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November 17, 2008

Where have you gone, Lee Iacocca? Nearly 30 years ago, Chrysler Corp. was near bankruptcy for many of the same reasons Detroit automakers are in deep trouble today. High gasoline prices prompted consumers to turn to more fuel-efficient Japanese cars. The economy was tumbling into a deep recession, credit was tight and auto sales were in the tank. Chrysler, the smallest of what were then called the Big Three automakers, was dangerously close to filing for bankruptcy.

Chrysler turned to the federal government for $1.2 billion in loan guarantees, a move that was even more unpopular than the Detroit Three's question for federal aid today. But Chrysler had one thing going for it that Detroit's automakers now lack--a charismatic leader in Chairman Lee Iacocca, now 82 years old. The man known as "the father of the Mustang" was an American hero who was able to make a strong case for loan guarantees in testifying before Congress.

Iacocca also cut his pay, taking a symbolic $1-a-year salary. He convinced the United Auto Workers union to take cuts in pay and benefits, but put then-UAW president Doug Fraser on Chrysler's board of directors.

"At that time no corporate officer in America, and perhaps the world, could match him in popularity and stature," wrote former Chrysler Chief Financial Officer Steve Miller in his recent autobiography, "The Turnaround Kid."

"During the restructuring he had spoken forcefully at congressional hearings, voicing the worries about global competition, especially from Japan, that millions of Americans shared," Miller, now the executive chairman of Delphi Corp., wrote. "The press turned to him almost every day for comment and quotes, and Lee tended to oblige them with a feisty wit and intelligence."

I doubt very much we'll see a similar performance from Detroit's current crop of smart, but cautious CEOs as Congress this week debates emergency loans for the automakers.

General Motors Corp. CEO Rick Wagoner, Ford Motor Co. Alan Mulally and Chrysler LLC Bob Nardelli will no doubt represent their companies well before harsh questioning by Congressional leaders.

But Detroit sure could use a hero.


LINK:The Detroit Three automakers need a hero - Auto blog - Rick Haglund - MLive.com
 
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