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Barnstormin’: The Last Days of Chrysler


Barnstormin’: The Last Days of Chrysler

Is Chrysler done? That’s a question which has been posed before, several times actually. Chrysler has nearly bought the farm a couple times now, coming the closest to collapse in the early 1980s before a government loan was secured by the company and Lee Iacocca led a talented group to revive it from the brink.

What few people know about that stretch of time is that Chrysler was actually bankrupt. The only way that the company made it long enough to secure the $1.2 billion government loan was because its suppliers kept sending the parts and pieces necessary to assemble cars. They were working on the good faith that Iacocca and his management group would be able to save the company. In one of the greatest turnaround stories in the history of American business, they were.

That was the early 1980s, and by the end of the decade the company was in a strong financial position, reopening its European operations (which they had divested during the late 1970s/early 1980’s to save the company). We all remember the halcyon days of the early 1990s with Tom Gale as the head of styling and how the hits literally rolled out of Chrysler, year after year. It was the Viper, the Ram truck that totally changed the styling aesthetic of the American pickup truck, then it was the LH cars with their “cab forward” design. Dodge was the most exciting car company in America back then and it seemed like it was poised to be around for a long time.

Then 1998 came and the “merger of equals” with Daimler was consummated. It took about six seconds to see that there was nothing “equal” about the partnership. The joke internally was, “Ya know how to pronounce DaimlerChrysler? The ‘Chrysler’ is silent.” Daimler dominated the relationship and suddenly the stock price took a dump and it seemed that the great spirit of creativity had been sucked from the company. It seemed like that because it had been. Daimler bled the company dry and left it face down in a ditch when it finally managed to offload what was left to Cerberus Capital Management. Those guys made the boys at Daimler look like visionary leaders.

Most recently came the news that the US government mandated Chrysler to merge with Italian automaker Fiat. They have until the end of the month, and as of the other day, Fiat’s CEO was basically stating that he’s ready to walk away from the deal. Fiat is concerned with the labor costs in Chrysler’s factories, the basic issue that has long plagued the domestic manufacturers.  

In response to the Fiat chief’s words, Bob Nardelli and Tom LaSorda–Chrysler’s CEO and President–respectively, sent a letter to all of their Canadian Auto Workers union employees stating that, essentially, they were going to have to take certain benefits away from employees to lower the average labor cost per vehicle to make them more competitive with other manufacturers. The workers received this message, and after careful consideration, literally piled them up and set them on fire during their lunch break. This actually happened.

With the end of the month being the deadline for completing the deal with Fiat, it is absolutely more than a possibility that Chrysler will be toast in a short few weeks. The goodwill shown by suppliers twenty years ago is non-existent, and there is no K-car or minivan coming around the bend to bolster the bottom line.

What’s left is a group of people being led straight off a cliff by an ownership and executive management group who have nothing at stake in this company. If it folds up Cerberus will liquidate all the factories, tooling, and material, and reclaim a large part of their investment. Bob Nardelli will be placed on the board or at the helm of another company, and may God save those employees.

Say what you will about Lee Iacocca, but the man was a true leader who made hard decisions, unpopular decisions, and ultimately winning decisions to lead a company back from the brink of death. The employees were energized, invested, and by all accounts obsessed with improving the quality of their product.

Employees 20 years ago would have framed that letter as the roadmap to save their company. Today they set them on fire.

Goodbye Chrysler. May your example save others.


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