The mood was somber, yet there was a sense of electricity surging through the room as the CEO strode up to the microphone. The situation was desperate, he quickly acknowledged, and without everyone’s cooperation – workers, bankers, investors and even the federal government – he warned, “then the pieces of the mosaic fall off the wall.”
That eloquent turn of phrase just might have come from Barack Obama, this morning, as he explained his decision to delay any additional assistance to General Motors and Chrysler. Perhaps it could have been the words of Rick Wagoner, the newly-ousted GM CEO, or Chrysler’s chief executive, Bob Nardelli, when they glumly admitted the need for a government bailout to save their companies, last autumn.
In fact, the speaker was Lee Iacocca, the legendary Chrysler chairman, when he announced plans to seek his own federal bailout, nearly 30 years ago.
That news conference was one of the very first events I covered as a rookie on the Detroit beat, and I can still recall the shock his words generated in the cramped and overheated news room at Chrysler’s old headquarters, the K.T. Keller Building, in Highland Park, Michigan. It was long before cell phones and Blackberrys, yet before the blunt-talking executive had even finished his presentation, those words were echoing across the world.
Anyone who thinks the battle for federal aid has been tough, this time around, should check the archives to see what Iacocca and the rest of Chrysler’s stakeholders went through those many decades ago. A thorough bit of research will also reveal just how strongly the automaker emerged from that particular brush with bankruptcy. And, by the time the last check was written to cover the loans Chrysler got, it had also presented U.S. taxpayers with a nearly 40% return on their investment.
That’s the good news. But the flipside of the story is that it didn’t take all that long before Chrysler once again was in trouble. By the end of the 1980s, it was sinking rapidly towards insolvency, a collapse this time forestalled by the arrival of the so-called LH cars, a line-up of strikingly different mid-size sedans, such as the Dodge Intrepid. (more…)