Lee Iacocca and Chrysler
…. There were two options Lee had, aged 54 by now, either to enjoy a retired life or take revenge of this insult.
Walter Chrysler
Lee Iacocca and Chrysler
As he puts it in his autobiography, “Lia – my daughter came to know about it and called me up. She was crying! I can forget what Henry Ford did to me but I can never forgive him for the way he did it and how it affected my family.” The choice was clear: Lee had to take the revenge…beating Ford on its own turf.
As soon as the news of Iacocca’s firing broke to the market, companies like Radio Shack, Westing House started their attempts to take Lee Iacocca on board. Who would want to miss out on such an opportunity! But Iacocca had spent almost 32 years in the automobile industry and was not enthused to change the field of his expertise.
Walter Chrysler, back in 1910s, was fascinated with Model T and the Cadillac, so much so that he opened and reassembled the cars many times. He went on to found “Chrysler Motors”. Right from the start, Chrysler made sure that their cars would be known for the High End Engineering. They had introduced many engineering wonders that are now common. Walter Chrysler died soon after retirement in 1940. From then on, the helm of Chrysler changed hands to people good at Finance – the Bean Counters. This slowly started reflecting in Chrysler’s product line as the cars went on becoming inferior from engineering perspective. The company wasn’t selling as many cars when its competitors like Ford, GM were seeing best of their years. The Oil Crisis was the last nail in the coffin.
The conditions couldn’t have been better for both Iacocca and Chrysler to join hands.
Within 15 days, Iacocca was looking for the address of Chrysler Motors. Chrysler was in bad conditions at that time. But Iacocca thought he could turn the situation within a year. But none of the executives gave him the precise idea as to where exactly - the 3rd leading Automobile manufacturer in US and the 10th biggest corporation in U.S. was heading. The company was not bleeding but hemorrhaging and no one bothered about that. When Iacocca studied the financial condition of the company, he came to know that he has boarded a sinking ship. But he couldn’t leave it in the midst of the deadly storm.
Now, he had to start the reformation and it started right from the top management. Chrysler was an empire built of small counties; each county having its own lord – the top executive like VPs - who cared the least about other counties’ wellbeing, let alone the whole company. He had to fire 33 out of the 35 top executives. To get the much needed cash flowing, he had to sell the Battle Tank division of Chrysler motors, which, in fact, was the most profitable subsidiary. He teamed up his old allies and some retired officials from Ford. He brought in Jerry Greenwald from Ford Brazil. There was so much competition and secrecy between the automobile manufacturers that Jerry met Lee at some airport with fake beard and makeup! He also brought in “Kenyan and Eckheart” as the Advertising agency for Chrysler. This proved useful in promoting the future Chrysler cars.
Chrysler Motors was famous for their engineering excellence but now they were notorious for leaking and unreliable cars. For instance, once at the launch of a new car, as the Mayer of the city turned the keys, the engine never roared to life. It was found that the battery in this new car was a dead one. Moreover, the dealers were not posting any order and the company has to keep the cars rusting in inventory. At the end of the month, the company used to have a “Fire Sale” where the cars were sold at any price less than the original price. So dealers used to buy their cars from fire sale only. Iacocca stopped this custom and made it compulsory for the dealers to post their orders in time and as per the requirement. Iacocca fired many of the workers just to have some cash in hand. But it was all necessary to keep the company floating because there were many adversaries who wanted Chrysler to go bankrupt.
Despite of these tough decisions, the company was running short of cash. So Iacocca took his toughest and wisest decision ever. As all the banks have already stopped giving any money to Chryslers, he asked for the loan guarantee directly to the U.S. government. This wasn’t a simple thing as he had to convince the government that the company had no plans to go bankrupt and with the given loan guarantee, it can survive and can pay back the loans. This was a mind blowing job. He had to stand before the congressional committee which questioned him about each and every aspect of the loan guarantee bill.
It all proved fruitful when government granted loan guarantee of $1.2 Billion which they had to return in a period of 10 years. At the same time, Chryslers launched their new car – the “K – car” which was an instant hit. Iacocca himself appeared in the advertisement to promote Chrysler motors, sending out the right signals that the Chrysler’s management and hence, the company has changed. Chrysler had lost people’s confidence to such an extent that Iacocca really had to appeal “If you can find a better car…… Buy it!” to make people at least consider Chrysler while buying a new car. Another trick was “Test drive our car and we’ll pay you $50!” Iacocca, who earned a salary of $ 1 million, even started taking a nominal salary of $ 1!
Thanks to such vigorous advertisement and the new improved management and quality, Chrysler could return the loan within 4 years compared to an allotted time of 10 years. Due to Iacocca’s effective management and leadership, Chrysler not only recovered from bankruptcy but also posted better profits than Ford. Today, Chrysler along with Daimler is one of the leading car makers in the world. It was all because Lee Iacocca and his effective team.
But the rollercoaster ride for Lee Iacocca didn’t end here. He became such an influential person in Chrysler that he owned a considerable amount of shares in Chrysler. Word spread that he wants to own Chrysler completely and… the board fired him! History repeats…
Apart from being a successful businessman, Lee is also a good natured father and a husband. He always had his weekend free for his family, no matter if the whole world is sinking. He was very much influenced by his father Nick. I can’t stop myself from referring a story about his father that will give a hint of what made Lee Iacocca what he is: Once, in an official meet, the top officers were enjoying a game of golf. Lee invited his father who never played golf in his whole life. His father struck the ball hard and literally started running after the ball. Lee shouted, “Walk dad, walk… there’s no need to run!!” and his dad, running at the age of 60, shouted back, “Why walk when you can run?”
