Lee Iacocca was born on 15th October, 1924 and is an American businessman very well known as a dynamic leader and for the efforts he put in to revive the Chrysler Corporation during the 1980s. He served in the company as CEO from 1979 till 1992 and was a powerful businessman in being highly passionate and a keen advocate for the enhancement of business exports originating from the USA. Having served with Ford Motor Company for 32 years, which included eight years as President, one of the greatest comebacks in history was shaped by Lee Iacocca.
His remarkable success, together with his innumerable appearances on TV advertisements as also his best seller book enabled him to become one of his country’s most well known and appreciated businessmen. As per the accounts of business analysts, Iacocca became well known for his daring decisions and ability to take risks. He believed that all businesses and all products are subject to their own innate risks and that they require to be overcome in order to succeed.
Iacocca has been proclaimed as a far sighted business man who could view further than the normal activities related to business. His thought patterns are entirely different from others and he is known to have come up with innovative ideas and pioneering concepts in business. He had the knack to adjust to any kind of situation and to overcome the most difficult problems with his visionary capabilities. Iacocca played a very significant role in Ford Motors and was responsible for the designing of the Ford Mustang which was a very successful model.
He proved to be the moving force behind the success of the company in promoting innovative processes but had fallen out with Henry Ford II and was removed from his position in spite of having contributed to the success of Ford in a big way. After being fired from Ford, Chrysler canvassed for him to join the company. Chrysler was at that time in bad shape and on the brink of getting bankrupt (Abodaher, 1982). Chrysler was in the grip of serious problems when Iacocca joined and the organization lacked effective coordination in most of its activities.
Iacocca was able to identify and disseminate the information and found that the spirit of solidarity and fellowship amongst majority of the company employees was entirely absent. Chrysler’s products were comprehended as being of poor quality and there were hardly any financial controls in place. The inventory of finished products was fast increasing and had already reached a level that was perceived as being unprecedented. This became a major cause for cutting down on production activities.
In using his dynamic abilities, Iacocca steered Chrysler on a productive path whereby the company declared in 1984 that it had achieved a record profit of $2. 4 billion. Such an achievement by Iacocca catapulted him to fame and he became very popular as one of the highest paid business executives. His autobiographies titled “Lee Iacocca” and “Talking Straight” published in 1984 and 1988 respectively had become bestsellers. In 1978 Iacocca was relieved from the Ford Motor Company five months later was appointed as President of Chrysler.
He became Chairman in 1979 and thus began the process of transformation which transformed the third biggest auto maker into a very profitable business. Iacocca had the vision to bring a turn around for Chrysler by downsizing capital expenditure to a lower break even point. When Iacocca joined Chrysler, the company was on the verge of bankruptcy and he immediately started the process of restructuring whereby the entire company was rebuilt from the ground level. He focused on manufacturing fuel efficient cars in order to reduce the financial burden on car owners due to the increasing fuel prices.
He also restructured the manpower base in the company and fired 35 Vice Presidents and appointed his colleagues from Ford in key positions. He made redundant about 65000 employees and sought more technical staff for the production activities. Iacocca established rapport with the unions, suppliers of auto parts and other stake holders. A major proactive step was taken in selling off the company’s loss making production facilities in Europe to Peugeot. He did away with the manufacturing of large car models that were proving to be commercially unviable and instead introduced the compact Plymouth Horizons and Dodge Omnis.
These two models came as a big relief for the American population at a time when fuel prices were rising and Chrysler sold more than 30,000 units each of both models in the first year itself. Chrysler was all set for a dramatic come back. Iacocca realized that the company could not cope with the initial financial pressures when he joined and sought help from the US Congress in 1979 and requested a loan guarantee which was eventually acceded to. This was an unprecedented action by the US Congress which proved to be a big support for Chrysler.
The decision attracted lot of controversy but Iacocca was able to get the loan guarantee which later fell just short of assuming repercussions resembling the Lockheed bailout (Haddock, 1987). For the first time in the corporate history if America, Chrysler appointed a union president to become a director in the board of the company. The financial position of the company began to improve and Chrysler bought E. F. Hutton Credit Corporation and Gulf-stream Aerospace Corporation for $125 million and $637 million respectively.
