The early Eighties were a terribly uncertain time in America’s economic history. Inflation was so horrendous that the Federal Reserve had to kick interest rates to 21 percent to subdue it, while gasoline prices also soared thanks to the Iranian Revolution. General Motors was hurting; Ford would have gone under if it hadn’t been for its European division’s success; and everyone knew Chrysler was a goner. The last of the Baby Boomers were about to graduate from high school, and The Eagles had broken up.
It was into that mix that two American CEOs burst onto the public stage. One was the son of immigrants, his father a hot dog vendor in Pennsylvania, who told us that America was better than we thought it was; in time there would be a national groundswell calling for him to run for the presidency. The other, the grandson of immigrants, told us how incredible he was and that maybe he should be the president of the United States. One rallied all of America to restore to its former glory the Statue of Liberty, while the other built massive casinos that were monuments to himself. Today the Statue of Liberty still stands tall; the other man’s casinos failed.
Until Lee Iacocca passed away at age 94, I had never thought about the fact both he and Donald Trump hit the headlines in the Eighties. Iacocca had been there before; in the mid-Sixties he’d made the cover of Time and Newsweek as the man most responsible for the Ford Mustang. And things like that don’t just happen; hype is always premeditated.
Iacocca had gotten the idea of creating a smaller sporty coupe for the coming wave of 80 million Baby Boomers from observing the Chevrolet Corvair Monza’s success. That compact sedan’s bucket seats and center console and shifter had appealed to younger drivers, who wanted something smaller and sportier than their parents’ Impala. One will notice that Time and Newsweek didn’t put Ed Cole on their covers as the father of that Chevrolet. Nor would there be a public honoring of the individual who gave us the Camaro or Firebird. But everyone still knows the Mustang came from Lee Iacocca.
He also gave us the 1974 Mustang II, but that’s not held against him.
The Human Pony Motor
A decade later, Iacocca believed the first wave of Baby Boomers, who had flocked to his 60’s Mustang, were now married and starting to have kids. He believed that there would be a huge market for a smaller, family-oriented people carrier — a “mini-van” — for the coming 30-something generation. But unlike the Mustang, which had been a cheap build because it was based on the existing Ford Falcon chassis, a minivan would require something expensive to design and build: a world-class, small four-cylinder engine mated to a front-wheel-drive transmission.
Iacocca knew Henry Ford II would never approve that kind of spending for a new product. So, Iacocca took it upon himself to fly to Japan and present Soichiro Honda with the gift of a Mustang II; and he asked if Honda would provide its engine and transmission for this proposed Ford. Honda agreed; but, when Iacocca presented that idea to the boss, Ford lost it. No Ford product would ever have a Honda engine in it. Ever!
A few years later, as the story goes, Ford went to the airport for a trip, only to find the corporate jet missing. Mr. Iacocca had taken it, without asking or caring whether Ford might be needing it. He was fired, and Ford’s excuse was that “sometimes you just don’t like somebody.”
Iacocca would show up at Chrysler shortly thereafter in the No. 2 spot behind John Riccardo. Chrysler had been in bad shape for most of the Seventies. It sold bloated land barges like the Monaco, and about the only thing it did right was hire Ricardo Montalban to intone seductively about the 1975 Chrysler Cordoba’s rich Corinthian leather. In his first meeting in the Chrysler board room with senior executives, Iacocca pulled out one of his huge cigars and lit it up. Another exec immediately told him there was no smoking, but Riccardo jumped in and said, “Gentlemen, as of today that rule is no longer valid.” Iacocca kept smiling and smoking.
Believe it or not, the hero of this story so far is actually John Riccardo. He had not been running Chrysler long, but long enough to know he was in well over his head. He hired Iacocca, stayed long enough to show him where all the problems were, and then turned the reins over to him. Imagine that, a CEO really put the corporation’s welfare ahead of his own ego and pay.
