Tough Times Ahead for Detroit: Iacocca

Chrysler Corp. Chairman Lee A. Iacocca said today that he anticipates that the next 15 months will be tough for the U.S. auto industry and that at least one more Chrysler plant may be closed.

The outspoken 64-year-old Iacocca, in an interview published in today’s Automotive News, also said the nation should brace for a recession that will finally arrive.

“I’ve been saying for five years--and I got to be right one year--that the recession is coming,” Iacocca told the weekly trade publication. “If I had to pick a year, I’d pick 1990 as more than a transition year. It is going to be a difficult year.”

Iacocca, saying he did not “want to cry fire in the theater,” was not specific as to which Chrysler plant may be closed, or when.

But he did hint, and industry analysts agree, that its St. Louis No. 1 plant that builds the Chrysler LeBaron and Dodge Daytona coupes seems a likely candidate. That plant has had to be repeatedly idled due to high inventories of those cars.

Last year Chrysler closed its Kenosha, Wis., plant, idling about 5,500 workers.

“We will definitely have to close more than we have closed to date, which is a 100-year-old plant called Kenosha,” Iacocca said, referring to the facility Chrysler inherited when it acquired American Motors in 1987. “There is a plant or two that probably will be closed.”

Iacocca also said Chrysler may have to delay the introduction of some of its new models during the early 1990s, despite promises that the car maker’s $1-billion cost-cutting program announced last July would not affect its vehicle programs.

“We will be stretching out some things,” he said, noting that no new model programs will be dropped and that the top priority on the corporate agenda is for Chrysler to become the nation’s lowest-cost producer while building higher-quality cars.

Part of Chrysler’s cost-cutting program involves the layoff of about 2,300 white-collar workers, or about 8% of Chrysler’s salaried work force, by the end of the year. Much of it is to be accomplished through early retirements and buyouts of employees at least 55 years old with a minimum of 10 years’ experience.

On other matters, Iacocca said:

--Chrysler is not interested in pursuing an arrangement or equity interest with a European car maker, as GM and Ford Motor Co. have been doing in recent months with British car maker Jaguar.

--Chrysler is still interested in acquiring non-automotive businesses, but he said the auto industry downturn may delay those plans.

--Chrysler most likely will make further joint ventures like the one announced this month with GM to manufacture transmissions and transfer cases.