Iacocca

Lee did not realize he was Italian until he was 11 years old. Looking at a map of Europe, he remembered searching for places actually named "Dago" and "Wop." Exposure to bigotry as a child left a mark, and prejudice invaded his life. The most important thing Lee learned in school was communication - writing clearly, public speaking, and expanding his vocabulary by joining the debate team. While recovering from rheumatic fever, Lee began passionately reading everything he could.

In August 1946, Lee Iacocca began working at Ford Motor Company as a student engineer in a program known as a "loop operation." This involved rotating through different departments over a period of weeks to gain hands-on experience with every stage of automobile manufacturing. He was assigned to Ford's massive River Rouge complex, the largest auto plant in the world at the time. This provided an invaluable opportunity to see classroom engineering concepts applied in real-world manufacturing.

When sales of the 1956 Fords were slow, Lee Iacocca came up with a plan to offer the cars for 20% down payment followed by 36 monthly installments of $56. Within three months, the Philadelphia sales district went from last to first nationally. The concept was adopted company-wide and Iacocca was promoted to District Manager in Washington D.C. Just before leaving on his honeymoon after getting married on September 29, 1956 to Mary McCleary, a Ford plant receptionist, Lee was told he would be heading car and truck sales for Ford, requiring a move to Detroit. Within a year, he became head of car marketing, reporting to Robert McNamara.

At age thirty-six, Lee Iacocca was the general manager of Ford's largest division, yet he remained virtually anonymous within the company itself. One of his first initiatives was to implement a quarterly review system whereby executives wrote down specific goals and targets for the next three months. At the end of each quarter, they evaluated their progress and set new objectives. This measure introduced accountability, dialogue, and ensured no one got lost.

When Lee took charge of the Ford division, they were enjoying success with the Falcon. To build on that, they developed a German-built fuel efficient compact called the Cardinal to compete with the Volkswagen. However, when Lee inspected the Cardinal in Europe, he found the styling poor, lacking trunk space and looking like a committee design.

On returning, Lee convinced Ford management, despite $35 million invested, to abandon the Cardinal as it would not appeal to youth and risk becoming another Edsel. With the Cardinal gone, Lee assembled a creative team to analyze the changing US auto market, concluding that younger buyers wanted style, performance and affordability. Starting in 1960, the team proposed a sporty four-seater as a new Falcon model. After an extensive design process, the basis of the Mustang emerged. Its launch at the 1964 New York World's Fair created a sensation as buyers rushed to purchase the $2,368 Mustang with its many options, averaging another $1,000 per car.

The Mustang was so successful that in January 1965, Lee was promoted to vice president of Ford's car and truck group. This gave him responsibility for planning, production and marketing of all new Ford and Lincoln-Mercury cars and trucks. For years, Lincoln-Mercury had been the weakest Ford division, making expensive, upscale vehicles.

In 1968, the 44 year old Lee Iacocca had a successful track record with the Mustang and was viewed as the next President of Ford Motor Company. However, Henry Ford hired Semon "Bunkie" Knudsen, an executive from rival General Motors, as Ford's new president with a $600,000 salary.

Knudsen struggled to adapt to Ford's faster-paced and more competitive environment compared to GM's more bureaucratic culture. After less than two years, Henry Ford fired Knudsen. On December 10, 1970, Lee Iacocca was named president of Ford. One of his first initiatives was launching a cost-cutting program with the goal of increasing Ford's profit margin from 3.5% to 5% the following year.

Before Lee Iacocca became president, Henry Ford II was a distant figure at Ford Motor Company. However, when their offices were next to each other, Iacocca worried about the company and his own future as he got to know Ford better. When the 1973 oil crisis hit, Iacocca and Ford clashed over developing a more fuel efficient small car.

In 1975, Lee Iacocca concluded that Henry Ford had embarked on a deliberate plan to force him out of Ford Motor Company. This belief took hold when Lee began suffering chest pains and realized his mortality. He suspected Ford did not want an Italian immigrant's son running the company if he died. So Ford instituted a program to discredit Iacocca, despite the fact that under Lee's leadership the company was thriving as never before.

With the tense atmosphere in the company during 1976 and 1977, he was later asked why he did not resign. He replied that he found it nearly impossible to abandon an annual salary of $970,000. He desperately wanted that $1 million per year and would not face facts. He also envisioned the Board deciding Henry had lost his mind and leaving him to run the company alone. Additionally, he was greedy. He relished being president, knowing his value to the company.

Lee Iacocca was extremely angry about being fired from Ford. He realized he needed to find a new job quickly before his resentment festered. The media speculated about his clash of personalities with Henry Ford, and there were some insulting remarks made regarding his Italian background. However, the main reason he was dismissed was that Henry

Walter Chrysler founded the Chrysler Corporation in 1925 after reorganizing the Maxwell and Chalmers Motor Companies. He was an innovator in engines and transmissions who had previously left General Motors in 1920 due to disagreements over how to run the Buick division. Chrysler brought out Dodge and Plymouth models in 1928. By 1940 when Walter Chrysler passed away, the company had surpassed Ford to become the second largest automaker behind GM, capturing 25% of the domestic market.

When Lee Iacocca joined Chrysler, he found a company that lacked cohesion and strategic direction. There were 35 vice presidents who operated in silos, with no communication or coordination across departments. Manufacturing built cars without consulting sales, amassing huge unsold inventories.

