Viewpoints : The Teflon Iacocca : Chrysler’s chairman is renewing his Tokyo-bashing, but the fact remains that his company still can’t adequately compete with the Japanese.
Remember “If you can find a better car, buy it”?
Well, Lee A. Iacocca’s new catch phrase is “the Teflon kimono.” It’s the way that he decribes what he calls Americans’ misguided conviction that the Japanese still build the best cars.
I’d like to see the non-stick surface applied where it belongs--on Iacocca himself. I think that he has become the Teflon CEO.
Since the taxpayer-guaranteed bailout of Chrysler Corp. a decade ago, Iacocca--admired the world over for his candor, toughness, charisma and management acumen--has nearly squandered the car maker’s painful rebirth. Chrysler once again can’t sell cars, has gaping holes in its product line, is in an organizational scramble and is losing money.
As Yogi Berra said, it’s deja vu all over again.
Iacocca’s aura reminds me of something that Roger B. Smith, chairman of General Motors Corp., said a couple of years ago about himself, which went something like, “I wasn’t as good as they said I was then, and I’m not as bad as they say I am now.”
Let me propose the Iacocca corollary: He was probably as good as they said he was then, but not anymore.
Smith should have it so good. The GM chairman is in the running for Villainous Businessman of the Year, thanks to GM’s continued corporate decline and bad public relations from the acclaimed movie, “Roger & Me.”
But at the same time in January that Smith was being lambasted for GM’s shedding of tens of thousands of workers over the past decade in Flint, Mich., what kind of publicity was Iacocca getting? A wire service photograph of him, grandpa-like, reading a book to first-graders as part of a Chrysler books-for-kids program.
And now Iacocca is again getting the kind of focused national attention that we all gave him in the 1980s. The reason is that he’s on the stump once more, in a cross-country roadshow that began in Washington in February, then stopped in Dallas and is headed for Atlanta, New York and Chicago before ending in Los Angeles on May 17 and 18.
Judging by reports of his Washington appearance, these stints are vintage Iacocca. He railed against U.S. consumers and media who reinforce “the idea that anything made overseas is better than anything made in America”; he said he was not going to “let that kind of crap go unchallenged anymore.” Then he touted the virtues of Chrysler products and talked about the company’s latest ad campaign starring himself.
Trouble is, Chrysler still can’t really compete with the Japanese in most areas. And while Chrysler executives are denying any hostile intent, Iacocca’s new shtick clearly is just a rehash of his Japan-bashing routine of old.
That does not work nearly as well as it used to. Once a clarion call to U.S. executives, workers and politicians to wake up and smell the competition, Iacocca’s sermonizing now comes off as a smoke screen designed to obscure the woeful job that he has done at the helm of Chrysler these past few years.
I’m not privy to exactly what management missteps are responsible for Chrysler’s troubles or who’s responsible for the miscues. But because the state of a company generally reflects the leadership of its chief, it’s clear that the Iacocca touch has been slipping lately:
Inability to sell cars or make money. Despite the advantages of restraints on Japanese imports and an eight-year boom in U.S. auto sales, Chrysler hasn’t been able to cash in. Its share of U.S. auto sales has eroded at an accelerating pace, having fallen to 10.4% last year from 12.6% just four years earlier; surging sales of trucks and minivans have only partly offset this decline. (American Motors’ tiny share of the market is included in Chrysler’s figures for both years; Chrysler acquired the smaller firm in 1987.) Profit has been declining for five years.
And invoking the Japanese bogyman won’t work here. During the same period, Ford Motor Co. boosted its share of the U.S. car market by 3.3 percentage points to 22.3%.
Absence of socko models. All hail Iacocca for approving the mid-1980s introduction of the Chrysler minivan, a truly innovative product that created a whole new automotive market.
But Chrysler hasn’t come up with a truly landmark, mass-market auto since the K-car--a lovable but homely line of boxy compacts--saved the company 10 years ago. Iacocca and other Chrysler executives for several years have been conceding that a weak product lineup endangered the company, and they have been promising remedies for just as long. They’re sounding the same anticipatory theme for the 1990s.
Things out of control. After vowing in the mid-1980s, as the auto industry recovered, that he wouldn’t allow the company again to get fat, happy and loose with the purse strings, Iacocca allowed just that. Now the company is trying to slash more than $1.5 billion in costs.
A chief culprit in this problem is Iacocca’s decision to buy American Motors Corp. a few years ago. Despite nabbing the popular, pricey Jeep line for the company, that acquisition saddled Chrysler with lots of unneeded car manufacturing capacity at some high-cost plants, doubled Chrysler’s unfunded pension liabilities and left it with the legal hangover of lawsuits against AMC’s rollover-prone old CJ Jeep models and an expensive obligation to buy parts from Renault, AMC’s former owner.
Neither has Iacocca handled this retrenchment in an endearing way. Although Wisconsin state officials allege that he promised to keep AMC’s decrepit Kenosha, Wis., plant open for another three to five years, Iacocca closed it in December, 1988, after little more than a year of production under Chrysler ownership. After similarly vowing to keep the ancient Jefferson Avenue assembly plant in Detroit open until Chrysler completes a new plant nearby in a couple of years, Iacocca shut Jefferson a few weeks ago.
Strategy reversals. In the past several months, Iacocca seems to be trying to undo lots of major efforts that, just a few years ago, he painted as crucial to Chrysler’s future:
Diversification was the $1-billion strategy of choice for Chrysler a few years ago, an effort to guard the company against the cyclical automotive market. But now Iacocca has unwound that by moving to shed Gulfstream, the maker of corporate jets, and Chrysler’s defense-electronics operations.
A holding company was to make management of Chrysler more efficient. Recently, Iacocca discarded that organizational structure.
A 45% stake in Mitsubishi gave Chrysler an enviable foothold in Japanese industry. Iacocca sold half of that stake last year.
A $250-million investment in a luxury coupe designed by Maserati was supposed to launch Chrysler into the elite of car makers. Iacocca dumped the poor-selling vehicle last year.
Waning popularity. True, in the 1980s Iacocca not only rescued Chrysler but also saved the Statue of Liberty from rapid decay, wrote a business bible and made himself the presidential choice of millions. But while the roadshow and the car maker’s new “Advantage Chrysler” program revive and strengthen his role as Chrysler’s chief marketing tool, Americans are not as interested; a TV ad featuring Iacocca placed last among eight auto ads shown during the last Super Bowl and 31st out of all 41 ads played during the broadcast, according to a USA Today survey.
Iacocca put his powerful persona on the line by psyching the U.S. consumer into buying the company’s brand-new--but decidedly plain-vanilla and unproven--K-cars as a vote of confidence in him and in America. And he emerged as a leading critic of Japanese industrial and trade policies.
The sheer force of his personality carried Chrysler back into bounty. He proudly repaid the $1.2 billion in U.S.-guaranteed loans ahead of time. Auto workers cheered him wildly on plant visits, saving much less enthusiastic applause for their own United Auto Workers brethrens. Then came “Iacocca,” the book that became an international best seller.
The intersection facing Iacocca these days recalls something he said in his book about another key moment in his career: the aftermath of his being sacked as president of Ford by Henry Ford II.
“There are times in everyone’s life when something constructive is borne out of adversity,” Iacocca wrote in the prologue to his book. “There are times when things seem so bad that you’ve got to grab your fate by the shoulders and shake it.”
I’m not sure that falling back on macho marketing and Japan-thumping are what that Iacocca proverb would prescribe for Chrysler’s current situation. But Iacocca is turning to those old friends nonetheless.
