COVER

LEE IACOCCA LOOKS AHEAD

August 1 1988
COVER

LEE IACOCCA LOOKS AHEAD

August 1 1988

LEE IACOCCA LOOKS AHEAD

COVER

Since he became chairman of Detroit-based Chrysler Corp. in 1979, Lee Iacocca, 63, has become North America’s celebrity executive. He has written two books and has spoken widely on his favorite topic—the automobile industry, including the increasing tensions between Japanese and North American carmakers. And Iacocca continued on that theme last week in an interview with Maclean’s Senior Writer D’Arcy Jenish in his large and cluttered Detroit office:

Maclean’s: You have obviously had a remarkable career. What is left for Lee Iacocca to achieve now?

Iacocca: I know what I’m glad I didn’t do. I almost got tempted once to get into politics. You could tell that I wouldn’t last long because I’d want to do some things without checking with everybody, including the janitor, on whether we should do it or not, and I know I’d go crazy.

Maclean’s: Chrysler’s share of the car market has fallen to about Ik per cent from 17 per cent since 1985. Can that be reversed?

Iacocca: This year, to date, car and truck sales combined in the United States were way up over last year. We paid a price. We went for market share. We’re up more than Ford. As I have said, we have had to pay like hell, though. We were the lowest pricers in Canada and the United States, and that’s a classic way to squeeze margins.

Maclean’s: Some auto industry analysts in Canada say that Chrysler may have made a strategic mistake by paying off its U.S. government loans ahead of schedule rather than using that money for development.

Iacocca: Oh, no. I just told somebody that the sweetest day of my life was paying off those loans early. The bureaucracy of the government was over us like a blanket. Getting rid of them was the greatest day of our lives. I wish we could have done it in two years instead of three. But when I stop to think that we might have taken 10, I would

have shot myself. That’s how bad it was. I’m not antigovernment, but Jesus! Government!

Maclean’s: The Canadian opponents to free trade argue that the United States is an economic power that is in decline—-is that a valid criticism?

Iacocca: Well, if we continue with federal government policies of the last eight years, we’ll stay in decline, but not if we assert ourselves and understand what competitiveness means. It means big investment, it means lower interest rates, it means better union relations, it means reasonable tax. I would rather compete with cheaper three-per-cent money from the Mitsubishi Bank than pay 12 per cent to America’s Citibank. Maclean’s: Do you anticipate that overproduction of cars is going to be a major problem? What will the consequences be?

Iacocca: Europe has just gone through it. It has started closing plants and is trying to get things in balance. Luckily for Europe, the Japanese ‘transplants’ haven’t taken off there yet. The key to all this is how many old American plants you can keep open while the Japanese continue to open new plants. There’s going to be one hell of a fight for everybody to maintain their market share.

Maclean’s: Do you have any idea where this overcapacity problem will hit Chrysler?

Iacocca: We’re in pretty good shape in Canada. As you shake out the whole system, maybe you will have to close a plant or two, come out with new products—you can never know how that will end up. We watch it very carefully because we do very well in Canada. We make good money. Our dealers make good money.

Maclean’s: Your global view seems to be that we are going to have a North American market that is going to affect Europe and the Far East. Is that what you see emerging? Iacocca: The whole j world wants to do busiÇ ness. They should all try to do it as fairly as they can, and the guys who should really be concerned are those with the biggest markets with no reciprocity. Canada and the United States should demand reciprocity.

Maclean’s: What do you think of the U.S.-Cañada free trade agreement? Iacocca: You have to remember that the same groups in Canada that were against the Auto Pact in 1966 are against this one. But the United States is such a big market and has such a healthy economy, and Canada is big enough—10 per cent of the U.S. car market. They both fared very well over that 22-year period. Our plants up there were all rats’ nests, really inefficient, trying to do manufacturing operations building six or seven cars. With the Auto Pact, within 18 months everything was cleaned up. The benefits to all customers were evident. That’s what makes me a free-trader. □