower's 44,000 miles of Interstate highways. Regulation W [the wartime law that limited car loans to 24 months] was scrapped. And that's when the market took off.
A guy named Charlie Beacham was my first mentor at Ford. He taught me the importance of the dealers, and he rubbed my nose in the retail business. I learned about leasing. I learned about finance. I learned that monthly payments are the cornerstone of everything in the automobile business. It was Charlie Beacham who made me go to Dale Carnegie to learn how to communicate.
I came up with "56 for 56" when Ford was trying to sell cars on safety. The safety campaign wasn't wrong, it was just ahead of its time. The cars weren't selling, and I figured out that a guy could buy a 1956 Ford for 56 dollars a month, and we merchandised the hell out of it. It worked. McNamara [Robert S. McNamara, president of Ford and subsequently secretary of defense in the Kennedy administration] thought I was a genius, and he brought me into Dearborn. He was my other mentor at Ford.
DED, Jr.: There's a light side of Lee Iacocca that doesn't appear in the standard Iacocca legend. They say that no matter what a meeting was about, who else was sitting at the table, or how many other meetings you'd attended that day, you were always the best-prepared guy in the room. You'd absorbed the known facts, you knew the numbers, and you were ready to do business.
Iacocca: I got that from McNamara. He lived on information. He always had a question that you weren't expecting. I'd say I needed 200 million dollars for some project, and he'd tell me, "Write it down. One sheet of paper, 25 words. No gestures, no facial expression, no colorful language. Just tell me why it's essential for the Ford Motor Company to do this." He and [J. Edward] Lundy created the Ford financial control model--the best and most comprehensive system of financial management in the whole goddamned industry. I learned from McNamara, and I did it his way until it became second nature for me. That discipline was what made the mess I inherited from Chrysler so shocking. They didn't have any controls. They didn't know anything. They were doing it with mirrors. That's why I brought so many Ford guys over to Chrysler. We took 82 Ford purchasing guys in one swoop.
If you'd ask me about the last 25 years of this century, I'd have to say that everything went to hell. I bashed the Japanese, but I really bashed the MITI (Ministry of International Trade and Industry, coordinated the development of all Japanese industry after WWII, including the auto industry). I told them they were going to pay the price and they did. They had a 10-year recession. How do you compete with guys who manipulated the yen to a fare-thee-well? I'll give you an example. How would you like to take on the Bank of Tokyo, whose highest interest rate in, I guess, 20 years has been one percent? I built the Chrysler Tech Center. It cost $1.5 billion at 16 percent. Toyota could've built the same thing and had an assembly plant thrown in as a gift to build, you know, a whole new car line based on the difference in interest rates. I used to think General MacArthur broke up the Keiretsu. Me! Naive! Dumb shit! They were still there. And when Chrysler joined up with Mitsubishi, I knew they were there. I even got invited to some Friday meetings and watched them manipulate. If you had a meeting like that in the United States, they'd throw your ass in jail. You should put that in a book sometime.
Once I testified at a hearing to break up General Motors because they had 60 percent of the market, and, like an idiot, I said, "You gotta spin off Chevrolet. You gotta break 'em up, break 'em up." Guess what? The market broke them up. They screwed up. The bean-counters really looked over there, worse than at Ford. Eddie Cole [GM president Edward N. Cole] retired. Pete Estes [E.M. Estes, GM president] retired. John DeLorean retired--he kind of went south there, toward the end, but he was a damned good product man. I knew them all. I admired them all.
How can they do nine product platforms, and all the derivatives, and make them all exciting? How can they support them? It's impossible! Toyota brings out a new car. What is it? It's a Toyota. GM brings out a new car. Does anybody know what it is? I think I'd bite the bullet and say, "We got rid of Olds. How about Buick or Pontiac? What do we do about Hummer? How the hell did we get into that business? Why should General Motors be fooling around with American General? Why did we just buy Saab? Well, Ford was buying Volvo, so we had to buy somebody." Now Saturn's a full line of cars. Shouldn't Saturn have been part of Chevrolet? That's the kind of stuff you don't foresee.
DED, Jr.: Tell us about Chrysler.
Iacocca: Hal Sperlich lured me to Chrysler. Hal was on the original Mustang team at Ford, and he had a nose, a genius for looking at the whole inventory of platforms and components, bringing combinations together, and getting them to market. He was just great at it. He used to drive me nuts. He pushed me harder on the Mustang than anybody, and he pushed me on the minivan. We called it the Minimax at Ford--the front-drive van that drives like a car and fits in a normal garage. All the research indicated it would be a winner. Sperlich pushed so hard that Henry Ford made me fire him, and he went to Chrysler--wound up holding the door open for me there. I said, "Why? They're dead-ass broke." So he brought over a prototype with front drive and said, "There's your Minimax." So that was the opener. We'd just spent a ton of money on the minivan idea at Ford, and I wanted approval to get our old files, all the research I got, in writing, and they let me take everything. The minivan was a cash cow, hitting the market at the right time, hitting it just right. It still has about 30 percent of the world market.
Chrysler invented rebates, I'm sorry to say. I didn't have anything to do with that. A lot of flaky deals were made in order to give the customer enough cash for a down payment. We should've gotten at it with monthly payments instead. I guess I invented extended warranties, because that's all we had to sell at Chrysler in those days. We made good powertrains. If the times had been different and Chrysler had the muscle to match its engineering capability, the whole automotive universe might look different today. We announced five years or 50,000 miles on powertrains, and I said, "We gotta be nuts!" Now it's 10 years and 100,000 miles on the whole car, not just the powertrain.
Chrysler didn't have any money. They were broke. I needed a loan guarantee from Congress, but we had to get our house in order first. We installed Ford-style financial controls, went to work cleaning up the fields full of unordered, unsold new cars. I went to the United Automobile Workers to ask for their help. I got lucky on that one. Doug Fraser was there. He'd come up through the ranks, and he was a solid, standup guy. I'd worked with him before. I said, "Guys, it's simple. It's a cold winter night, and I've got about 300,000 jobs at 15 bucks an hour. At 20 bucks an hour, I've got none. What do you want to do?" Doug said, "What are you gonna do?" I told them we'd start with the executives and give everybody a 20-percent haircut. He said it again, "What are you gonna do?" I said, "I'll work for a buck a year. Symbolic." That night, the bargaining council said, "If you're willing to work for nothing, maybe we should take a haircut, too." And they gave back $2.5 billion. Doug Fraser said, "This is the worst day of my life. We fight all our lives to get a bigger slice of the pie, and in one swoop, you take $2.5 billion." Nobody ever gives the UAW enough credit in its role in the bailout. We were only asking the government to back $1.2 billion in loans, and the union was already giving us $2.5 billion. Then the banks said, "Hey, maybe this thing can be saved." And we were lucky again--the economy turned around, too. Our performance against that loan guarantee and the role of the UAW somehow got lost in the media concentration of the $1.2 billion. We paid back the loans in 36 months and paid the government a profit of $350 million for its help. And after that, Chrysler was a brand-new car company.
I guess that's one achievement I'm really proud of. Saving Chrysler was more than jobs, more than shareholder value. Saving Chrysler was a good idea for the whole country. The merger with Daimler-Benz was a good deal, too, but it should've gone the other way--Chrysler should've bought Daimler-Benz. As it was, it took the Germans seven years to assimilate it.