Chairman Urges Shareholders Not to Abandon Chrysler Corp.
Chrysler Corp. Chairman Lee A. Iacocca pleaded with shareholders Thursday to “stick with us” despite the flagging value of the company’s stock and its lagging auto sales.
Speaking to investors at the company’s annual meeting in Universal City, he said, “1989 was a tough year for the auto industry . . . and an especially tough one for Chrysler. . . . (But) we are not disappointed in the progress we made during the year in getting this company ready for the decade of the ‘90s.”
To a generally receptive audience, Iacocca outlined several steps Chrysler is taking to pull itself out of a slump that has seen its market share fall and its stock price languish at around $17 per share.
After the meeting, he told reporters that the perception that Chrysler is in trouble is worse than the reality.
“It may be a big perception, but we’re doing fine. We’re in a recession; none of the Big Three are making a damn dime in the auto business today,” he said.
But he added: “We’ve got a good program. We’ve got a good plan, and we’re going to come back and be doing better in the next six months.”
During the three-hour meeting, he asked shareholders to stick with the company for the long term and told them of several programs planned to go into effect.
“This is an industry in which plans are made almost (10) years ahead . . . and results can only be judged over that kind of time span,” he said.
Iacocca detailed steps the company took in 1989 to trim costs, including closing three auto plants, asking managers to take salary cuts, freezing raises and cutting the white-collar work force by 11%.
As a result, Chrysler showed a modest profit in the first quarter of 1990 despite lower sales. That followed a loss in the fourth quarter last year, attributable in part to costs associated with plant closings.
Among future programs that Iacocca discussed were a $15.6-billion product-development budget to fill gaps in Chrysler’s automobile line; a $1-billion investment in a new, high-technology engineering and research center near Detroit, and a program to cut $1.5 billion in costs.
He said the company would introduce one new model a year for the next five years. Today, Chrysler is expected to unveil its V-10 Viper sports car.
“When you take the long view, the Chrysler of the ‘90s doesn’t look like the Chrysler of 1980,” Iacocca said, “and I’ll make a prediction for you: Whoever is sitting in this spot 10 years from now . . . will say the same thing I’m saying today. ‘Look how far we’ve come.’ ”
Iacocca blamed part of Chrysler’s problems on what he argued was government failure to defend the domestic auto industry against imports.
At the same time, he defended his controversial “Advantage: Chrysler” marketing campaign, which questions America’s affection for Japanese cars and argues that Chrysler products are as good.
“Why is this little campaign of ours raising so many eyebrows and so many people’s blood pressure?” he asked. “We’re just saying that an American car company has some big product advantages, even over the Japanese, and some people think we’re saying the world is flat by making that statement. . . .”
He added: “We’re not saying, ‘Buy it because it’s American’; we’re saying, ‘Don’t dismiss it because it’s American,’ and there’s a damn big difference in those statements.”
