BUSINESS

Chrysler fights another battle

SUSAN RILEY November 14 1983
BUSINESS

Chrysler fights another battle

SUSAN RILEY November 14 1983

Chrysler fights another battle

For Chrysler Corp.'s controversial chairman, Lee lacocca, it was a largely satisfying week. First, the

inveterate salesman found himself with a new product to promote: Chrysler’s new van-wagon, a $700-million gamble for the born-again auto giant. Then it appeared that a six-day-old strike that closed down Chrysler assembly plants in the United States and Canada was headed for settlement.

Last week in Windsor, Iacocca beamed proudly as he drove the first of Chrysler’s new front-wheel-drive vans off the assembly line. Never known for his modesty, he boasted that the new Plymouth Voyager was the most revolutionary vehicle since the Mustang, which made him famous at the Ford Motor Co. in the early 1960s. Intended for large families, the Voyager resembles a seven-passenger station wagon and will sell for $10,000 to $12,000. Chrysler hopes to sell 150,000 of them the first year and 250,000 the second.

For a while at least, it will have the van-wagon market to itself. A new van from Toyota Motor Co. of Japan will be in short supply because of export restraints. And similar vans from GM and Ford do not have front-wheel drive, an increasingly popular option among North American drivers.

Iacocca’s new gamble also comes at a time when North American cars are selling strongly. October was the best month this year for U.S. vehicles, with sales ahead 55 per cent over September. So far this year, the four major U.S. companies have sold 527,724 cars—up 26 per cent from 1982. However, the figures are still 30 per cent below the record levels set in 1979, before competition and the recession almost felled Detroit.

But for Chrysler last month was the best October in five years and another success for Iacocca. He is generally credited with saving the company in 1979 through a combination of personality and business acumen, including the introduction of some Japanese-style production techniques and business practices. Ottawa and Washington also helped out with generous loans.

But his latest gamble nearly died in infancy. The van-wagon was to have been produced at the highly automated Windsor, Ont., plant, and last week that plant faced a shutdown because of a shortage of small metal clamps produced at the troubled Twinsburg, Ohio, factory. “We are going to have to work it [the strike] out fast or we are going to have a disaster,” Iacocca told reporters in Windsor last week. “If the whole sys-

tern goes down for a month or two, we are bankrupt.”

The strike had forced the layoff of about 18,200 employees at plants in the United States and Canada because they had run out of vital parts produced in the Twinsburg plant. There were fears that a long strike would have eventually shut down the company’s entire North American operation. That would have left about 55,000 workers unemployed and would force the automaker to dip into its cash reserves—currently estimated at $600 million—to pay the bills.

Ironically, Chrysler’s problem arose partly from its newfound success in building and selling cars. Chief among 50 demands by Twinsburg plant workers was a reduction of overtime that kept some employees at the plant for 10 hours a day, seven days a week. Workers who refused the overtime were suspended. “We have the highest divorce rate in Summit County,” said Norman Slack, a maintenance laborer at the Twinsburg stamping plant. “You cannot turn people into robots.”

The federal department of labor settled the overtime issue in Canada 20 years ago when it ruled that Chrysler employees could not be required to work more than eight hours a day, six days a week. “But before that happened,” recalls Windsor UAW leader Ken Gerard, “hundreds of people here were suspended.”

Chrysler Corp. prefers to use overtime rather than additional employees because the practice keeps benefit costs lower. But Chrysler’s Twinsburg employees believe that the corporation now has to deal with matters other than cost effectiveness.

By week’s end union spokesmen indicated that the negotiations were on the verge of success, with only two minor issues outstanding, and the town’s 3,200 autoworkers were expected to be back on the job this week. The Twinsburg plant produces all the front doors and most of the steel underbodies for Chrysler cars produced in Canada and the United States. Some production was continuing at Windsor and at a truck assembly plant in Warren, Mich., but few of Chrysler’s other plants were unaffected.

Before last week’s strike, Chrysler had earned a record $582.6 million in 1983, after losing $3.27 billion from 1979 to 1981. According to auto industry analyst Arvid Jouppi, “What Lee Iacocca did was to slim down the operation to the point where there are profits and volume. With volume comes a moderate amount of overtime.” But, as the workers at Twinsburg found out, they had to strike to make Lee Iacocca’s definition of “moderate” the same as

theirs.

SUSAN RILEY

Judy Gerstel