Lee Iacocca: US Auto Execs Shouldn't Be Ousted

DETROIT — Lee Iacocca, the man who led Chrysler through a government bailout in the late 1970s, says the CEOs of Detroit's automakers should not be forced to quit as a condition of getting government loans.

Iacocca, Chrysler's retired chairman and chief executive, said in a statement Tuesday that now is not the time to make executive changes, as suggested by Senate Banking Committee Chairman Chris Dodd, D-Conn.

"Having been there, I do not agree with the sentiment now coming out of Congress that the management should be changed as a condition of granting loans to the Detroit automakers," Iacocca said. "You don't change coaches in the middle of a game, especially when things are so volatile."

He added that the auto industry has been hit by an unpredictable series of events beyond its control.

"The companies may not be perfect but the guys who are running them now are the only ones with the experience and the in-depth knowledge and understanding of how the car business really works," he said. "They're by far the best shot we have for success."

Dodd said in a Sunday television interview that Wagoner "has to move on" as part of a government-run restructuring. President-elect Barack Obama, without naming names, said current auto industry management should be ousted if it doesn't understand the need to make changes. Dodd didn't name Ford Motor Co. CEO Alan Mulally or Chrysler LLC's Bob Nardelli.

On Monday, the senator said that "it's not my job to hire and fire, but what I suggest is, you need to have new teams in place here ... if you're going to convince the American public" that the financial relief plan is necessary and justified.

But Tuesday, Dodd appeared to back away from calling for the executives' ouster.

"Clearly, it's not Congress' job to micromanage, hire and fire. I think you set up and put in place the people who know this industry, understand it, and then do the kind of major restructuring that has to occur," Dodd said on MSNBC.

Chrysler, General Motors Corp. and Ford are seeking up to $34 billion in loans to help them weather the worst auto sales climate in 26 years. Congress may vote this week on a plan to give them temporary relief while being held accountable for restructuring.

Iacocca persuaded Congress to issue $1.5 billion in loan guarantees for Chrysler in 1979.

The bill was passed four days before Christmas and signed into law by President Jimmy Carter in January 1980. Like the bill now under consideration in Congress, the 1979 legislation gave the government broad oversight of the company and an ownership stake. Chrysler avoided bankruptcy and went on to develop its highly successful, fuel-efficient K-cars.

Chrysler eventually drew down $1.2 billion in loans and repaid them within three years _ seven years early. Chrysler turned a profit in 1982 and the government made $311 million in the sale of stock warrants and another $25 million in loan guarantee fees.

Comments

[munki]

Unfortunately... Iacocca is one of many took much out of the company which could have used to improve infrastructure... R&D

[arvay]

This is like arguing that Lincoln was wrong when he replaced a string of non-performing generals until he found Grant and Sherman. Every situation is unique, of course, but many of these execs have a very bad record of failure. Years and years when they sold gas-guzzlers and foughtprogress.

[w8aminute]

I agree with Lee

[Lettuce Inn]

Check out:
"CHRYSLER'S HIDDEN COFFERS: Why is Cerberus, one of the world's richest private equity firms, begging for a bailout?"

http://www.forbes.com/2008/12/09/chrysler-cerberus-bailout-oped-cx_dg_1210gerstein.html?partner=yahootix

[stockholder5]

Iacocca said: "You don't change coaches in the middle of a game, especially when things are so volatile."
Things are not volatile, they're a mess. The companies are bankrupt!

and btw Chrysler is now owned by a Private Equity Firm and is not a public company. It shouldn't get a bailout. Private equity firms are all about cost cutting and streamlining operations, and turning companies around and if they can't fix Chrysler, no car czar will.

[MuchMadness]

The photo looks like Senator Reid, not Iacocca.

[research]

CEO's stick together.

[watchTVgetSTUPID]

Why should the CEO of GM make more money in one month than the CEO of Toyota makes in a year? They do not represent the stockholders nor their workers nor their companies. They are only in it for themselves ... like the rest of the overpaid US CEOs in this country.

[SCG]

I agree with Iacocca on this one. I'm no fan of American management and certainly not GM, whose arrogance through the years is stuff of legend.

But it's important to separate this economic crisis brought on by the financial industry and short sighted management of the Big Three. Quality has improved, now it's a matter of actively pursuing fuel efficient and electric cars.

If Obama can come up with a reasonable alternative public health care system which could reduce costs for manufacturing, perhaps our domestic car industry will finally have a real cost advantage over the imports? Certainly if our dollar collapses, as some have foreseen.

We need to save manufacturing through this crisis not of their own making. We'll be glad we did when we come out of this mess.

[ReasonIsMyReligion]

Iacocca made the Mustang before he made the K-car.

The big 3 at the Detroit 3 made... Hummers, Hemis, and Tritons.

Iacocca's judgment ain't what it used to be.

[KillTheMessenger]

Iacocca's judgment was never what he claims it was in his "autobiography". Once you read up on his real world stance on safety belts, airbags and fuel efficiency, you will be just as disgusted about him as about the three stooges.