Hal Sperlich was actually a key architect of the original Ford Mustang. But he had already left Ford for Chrysler before Iacocca was fired and was working on the 1981 front-wheel-drive K cars that would come to market just as Chrysler would need them most. Also, from that same platform would come the Dodge Caravan minivan a few years later. Iacocca had a masters in engineering, but was in fact a master of marketing, while for decades Sperlich knew how to make Iacocca’s visions come true.
The Chrysler minivan changed everything. It made so much money that Chrysler paid off the loans that had been its financial salvation — co-signed by the taxpayer — seven years early. When the government demanded the vig that Chrysler had agreed upon for the bailout, Iacocca tried to get out of paying it; ultimately, he did. Iacocca was soon named head of the foundation to restore the Statue of Liberty and Ellis Island. He also wrote the best-selling nonfiction hardcover book of 1984 and 1985, his autobiography.
Iacocca would later buy American Motors for a song; he believed the sport utility market was about to take off, and with AMC he got Jeep. More than that, he saw the brilliance in AMC’s head of engineering, Francois Castaing.
Iacocca also hired Bob Lutz when he parted ways with Ford. Although in later years both old lions publicly regretted the way they had treated each other at Chrysler, Iacocca would say the biggest mistake of his life was bypassing Lutz as the next Chrysler CEO. Lutz, a man of few regrets, said recently that he wishes he could go back and relive the Chrysler years, just to treat Iacocca with more respect.
For the record, Iacocca saved Chrysler. Bob Lutz made it was it is today.
The Auto Industry’s Babe Ruth
Iacocca also made many major mistakes. Yeah, he bought Jeep, but he also bought Lamborghini. He did a deal with Maserati for that horrific TC convertible. And he took all the prize money from minivan sales and diversified Chrysler into other areas, such as Gulfstream jets. Then, when Chrysler fell on hard times a couple of years later, it had to hold a fire sale of all those corporate purchases to save the parent company.
In 1988, with no money to launch new products, and still believing vinyl landau roofs and fake wire-wheel hubcaps were great designs, Iacocca, who for two decades campaigned against airbags, put one into a Chrysler product; and airbag safety became his ad campaign that year. It was an act of desperation because Chrysler had nothing else to push — and it worked. The entire modern movement to airbags started because other manufacturers watched Chrysler sell an outdated car simply because of that airbag.
But despite having saved the company, the Chrysler board was ready to move Lee Iacocca into retirement. They did so in 1992.
In that era, I was not a fan of Chrysler products. But I was a huge fan of Lee Iacocca and how he saved Chrysler from extinction. He was incredibly blunt, politically blind, and honest to a fault, and he could have been the poster boy for the Great Man Theory of America’s economic society. I thought the public was right, that this guy should have been President of the United States.
The things Iacocca did right are still with us today. The things he did wrong, and there were loads and loads of those, too, have been swept under history’s rugs. The problem is, as time goes on all of the mistakes come to light; so instead of Iacocca’s being America’s great automotive hero, we have to balance the good and the not so good. He was still good enough to keep on a pedestal, we just needed to lower it to curb height.
Lee Iacocca never trashed his American workforce. And he defended America as being as good as or better than any other country in the world. He didn’t want to make America great again, he told us we were already great. And we believed him, and so it became a self-fulfilling prophecy. At least for a while.
In later years, he took to bashing Japan, to the point many believed it verged on racist. Yet Mitsubishi was critical to Chrysler’s salvation — and the Mitsubishi TVs and stereos in his home had journalists questioning his nationalistic rants.
I was wrong 30 years ago. Lee Iacocca would have made a horrible president; but he was the brilliant and perfect CEO in truly turbulent times for a troubled automaker.
Ed Wallace is a recipient of the Gerald R. Loeb Award for business journalism, bestowed by the Anderson School of Business at UCLA, and hosts the top-rated talk show, Wheels, 8:00 to 1:00 Saturdays on 570 KLIF AM. Email: firstname.lastname@example.org