Lee Iacocca, automaker who led both Ford and Chrysler dies at 94https://indianexpress.com/article/business/lee-iacocca-automaker-who-led-both-ford-and-chrysler-dies-at-94-5812071/

Lee Iacocca, automaker who led both Ford and Chrysler dies at 94

Lee Iacocca gave America the Ford Mustang and Chrysler minivan, and was celebrated for saving Chrysler from going out of business. Many magazines portrayed him as the avatar of the American Auto Age

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Former Chrysler Chairman Lee Iacocca died Tuesday at his home in Bel-Air, California of complications from Parkinson’s disease, his daughter Lia Iacocca Assad told the Post. (Reuters/File)

Written by Robert D. McFadden (Jacey Fortin contributed reporting)

Lee A. Iacocca, the visionary automaker who ran the Ford Motor Co. and then the Chrysler Corp. and came to personify Detroit as the dream factory of America’s postwar love affair with the automobile, died Tuesday at his home in Bel Air, California. He was 94.

He had complications from Parkinson’s disease, a family spokeswoman said.

In an industry that had produced legends, from giants like Henry Ford and Walter Chrysler to the birth of the assembly line and freedoms of the road that led to suburbia and the middle class, Iacocca, the son of an immigrant hot-dog vendor, made history as the only executive in modern times to preside over the operations of two of the Big Three automakers.

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In the 1970s and ’80s, with Detroit still dominating the nation’s automobile market, his name evoked images of executive suites, infighting, power plays and the grit and savvy to sell American cars. He was so widely admired that there was serious talk of his running for president of the United States in 1988.

Detractors branded him a Machiavellian huckster who clawed his way to pinnacles of power in 32 years at Ford, building flashy cars like the Mustang, making the covers of Time and Newsweek and becoming the company president at 46, only to be spectacularly fired in 1978 by the founder’s grandson, Henry Ford II.

But admirers called him a bold, imaginative leader who landed on his feet after his dismissal and, in a 14-year second act that secured his worldwide reputation, took over the floundering Chrysler Corp. and restored it to health in what experts called one of the most brilliant turnarounds in business history.

Explained | The world’s best known businessman: The rise of Lee Iacocca

He accomplished it with a controversial $1.5 billion federal loan guarantee, won by convincing the government that Chrysler was vital to the national economy and should not be allowed to fail, and with concessions from unions, new lineups of cars, and a new national spokesman — himself — featured in a decadelong television advertising campaign.

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FILE – In this Aug. 7, 1980, file photo, Chrysler Corp. Chairman Lee Iacocca sits on the hood of K Car Number One, a Plymouth Reliant, in Detroit (AP)

“If you can find a better car, buy it,” the blunt Iacocca challenged the public. “I’m not asking you to buy any car on faith. I want you to compare.”

As the 1980s unfolded, his commercials hammered at a theme: “The pride is back.” And so it seemed. The guaranteed loans were repaid in four years, seven years early. Americans were buying cars at a record clip again, including Chrysler’s new minivans and compacts. The company’s $1.7 billion loss in 1980 had become a $2.4 billion profit by 1984.

Chrysler was selling cars as fast as it could make them. Its stock price soared, as did Iacocca’s popularity. His achievement in restoring Chrysler was all the more impressive because it had begun in a national recession and matured against intense competition from America’s larger automakers, Ford and General Motors, and from a rising tide of imported cars from Japan and other countries.

His book “Iacocca: An Autobiography” (1984, written with William Novak) became a runaway bestseller, the leading nonfiction hardcover of 1984 and 1985. With tens of millions of copies in print, it still regales readers with its intimate look at the auto industry of Iacocca’s day, its cast of larger-than-life characters, its accounts of the author’s dismissal at Ford and his rescue of Chrysler.

In 1987, the company that had nearly failed posted sales of $26 billion and sat on a $3 billion cash cushion. Iacocca, who had taken only $1 as compensation in the first year after winning the loan guarantee, was now the industry’s most highly paid executive, with salary and stock options worth $18 million.

Television commercials and news photographs had made him one of the nation’s best-known faces, an oval of grandfatherly features: a balding pate, a fleshy nose, mischievous eyes behind half-rim glasses, thin lips chomping an imported cigar, and a bland political smile that gave away nothing.

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FILE PHOTO: Former Chrysler Chairman Lee Iacocca (R) and Unique Mobility, Inc. Chairman Ray Geddes pose with two of their electric vehicles, a commuter car and scooter, outside company headquarters in Golden, Colorado (Reuters)

A heroic figure to many Americans, he became chairman of a project to restore the Statue of Liberty and Ellis Island, and was in demand for speeches and public appearances that took on the color of a campaign. He conferred with President Ronald Reagan, members of Congress, governors and business leaders. He was mobbed by admirers and pursued by the press. Polls confirmed that a run for the White House was realistic, and his denials of political ambition only fueled public interest in a possible candidacy.

“The loan guarantee debate, Chrysler’s subsequent return to health, and the publication of his best-selling autobiography conferred mythic status on him as the nation’s economic Winston Churchill,” Doron P. Levin, a former reporter and Detroit bureau chief for The New York Times, wrote in “Behind the Wheel at Chrysler” (1995). “At the peak of his popularity, many Americans believed not only that Iacocca held the answers to the nation’s economic ills but also that he should lead the country as president.”

