Iacocca Engineers Turnaround,
Decades of Change Follow
1970’s: Financial Issues Cloud the Decade
Thanks to the growing popularity of inexpensive, but well-built Japanese imports, the rising price of gasoline, changes in American car-buying habits and the firm’s resulting financial problems, Chrysler branded vehicle sales stalled in the 1970’s, leading to bankruptcy. As a result, only one new assembly plant was brought online – a truck and van plant located across the river from Detroit, in Windsor, Ontario, Canada.
In November 1978, Lido “Lee” Iacocca, a former Ford executive fired just four months earlier was brought on-board to whip the company into shape. In addition to firing 33 of the company’s 35 vice presidents, he slashed $500 million in costs, and convinced the United Auto Workers Union (UAW) to forgo scheduled salary raises.
By August 1979 the company’s Supplemental Unemployment Benefit fund ran out, drained by over 27,000 layoffs. Chrysler also faced a $1.1 billion loss for the fiscal year, due in large part to a struggling American economy suffering from higher gas prices, sky-rocketing interest rates and a market share that had dropped below 10 percent.
In an effort to avoid a disastrous bankruptcy, four months later Iacocca went before the U.S. Congress to request financial help. He presented a five-year restructuring and new product plan that called for $13.6 billion in spending cuts. By the following summer Congress approved a $3.5 billion aid package that included $1.5 billion in federal loan guarantees. As part of the package, the UAW agreed to $475 million in wage concessions and management agreed to a $125 million reduction in compensation.
Thanks to the Congressional aid package, together with Iacocca now-famous TV and radio commercials pitching a line of more fuel-efficient models from the “New Chrysler Corporation,” the company enjoyed a storied turn-around in the decade of the ‘80s.
Plant No. 18) The only assembly plant Chrysler built in the 1970’s was the Pillette Road Truck Assembly plant, located in Windsor, Ontario, Canada. The new plant was built in 1974 to handle truck-based van products, namely the Dodge Ram Van and Dodge Ram Wagon. It continued to build vans from its opening until it closed 30 years later, in 2003. Status: Out of service.
The 1980’s: Enter the “Iacocca Era”
If the 1970’s went down as the turbulent “stand pat” decade at Chrysler, the 1980’s were anything but. “Wheeling and dealing” was the theme of the decade that followed, under the irrepressible leadership of the new head of Chrysler boss, Lee Iacocca.
The ‘80s saw a revitalized Chrysler Corporation that achieved an historic economic turnaround – thanks in demand for its minivans and new K Cars. The company’s resurgence allowed it to exit bankruptcy and repay its government-backed loans quickly. Under Iacocca’s leadership it also expanded its operations dramatically, with new assembly plants coming on-stream in the U.S. and Canada, thanks to the acquisition of American Motors and a growing alliance with Japan’s Mitsubishi Motors Corporation. Iacocca had clearly proven himself to be a savvy car-company “fix-it man,” very much in the same mold as company founder – Walter P. Chrysler.
As a result of the AMC/Jeep deal Chrysler acquired three plants, and jointly operated a fourth assembly plant in Normal, Ill. – Diamond Star Motors – that was designed initially for the Mitsubishi Eclipse and Plymouth Laser models. However, the AMC plant in Kenosha, Wis. was shuttered once the acquisition was finalized, as the Jeep product line was the more valuable asset.