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Iacocca tip: 'Equality of sacrifice'
<script>queryvar="iacocca,tip:,equality,of,sacrifice";</script> Edward Lapham
Automotive News
November 24, 2008 - 12:01 am ET
After the dismal reception Washington lawmakers gave Detroit 3 CEOs and UAW President Ron Gettelfinger last week, I found myself saying, "This isn't the way Lee Iacocca did it in 1979.''
So I called Iacocca and asked him to compare today's crisis with the time Chrysler Corp. got the feds to co-sign for up to $1.5 billion in loans.
Iacocca told me he'd had a lot of calls but wasn't doing interviews. Then he opened up, as he always has. He agreed the Detroit contingent was treated roughly but said he thinks the Detroit 3 will get some aid.
House Speaker Nancy Pelosi, D-Calif., has asked the Detroit 3 to submit their restructuring plans to Congress by Dec. 2.
Among other things, the companies must ban "excessive" executive pay, provide tax payers with ownership stakes in the companies, forbid dividends and demonstrate that they can meet fuel-efficiency goals. Moreover, they must demonstrate their plans to introduce advanced technology.
The companies must assess their cash flow, and they must demonstrate how they will pay their health-care and pension obligations.
And if the companies don't meet their benchmarks, they must agree that their loans will be called immediately for repayment.
But you don't win support from Congress and the public with just a laundry list of numbers and gonna-dos.
You need arresting images of shared sacrifice, commitment and determination.
On Friday, Iacocca told me his formula for molding public opinion.
"There's a made-in-the-U.S.A. template,'' Iacocca said of Chrysler's efforts 29 years ago. "It's called equality of sacrifice.''
For starters, Iacocca cut his salary to $1 a year.
At the time, Chrysler's stakeholders needed to raise $1.4 billion before the loan guarantees took effect. So the UAW coughed up $462 million in concessions.
"Doug Fraser said it was the saddest day of his life,'' Iacocca said of the then-UAW president.
Nonunion Chrysler employees took $125 million in pay cuts; suppliers and dealers contributed $180 million.
Chrysler's foreign banks committed $150 million, and its U.S. lenders put up $500 million.
It can't be any different this time, Iacocca said. "Even the banks have to take a haircut.''
Iacocca told me he was asked about a job description for a federal car czar. "You need to walk on water,'' he said. "And pray a lot.''
<table style="background-color: rgb(236, 236, 236);" align="center" bgcolor="#ececec" cellpadding="2" cellspacing="2"><tbody><tr><td class="an_body1">Made to order
Under rules set by House Speaker Nancy Pelosi, D-Calif., and Senate Majority Leader Harry Reid, D-Nev., the restructuring plans the Detroit 3 submit to Congress must
• Assess the companies' cash position, short-term liquidity needs and financing needs to ensure long-term viability
• Ensure taxpayers get repaid first when companies get federal loans
• Provide taxpayers with warrants or other ownership stakes in companies
• Forbid dividends and "excessive" executive pay, such as bonuses and golden parachutes
• Address payment of health care and pension obligations
• Show ability to meet federal fuel-efficiency rules and become world leaders in advanced technology vehicles
Agree that loans will be called immediately if companies do not meet benchmarks</td></tr></tbody></table>
Iacocca tip: 'Equality of sacrifice'
<script>queryvar="iacocca,tip:,equality,of,sacrifice";</script> Edward Lapham
Automotive News
November 24, 2008 - 12:01 am ET
After the dismal reception Washington lawmakers gave Detroit 3 CEOs and UAW President Ron Gettelfinger last week, I found myself saying, "This isn't the way Lee Iacocca did it in 1979.''
So I called Iacocca and asked him to compare today's crisis with the time Chrysler Corp. got the feds to co-sign for up to $1.5 billion in loans.
Iacocca told me he'd had a lot of calls but wasn't doing interviews. Then he opened up, as he always has. He agreed the Detroit contingent was treated roughly but said he thinks the Detroit 3 will get some aid.
House Speaker Nancy Pelosi, D-Calif., has asked the Detroit 3 to submit their restructuring plans to Congress by Dec. 2.
Among other things, the companies must ban "excessive" executive pay, provide tax payers with ownership stakes in the companies, forbid dividends and demonstrate that they can meet fuel-efficiency goals. Moreover, they must demonstrate their plans to introduce advanced technology.
The companies must assess their cash flow, and they must demonstrate how they will pay their health-care and pension obligations.
And if the companies don't meet their benchmarks, they must agree that their loans will be called immediately for repayment.
But you don't win support from Congress and the public with just a laundry list of numbers and gonna-dos.
You need arresting images of shared sacrifice, commitment and determination.
On Friday, Iacocca told me his formula for molding public opinion.
"There's a made-in-the-U.S.A. template,'' Iacocca said of Chrysler's efforts 29 years ago. "It's called equality of sacrifice.''
For starters, Iacocca cut his salary to $1 a year.
At the time, Chrysler's stakeholders needed to raise $1.4 billion before the loan guarantees took effect. So the UAW coughed up $462 million in concessions.
"Doug Fraser said it was the saddest day of his life,'' Iacocca said of the then-UAW president.
Nonunion Chrysler employees took $125 million in pay cuts; suppliers and dealers contributed $180 million.
Chrysler's foreign banks committed $150 million, and its U.S. lenders put up $500 million.
It can't be any different this time, Iacocca said. "Even the banks have to take a haircut.''
Iacocca told me he was asked about a job description for a federal car czar. "You need to walk on water,'' he said. "And pray a lot.''
<table style="background-color: rgb(236, 236, 236);" align="center" bgcolor="#ececec" cellpadding="2" cellspacing="2"><tbody><tr><td class="an_body1">Made to order
Under rules set by House Speaker Nancy Pelosi, D-Calif., and Senate Majority Leader Harry Reid, D-Nev., the restructuring plans the Detroit 3 submit to Congress must
• Assess the companies' cash position, short-term liquidity needs and financing needs to ensure long-term viability
• Ensure taxpayers get repaid first when companies get federal loans
• Provide taxpayers with warrants or other ownership stakes in companies
• Forbid dividends and "excessive" executive pay, such as bonuses and golden parachutes
• Address payment of health care and pension obligations
• Show ability to meet federal fuel-efficiency rules and become world leaders in advanced technology vehicles
Agree that loans will be called immediately if companies do not meet benchmarks</td></tr></tbody></table>
