In recent years, the number of car companies going under or barely surviving has grown drastically. One of the biggest of such names is Chrysler. The economic downturn of the late 2000s has bled over into the current decade and has posed an ongoing challenge for the manufacturer and Italian auto giant Fiat completed its acquisition of the company in January 2014.
Meanwhile, those on the inside recall a time when Chrysler experienced very similar difficulties in the late 1970s and early 1980s, and think back to the days when CEO Lee Iacocca led the automaker out of the woods and back onto the path of profitability.
1970s Gas Crunch Created Difficulties
In the years leading up to 1979, Chrysler had been struggling to stay relevant in the auto industry amidst the OPEC-led oil embargo on the United States and the subsequent gas crunch of the decade. The company had lost all ability to expand or upgrade their plants, and was barely getting by.
It had fallen behind on payments to suppliers, and banks were unwilling to lend the company money. Employees had been cut, and cut, and cut until a skeleton crew was responsible for running their plants.
Even then, many people were unsure if their paycheck would clear at the end of the week. In walks incoming CEO Lee Iacocca, new to the company – but not new to the automobile business as he was previously an executive at Ford Motor Company – and acutely aware of the storm he was facing. All told, Chrysler reported a loss of $160 million in the third quarter of the year he joined the company.
The Iacocca Years
When Iacocca took over Chrysler, the entire atmosphere around the company changed.
He personally visited plants and spoke with managers, reassuring them that things were going to turn around.
He secured a major cash infusion with the help of the U.S. government, which opened up Chrysler’s ability to invest more in their plants.
He jumped at every marketing opportunity, including appearing in television commercials himself. He also eliminated waste and played hardball with car dealerships to ensure that his products were being sold, not just sitting in the Chrysler lots.
In the early 1980s, Chrysler introduced the K-Car line and the minivan which both became hugely popular and the company returned to profitability quickly. In fact, Chrysler was able to repay its government-backed loans in seven years’ less time than anticipated.
It took someone forceful like Lee Iacocca to turn the company around thanks to his ability to rapidly assess his options and take risks that brought rewards. Iacocca retired in 1992 as the CEO, chairman and president of the automaker he rescued.
Learn from the Past
Today, Chrysler is facing trouble once more, but many are confident that the company will pull through, just as it did before under Lee Iacocca. What they need most is to follow Iacocca’s lead and overhaul their business quickly and concisely.
Supplied by: Avondale Dodge