Regards,
Abhishek
Walter Chrysler
Lee Iacocca and Chrysler
As he puts it in his autobiography, “Lia – my daughter came to know about it and called me up. She was crying! I can forget what Henry Ford did to me but I can never forgive him for the way he did it and how it affected my family.” The choice was clear: Lee had to take the revenge…beating Ford on its own turf.
As soon as the news of Iacocca’s firing broke to the market, companies like Radio Shack, Westing House started their attempts to take Lee Iacocca on board. Who would want to miss out on such an opportunity! But Iacocca had spent almost 32 years in the automobile industry and was not enthused to change the field of his expertise.
Walter Chrysler, back in 1910s, was fascinated with Model T and the Cadillac, so much so that he opened and reassembled the cars many times. He went on to found “Chrysler Motors”. Right from the start, Chrysler made sure that their cars would be known for the High End Engineering. They had introduced many engineering wonders that are now common. Walter Chrysler died soon after retirement in 1940. From then on, the helm of Chrysler changed hands to people good at Finance – the Bean Counters. This slowly started reflecting in Chrysler’s product line as the cars went on becoming inferior from engineering perspective. The company wasn’t selling as many cars when its competitors like Ford, GM were seeing best of their years. The Oil Crisis was the last nail in the coffin.
The conditions couldn’t have been better for both Iacocca and Chrysler to join hands.
Within 15 days, Iacocca was looking for the address of Chrysler Motors. Chrysler was in bad conditions at that time. But Iacocca thought he could turn the situation within a year. But none of the executives gave him the precise idea as to where exactly - the 3rd leading Automobile manufacturer in US and the 10th biggest corporation in U.S. was heading. The company was not bleeding but hemorrhaging and no one bothered about that. When Iacocca studied the financial condition of the company, he came to know that he has boarded a sinking ship. But he couldn’t leave it in the midst of the deadly storm.
Now, he had to start the reformation and it started right from the top management. Chrysler was an empire built of small counties; each county having its own lord – the top executive like VPs - who cared the least about other counties’ wellbeing, let alone the whole company. He had to fire 33 out of the 35 top executives. To get the much needed cash flowing, he had to sell the Battle Tank division of Chrysler motors, which, in fact, was the most profitable subsidiary. He teamed up his old allies and some retired officials from Ford. He brought in Jerry Greenwald from Ford Brazil. There was so much competition and secrecy between the automobile manufacturers that Jerry met Lee at some airport with fake beard and makeup! He also brought in “Kenyan and Eckheart” as the Advertising agency for Chrysler. This proved useful in promoting the future Chrysler cars.
Chrysler Motors was famous for their engineering excellence but now they were notorious for leaking and unreliable cars. For instance, once at the launch of a new car, as the Mayer of the city turned the keys, the engine never roared to life. It was found that the battery in this new car was a dead one. Moreover, the dealers were not posting any order and the company has to keep the cars rusting in inventory. At the end of the month, the company used to have a “Fire Sale” where the cars were sold at any price less than the original price. So dealers used to buy their cars from fire sale only. Iacocca stopped this custom and made it compulsory for the dealers to post their orders in time and as per the requirement. Iacocca fired many of the workers just to have some cash in hand. But it was all necessary to keep the company floating because there were many adversaries who wanted Chrysler to go bankrupt.
Despite of these tough decisions, the company was running short of cash. So Iacocca took his toughest and wisest decision ever. As all the banks have already stopped giving any money to Chryslers, he asked for the loan guarantee directly to the U.S. government. This wasn’t a simple thing as he had to convince the government that the company had no plans to go bankrupt and with the given loan guarantee, it can survive and can pay back the loans. This was a mind blowing job. He had to stand before the congressional committee which questioned him about each and every aspect of the loan guarantee bill.
It all proved fruitful when government granted loan guarantee of $1.2 Billion which they had to return in a period of 10 years. At the same time, Chryslers launched their new car – the “K – car” which was an instant hit. Iacocca himself appeared in the advertisement to promote Chrysler motors, sending out the right signals that the Chrysler’s management and hence, the company has changed. Chrysler had lost people’s confidence to such an extent that Iacocca really had to appeal “If you can find a better car…… Buy it!” to make people at least consider Chrysler while buying a new car. Another trick was “Test drive our car and we’ll pay you $50!” Iacocca, who earned a salary of $ 1 million, even started taking a nominal salary of $ 1!
Thanks to such vigorous advertisement and the new improved management and quality, Chrysler could return the loan within 4 years compared to an allotted time of 10 years. Due to Iacocca’s effective management and leadership, Chrysler not only recovered from bankruptcy but also posted better profits than Ford. Today, Chrysler along with Daimler is one of the leading car makers in the world. It was all because Lee Iacocca and his effective team.
But the rollercoaster ride for Lee Iacocca didn’t end here. He became such an influential person in Chrysler that he owned a considerable amount of shares in Chrysler. Word spread that he wants to own Chrysler completely and… the board fired him! History repeats…
Apart from being a successful businessman, Lee is also a good natured father and a husband. He always had his weekend free for his family, no matter if the whole world is sinking. He was very much influenced by his father Nick. I can’t stop myself from referring a story about his father that will give a hint of what made Lee Iacocca what he is: Once, in an official meet, the top officers were enjoying a game of golf. Lee invited his father who never played golf in his whole life. His father struck the ball hard and literally started running after the ball. Lee shouted, “Walk dad, walk… there’s no need to run!!” and his dad, running at the age of 60, shouted back, “Why walk when you can run?”
Regards,
Abhishek
posted by Gyan for the Day! | 5:26 am
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