Lee Iacocca enabled Chrysler to introduce the K-car in the 1980 which became its best seller mini van. The car became a craze for small families that wished to have room and efficiency. Chrysler’s financial position became strong and the government loans were repaid in 1983. Chrysler became an example and symbol of triumph and of the American dreams. The small and compact Dodge Aries and Plymouth, the designs of which were rejected by Ford and later introduced by Iacocca in Chrysler, proved to be the bane for US citizens following the oil crisis of the 1970s.
Such reforms introduced by Iacocca went a long way in bringing a turn around for Chrysler and the company was able to clear debts much earlier than required by the government. In spearheading the company’s success, Iacocca assumed leadership roles in several notable areas. The most noteworthy of these was becoming the chairman of the President’s Statue of Liberty-Ellis Island Centennial Commission that was established to arrange for finance and to take care of the restoration process of the two landmark monuments located in New York.
Iacocca became popular throughout the world and in successfully meeting the challenges was soon recognized as one of the most applauded businessmen of the world. Under his leadership Chrysler began to expand operations in aerospace and electronics and enhanced its global operations. It was in 1984 that Chrysler broke all previous records and attained the maximum profit of $2. 4 billion. The company reorganized itself into a parent company with four independent operation companies; Chrysler Technologies, Gulfstream Aerospace, Chrysler Financial and Chrysler Motors. Overseas operations were further expanded and in 1984 the company bought 15. % equity in Officine Alfieri Maserati SpA, the Italian luxury car maker, although the interests were later sold off in 1988.
In partnership with Mitsubishi Motors Corporation, Chrysler created in 1985, a joint venture organization to make small automobiles in the US, which was called Diamond-Star Motors Corporation. Three years later Chrysler started manufacturing the Plymouth Laser. Chrysler entered the European market again in 1987, after staying away for nine years and commenced exporting the convertible Chrysler LeBaron, the Dodge Daytona and the Plymouth Voyager.
In the same year Chrysler bought Nuova Automobili F. Lamborghini SpA which made the well known Countach. The largest acquisition by Chrysler was made in 1987 when it purchased for $800 million, American Motors Corporation, a major auto company in the USA. This deal made Chrysler the owner of Jeep brand of automobiles in collaboration with Beijing Jeep Corporation of China. Such acquisitions enabled Chrysler to launch the famous Eagle model in 1987, which was principally the first new Chrysler brand launched after 1928.
Chrysler also acquired during this period Electrospace Systems, which made intelligence and tactical systems for use in missiles, ships and aircrafts. The company made a collaborative arrangement with Fiat in 1988 whereby it distributed Alfa Romeo automobiles in the USA. There was a joint venture agreement signed with General Motors in 1989 to manufacture transmission parts. The company also entered into an agreement with Technologies Airborne Systems in 1989 for the development of air craft technology. In 1989 Chrysler entered into a profit sharing arrangement with llar Rent A Car Systems and Thrifty Rent-A-Car System.
In the same year there was an agreement with Steyr-Daimler-Puch of Austria to manufacture mini vans to be sold in Europe (Levin, 1995). Under Iacocca’s dynamic leadership Chrysler made commitments in pursuing for the cause of safety and value during the 1980s. It was for the first time in automobile history that Chrysler introduced in 1987 a seven year and 70,000 mile warranty for power train and rust protection. The company pioneered in the introduction of the electronically operated fuel injection engines and the offering in regard to the air bag protection system as standard equipments.
In mid 1989 Iacocca initiated cost cutting measures in Chrysler aimed at saving $1 billion and to restructure the programs in focusing on providing for the central objectives of the core automotive businesses. This enabled Chrysler to start new approaches in the manufacture of cars and trucks by way of ‘platform teams’ which entailed teams of workers from different departments such as marketing, production, purchase, engineering and designing that worked together on a assembly line through each production phase. Every team worked as a small company with independent responsibility for operations.
