Lee Iacocca: Sitting Back, But Ready to Lean Forward
Jul. 31, 1989
HIGHLAND PARK, Mich. (AP) _ Lee Iacocca, the driver behind the restoration of Chrysler Corp. and Statue of Liberty, the irreverent executive who's done his own ads and guest-starred on prime-time TV, is content these days to sit back a little and take it easy, letting others run the business.
But when it comes to key decisions at Chrysler, the 64-year-old chairman is ready to assert himself over subordinates with undisputed authority.
''I try not to get in their hair, but I do,'' Iacocca said in an interview. ''I'm trying to stay out the best I can. But right now, we've got a lot of tough, tough decisions to make. How do you prioritize?''
Company executives are confronting several problems: a declining market share, a slowing economy, the relentless competition from Japan and now Korea, improving the mix of vehicle models and allaying investor concerns.
Chrysler's second-quarter earnings are due Monday. Analysts expect a slight increase over the $320.4 million the nation's No. 3 automaker made during the same period last year. But they hedge the prediction because Chrysler has spent so much on incentives to sell its cars and trucks.
Through July 20, Chrysler's car and truck sales were running 8 percent behind the pace of last year, a worse showing than its Big Three rivals, General Motors Corp. and Ford Motor Co.
There's little doubt the total market demand this year will fall well below the 15.8 million vehicles sold last year, one of the best in industry history.
Iacocca estimates sales between 13.5 million and 14 million vehicles this year, the lowest estimate of the Big Three chairmen. GM's Roger Smith predicts about 15 million, and Ford's Donald Petersen reckons about 14.7 million.
''I've been saying this for a lot of years, and it's the old story, I'll have to be right one year. We're going to have to have a pause, a recession,'' Iacocca said. ''I thought it would be mid-'88 to mid-'89, I think I was off by a good, solid year.''
He predicted a tough time for the next 12 to 18 months, but said Chrysler, the auto industry and the U.S. economy are in better shape now than they were before the last big industry slump in the early 1980s.
''We were worst of the three at that time, but they (GM and Ford) weren't very far behind if this would have kept up,'' he said.
In a move that's been written into the business history books, a sickly Chrysler beseeched the federal government for help in the late 1970s and eventually secured $1.5 billion in loan guarantees to survive.
Under Iacocca's guidance, Chrysler repaid the loans seven years early, and he frequently talks about that with a mix of humor and bluntness.
When he first disclosed Chrysler's early-repayment plan at the National Press Club in Washington in July 1983, Iacocca told reporters: ''We at Chrysler borrow money the old fashioned way. We pay it back.''
Nonetheless, the company is still a bit wobbly and faces significant questions about its long-term direction.
Measured by sales, Chrysler is becoming a truck company. Through the first six months of the year, it sold more trucks than cars, partly because of the trend-setting minivans - the Dodge Caravan and the Plymouth Voyager - and Jeeps, which Chrysler got buy purchasing American Motors Corp. in August 1987.
Chrysler commands more than 55 percent of the minivan market, which Iacocca says will be impossible to hold because of competition from imports and a new line of GM minivans.
Iacocca recalled when he introduced minivans in 1983: ''I remember some wise-ass at Ford said, 'They are on dope over there.' They said it was a little nothing, it was sort of a fad. Who would want a little van when they could get a big van?
''What they forgot is that you weren't going after the van or wagon owner, you were going after the four-door sedan owner and there's 5 million of those a year.''
Whether they're minivan buyers or not, Iacocca goes after them all, many times personally.
Since Nov. 1, 1978, when he was fired as president of Ford and went to Chrysler with the same title, he's become synonymous with Chrysler.
Iacocca's contract with Chrysler runs through 1991 and he isn't saying whether he'll stick around thereafter, or want to.
''I've got to do a lot in the next 2 1/2 years,'' he said. ''I always thought that compared with the Japanese, we put the good guys out - 65 and over. That's when they're just coming into their own in Japan. I thing it is stupid the way we take assets and throw them out.''
Besides salary, bonuses and stock-option rights, Iacocca will receive 225,000 shares of Chrysler common stock in 1990 and 1991 worth, at today's prices, about $6 million.
He has withstood the wrath of the United Auto Workers union and others in the past for multimillion-dollar annual earnings that critics have called obscene and unjustified. The chairman not only hasn't apologized, he's called his compensation the prize that comes with the task of saving a big company.
There is little Iacocca won't do to create a friendly image for himself and Chrysler.
He's appeared in television ads, did a guest spot on ''Miami Vice'' and said in newspaper ads: ''Did we screw up? You bet we did'' when the federal government nailed the company for odometer fraud.
His personal life has snared attention too. He was involved in a well- publicized divorce from his second wife, Peggy, whom he married after the death of his first wife, Mary. He nearly was drafted for president in 1988 and, in perhaps one of the proudest efforts by the son of Italian immigrants, Iacocca spearheaded the restoration of the Statue of Liberty.
Like many of his other projects, controversy swirled around the multimillion dollar rejuvenation of America's freedom symbol in New York harbor.
Like other ventures, Iacocca said he learned from it. In four years of the project, Iacocca became fed up with the infighting and red tape obstacles lobbed at him by Washington bureaucrats.
''I decided, 'How would you like to go down there and do that for a living on everything?' So maybe it's the best lesson I ever got,'' he said. ''If it hadn't, maybe I'd have been stupid enough to run for president.''
End adv for Sunday July 30