But by the late 1980s, storm clouds that Iacocca and other auto executives had long ignored were gathering. The stock market had plunged in 1987, and Japan, long since recovered from the disasters of World War II, had become a world-class economic power, whose fuel-efficient cars were flooding the United States. Americans wanted reliable, well-built cars with innovations like air bags, and Honda and Toyota were supplying them.

 

Iacocca, as he acknowledged, had drifted too far from day-to-day operations. Instead of reinvesting in new models to rival Japanese imports, he had aggressively expanded into other ventures, acquiring the corporate jet manufacturer Gulfstream and American Motors, a small competitor. By the 1990s, many American cars could not compete with Japanese innovations.

The Iacocca magic, like Chrysler’s earnings, faded as the nation dipped into recession. He persuaded Congress to give some protection to the U.S. auto industry from imported cars, but Japan just set up factories to build cars in the United States.

Iacocca barnstormed the country, demonizing the Japanese as alien invaders. He argued that Chrysler made better cars, that Japan’s “Teflon kimono” had deceived Americans and that the United States was suffering from a “national inferiority complex.”

It backfired. Critics accused him of “Japan bashing” and said Chrysler’s offer of $1,000 rebates suggested a fire sale.

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FILE – In this March 28, 1990, file photo, Chrysler Corporation Chairman Lee Iacocca sits in a 1990 Dodge Viper sports car as the Chrysler in the ’90s six-city tour makes a visit to New York. (AP Photo/File)

Trying to reverse the decline, Iacocca established partnerships with Mitsubishi, Maserati and Fiat, but they were no panacea. Finally surrendering to pressures to step down, he hired Robert J. Eaton, the head of GM’s European operations, as his designated successor, and retired as Chrysler’s chairman and chief executive in 1992.

“He’s like Babe Ruth,” Bennett E. Bidwell, a retired Chrysler executive, said of Iacocca. “He hit home runs and he struck out a lot. But he always filled the ballpark.”

He was born Lido Anthony Iacocca on Oct. 15, 1924, in Allentown, Pennsylvania, one of two children of Nicola and Antoinette Perrotto Iacocca, immigrants from San Marco, Italy, who named him after the Venice beach resort. He and his sister, Delma, grew up in Allentown.

Their father had little education. He started as a hot-dog vendor in Allentown, borrowed money and went into real estate and other ventures. He lost nearly everything but his Orpheum Weiner House in the Depression. But he later acquired several movie theaters and opened one of the country’s first car-rental companies with a small fleet of Fords, and Lido grew up talking cars with his father.

“The Depression turned me into a materialist,” Iacocca recalled in his autobiography. “Years later, when I graduated from college, my attitude was: ‘Don’t bother me with philosophy. I want to make ten thousand a year by the time I’m 25, and then I want to be a millionaire.’”

He also heard anti-Italian slurs in streets and schoolyards. While attending Allentown High School, he suffered a severe case of rheumatic fever. Unable to compete in sports, he pushed himself in his studies and graduated with honors in 1942. Lingering effects of the illness kept him out of World War II.

At Lehigh University in nearby Bethlehem, Pennsylvania, he became a talented debater, had excellent grades and in 1945 graduated after three years with a bachelor’s degree in industrial engineering.

He also impressed a Ford recruiter and was hired for an executive training program. He took a leave to attend Princeton on a scholarship, and after earning a master’s degree in mechanical engineering in 1946 returned to Ford. Instead of engineering, he saw his future in marketing in the postwar boom years and lined up a job in sales in Ford’s Chester, Pennsylvania, office, assisting dealers in the eastern Pennsylvania region.

FILE — Lee A. Iacocca during testimony before the Senate banking committee in Washington in 1979. (George Tames/The New York Times)

He decided to change his foreign-sounding first name to Lee, a serious concession for a young man proud of his ethnicity. He worked endless hours in the 1940s and early ’50s, honing his speaking skills, studying sales trends and coordinating the strategies of his dealers. They sold cars aggressively, and his career flourished.

In 1956, Iacocca married Mary McCleary, a Ford receptionist in Chester. They had two children, Kathryn Iacocca Hentz and Lia Iacocca Assad, who survive him, as do a sister, Delma Kelechava, and eight grandchildren. His first wife died in 1983 from complications of diabetes. In 1986 he married Peggy Johnson, a former flight attendant. The marriage was annulled in 1987. In 1991 he married Darrien Earle, whom he divorced in 1994.

It took a decade for Iacocca to distinguish himself in Ford’s huge workforce. Then he had a clever idea for a sales pitch. It was “56 for 56”: offering 1956 models with 20% down and $56 a month for three years. The idea was so successful regionally that Ford turned it into a national campaign and made him the corporate director of truck marketing.

He also came to the attention of Robert S. McNamara, Ford’s vice president for car and truck sales and a future Ford president and secretary of defense. As a McNamara protégé, he learned to be an executive — to run meetings, analyze trends and mediate the often competing interests of Ford’s bean-counting financial analysts and its aggressive marketing and sales forces.