The COOs focused on loans rather than aligning teams. There were no financial controls or planning. For years, Chrysler was run by people seemingly disinterested in the auto business. Talent was moved arbitrarily between areas, leaving people in jobs they weren't suited for. Within three years, Lee fired 33 of the 35 VPs. Fundamentally,

When Lee Iacocca took over Chrysler, he knew he needed an experienced team to help turn the struggling company around. He went back through his detailed notebooks, where he had tracked the careers of hundreds of Ford executives over the years. His first hire was Gerald Greenwald as Chief Financial Officer, who he poached from Ford. Greenwald introduced financial systems to evaluate management decisions and gather data.

When Lee Iacocca joined Chrysler in January 1979, the company faced immense challenges. Just months after he arrived, the Iranian Revolution caused oil prices to double, decimating Chrysler's recreational vehicle sales. With gas shortages across America, Chrysler's market share plunged to a mere 8%. Making matters worse, Chrysler had wrongly assumed four-fold gas price increases when planning its 1983 models.

Lee Iacocca had done everything possible to reduce Chrysler's expenses, yet the company was still losing money due to the poor economy. Lee realized the only way to save Chrysler was to request a government loan. Every other option to restructure the company had already been attempted. Chrysler's first request to the government was not for a loan but to loosen anti-trust laws to allow automakers to collaborate on research and development.

From the start, government-backed loans to Chrysler faced widespread opposition, especially from the business community who saw it as interfering with free market principles. However, government regulations had contributed to Chrysler's financial troubles, so there was a case that government should help address the consequences.

The free enterprise system has always adapted to changing situations, and Chrysler argued this was another necessary adjustment. Eventually, there seemed to be some recognition that guaranteeing the loans would ensure healthy competition between Chrysler, Ford and GM, preserving 600,000 American jobs. If Chrysler collapsed, unemployment insurance and welfare payments were projected to cost $2.7 billion the first year.

Congressional hearings were held where Lee Iacocca had to appear as a Chrysler witness and respond to loaded questions with no preparation. Chrysler was criticized for past issues, especially those before Iacocca's involvement. The hearings blamed Chrysler for real and imagined industry problems, refusing government responsibility for frequent regulation costs. Views were polarized regarding the proposal. After the House hearings, Senate hearings repeated the process with new people.

With the passage of the Loan Guarantee Act, Chrysler now had a chance to survive. However, turning the company around and repaying the loans was just beginning, not the end. Lee Iacocca started by reducing his own salary to $1 a year to set an example and have credibility with unions. He learned that people can accept pain if everyone suffers equally.

Chrysler had the backing of management, unions, suppliers and dealers to get the company profitable again. The one group that refused to make concessions was the banks. Compared to congressional hearings, dealing with the banks was extremely difficult. Banks only cared about their returns, not Chrysler's overall situation. They wanted Chrysler to declare bankruptcy. When the loan guarantee act passed, Chrysler owed about $4.75 billion. For 50 years prior,

The K-car represented a hopeful new direction for the struggling Chrysler company. Launched in 1981, the affordable, fuel-efficient compact was intended to compete with GM's X-car and appeal to budget-conscious buyers. After years of financial turmoil, the successful K-car finally gave Chrysler a hot-selling model.

However, early production troubles almost sank the K-car introduction. Once manufacturing smoothed out, K-car sales took off, capturing 20% of the compact segment. Still, high interest rates hampered sales, so Chrysler offered special financing incentives. Despite strong K-car numbers, Chrysler lost $478 million in 1981.

In 1983, after reviving Chrysler, rumors circulated that Lee Iacocca would run for President. This stemmed partly from his appearing in Chrysler commercials that had patriotic overtones. Numerous articles speculated about Iacocca’s supposed political ambitions. The rumors began jokingly among journalists but soon drew serious analysis.

Chrysler Corporation had undergone major restructuring, now only needing to sell 1.1 million cars annually to break even instead of over 2 million previously. By 1982 Chrysler was profitable again, making a record $925 million profit in 1983. With strengthened finances, Chrysler offered 26 million shares to the public in Spring 1983, selling out within an hour and raising $432 million, the third largest stock offering ever in America at the time.

Lee Iacocca strongly advocates for mandatory seat belt laws, comparing them to traffic laws like stopping at a red light - a necessary rule for a functioning society. He argues that driving is a privilege, not a right, so it comes with responsibilities like wearing a seatbelt. Statistics show seat belts reduce traffic fatalities by 50%. If worn properly, it's nearly impossible to die in a crash below 30mph. Failure to wear seat belts raises taxes and insurance rates while putting others at risk.

In 1914, Henry Ford doubled the average wage to $5 a day to create a middle class that could afford his cars. Today's $15 per hour worker buys homes, cars, and appliances, fueling capitalism. While unions have won major wage gains, the costs are steep. For example, Chrysler spends over $600 per vehicle on worker health benefits, nearly 7% of the sale price for small cars.

America and Japan are currently engaged in a trade war that is critical to the futures of both countries. Japanese industry is strongly backed by the government through MITI, the Ministry of International Trade and Industry. MITI determines key industries like autos, steel, chemicals, shipbuilding and machinery manufacturing and assists their research and development. This government support through goals, priorities, loans, tax incentives,

The experience with Chrysler demonstrated what can happen when many groups unite behind one specific goal. America should take the same approach to reduce its deficit. As Lee Iacocca suggested, cut $15 billion by trimming 5% from defense plus equal social program cuts. Also raise $30 billion with an oil import surtax and 15 cent gas tax hike.

America has lost world leadership. Once strong from investing in production and consumption, America now pours money into paper investments. Big companies put huge sums into other companies' stock. Most money winds up in banks, not lasting production. New financial tools just absorb purchasing power for engineers' profit. So much capital yields little value.