Such measures greatly reduced time taken in the manufacturing process since all workers worked together from the beginning thus resulting in synergy. The Dodge Viper was the first automobile manufactured by using this procedure by platform teams. Subsequent to the success of developing the Viper platforms, Iacocca gave the go ahead to manufacture the Jeep Grand Cherokee, Eagle Vision and Chrysler Concorde in a similar fashion by making innovations in their design. Iacocca established in 1991 the Chrysler Technology Center which was a massive structure measuring 3. million square feet. This facility provided different functional supports in terms of manufacture, engineering, product designing and other aspects of automobile development. Chrysler also came up with the Jefferson North Assembly Plant at Detroit at a cost of $1. 6 billion and dedicated the same for the production of sports utility vehicles. This was a proactive measure by Iacocca in offering consistent flow of employment opportunities and support to workers in Detroit instead of pursuing the industry pattern of establishing production facilities in rural areas.
In 1992 there were significant changes in the board of Chrysler and on March 16th the board of directors initiated moves to change the management structure and brought in Robert J. Eaton as Vice Chairman and Chief Operating Officer. Soon after, Lee Iacocca quit Chrysler on 31st December 1992. Iacocca was involved with Chrysler in other ways after he left as Chairman and helped Kirk Kerkorian who had unsuccessfully tried to take over the company in 1995.
Iacocca again came in the limelight in July 1995 when he pitched in favor of Chrysler for the promotion of the company’s products and appeared in several commercials that aimed at rejuvenating the image of the company’s products in the eyes of the people. Following the recent fall out of Chrysler and its increasing unpopularity, Iacocca was quite unhappy and issued a statement in an interview given to Newsweek, “This is a sad day for me. It pains me to see my old company, which has meant so much to America, on the ropes… no one wants Chrysler to survive more than they do.
So I’d say to the Obama administration, don’t leave them out. Put their passion and ideas to work” (Halpert et al, 2009). In addition to his assignments with Chrysler, Iacocca was engaged in a number of activities that indicated his leadership qualities and furthered the cause of American business. He was appointed by President Ronald Reagan to assume charge of the Statue of Liberty, Ellis island Foundation and continues to serve a member of the foundation’s board. He had the generosity to divert all earnings from the royalties of his books for the benefit of research on diabetes.
An ardent socialite, he also took part in episodes of the Miami Voice and played the role of Park Commissioner Lido. He had the vision to co author the book “Talking Straight” with Sonny Kleinfeld in which there was immense praise for the innovative and creative ability of the Americans. This book was written to balance the adverse influence on Americans of the Japanese book “Made in Japan” by Akio Morita which held in high esteem the hard working culture of the Japanese after the complete destruction of Japan after World War II. Iacocca declined to accept the offer to be made a Senator after the death of Senator John Heinz III.
He was appointed as head of E V Global Motors in 1999 that manufactured electric bikes. Iacocca had supported George Bush in the 2000 elections but changed his support in the 2004 elections by endorsing Democrat John Kerry who was opposing Bush. In the 2006 election of Governor in Michigan, Iacocca supported the Republican candidate Dick Devos (Halpert, 2009). Iacocca had become very popular and was a virtual folk hero by the mid 1980s. He was labeled as the sex symbol of America by the Saturday Evening Post and was described by Readers Digest as the living embodiment of the American dream.
People began to look at him as a candidate for President and a movement was set in motion to canvass for his candidature. A presidential poll conducted in 1985 showed that Iacocca was only 3% behind George Bush in terms of popularity as a potential candidate. However the late 1980s and early 1990s did not prove to be very good for Iacocca because in view of Chrysler’s low public image, his image too began to suffer a set back. During this time the Americans were gripped by recession and did not favor and appreciate the high salaries enjoyed by executives like him.
Iacocca had at one time taken a salary of only one dollar per year from Chrysler but was drawing $18 million in 1987. Additionally, his popularity also suffered because he criticized the way Japanese did business in blaming them for the disadvantages suffered by auto makers in America. Analysts were of the opinion that the American public believed during this period that Japanese cars were giving better value and were much superior. The public felt that instead of criticizing the car manufacturers of Japan, Iacocca should have engaged in competition with them to come out with better products (Iacocca, 1984).