He also learned the subtle, sometimes brutal, strategies of the executive scramble — to court allies, evaluate and undercut rivals, whatever it took to gain the next rung up the corporate ladder. Associates said he could humble a subordinate for a mistake one day and praise him the next. He once fired an executive and, on the way to the door, reminded him of their families’ dinner date later in the week.

Iacocca succeeded McNamara as vice president and general manager of the Ford Division in 1960, and four years later secured his place in automotive history by bringing out the Mustang, a small, rakish car with bucket seats and a floor shift that appealed to affluent young buyers and motorists of all ages who had dreamed of owning a sports car.

The Mustang was the hottest-selling new car model in Detroit history, ringing up $1.1 billion in net profits over two years. Its success landed Iacocca and the Mustang on the covers of Time and Newsweek in the same week in April 1964. The garrulous Iacocca became a favorite of reporters, who delighted in his candor, rare in the car industry.

He produced other winners — the Maverick to compete with imports, the Lincoln Continental Mark III to challenge GM’s Cadillac Eldorado. There were missteps: The Pinto burst into flames in rear-end collisions, and lives were lost. For years he opposed air bags, mandatory seat belts and other safety items, insisting they did not sell cars.

But he outmaneuvered rivals for the executive suite and was named president of Ford in 1970, the No. 2 post, reporting only to the chairman, Henry Ford II.

In the next eight years, as gasoline prices and foreign competition rose, Iacocca cut costs, streamlined operations and turned unprofitable divisions around. He nurtured managers who challenged conventional wisdom and solicited ideas from dealers and unions.

He also began to revel in the glitzy perquisites of his lofty position. He traveled in a private Boeing 727, entertained in lavish Ford suites at the Waldorf Astoria in New York and Claridge’s in London, and partied with Frank Sinatra and other celebrities. His extravagances reportedly offended Ford.

Iacocca, center, then chairman of Chrysler Corp., accepting a symbolic check representing a government loan to save Chrysler from James D. Wolfensohn of Salomon Brothers, during a news conference in New York, in 1980. (Eddie Hausner/The New York Times)

Iacocca’s relationship with the boss had never been close. Ford visited his office only a few times in his eight years as president. Their families rarely socialized. The company was publicly held, but Ford remained autocratic, deciding the fates of executives who came and went.

He fired Iacocca in July 1978, saying he just did not like him. He never gave more detailed reasons. The company posted a $1.8 billion profit that year. Some industry observers said Ford could not tolerate a nonfamily rival, especially one with Iacocca’s brass. In his memoir, Iacocca detailed a long struggle between them, and called Ford a man of limited vision with ethnic and racial biases.

Several months later, Iacocca joined Chrysler. It was debt-ridden, losing millions and had virtually no credit. He closed plants, cut the workforce in half, won large union concessions and sold assets to raise cash. It was not enough. He turned to the government for help, igniting a national debate over a “bailout.”

But Iacocca did not ask for a handout, or even a loan, just a federal guarantee of loans from banks and other creditors. Taking him at his word — that he could resurrect Chrysler, that it was too important to be allowed to fail — Congress passed and President Jimmy Carter signed the loan guarantee, enabling the company to get back on its feet. Ultimately, Chrysler borrowed only $1.2 billion of the $1.5 billion that was guaranteed, and paid it back long before it was due.

Many factors accounted for the turnaround, but among the most important were the success of the K-car, a small, fuel-efficient, front-wheel-drive sedan, and the minivan, which seated seven people and was sold as a family or delivery vehicle. In 1987, Chrysler acquired American Motors and its Jeep division. Its Jeep Grand Cherokee was introduced in 1992, the year Iacocca retired, and became one of the biggest sellers in Chrysler history.

After retiring, Iacocca moved to Bel Air, California, where he invested in electric bicycles, olive oil and other ventures and promoted diabetes research. But he was restless for action.

In 1995, he and his friend Kirk Kerkorian, a corporate raider who had been accumulating stock in Chrysler, made a hostile takeover bid for the company. Chrysler rebuffed it and canceled plans to name its headquarters and technology center in Auburn Hills, Michigan, after Iacocca, whose action was portrayed as a betrayal of the company he had rescued.

In 1998, Daimler-Benz AG, the German company that made Mercedes-Benz cars, acquired Chrysler in a $36 billion merger that was the largest industrial takeover in history and the biggest acquisition of any American company by a foreign buyer. Iacocca said it might not have happened if his takeover had succeeded. The company is now owned by the Italian company Fiat.

In addition to his autobiography, Iacocca wrote “Talking Straight” (1988) with N.R. Kleinfield, then a reporter for The New York Times, and “Where Have All the Leaders Gone?” (2007) with Catherine Whitney.

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In 2008, months before Chrysler and General Motors declared bankruptcy after years of mounting losses, Iacocca visited Auburn Hills and was greeted with thunderous applause by 1,000 Chrysler workers.

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“Don’t get panicked,” he told them. “Things are going to be OK. Now is the time to show your stuff. We don’t have any alibis. The truth is automobiles in America are still a vital business.”