Veteran Chrysler dealer Hoot McInerney vividly recalls the impression that Lee Iacocca made on Congress in 1979, when the Chrysler Corp. chairman sought federal loan guarantees that would help bail out the struggling automaker.
"When he went before the congressmen, they were dumbfounded," says McInerney, owner of Northland Chrysler-Jeep in Oak Park, Mich. Lawmakers were swept away by Iacocca's brilliance, quick mind and seemingly endless supply of good ideas, McInerney says.
McInerney was one of scores of dealers who went to Washington to lobby for the $1.5 billion loan-guarantee package that eventually saved the company. Iacocca, father of the Ford Mustang and savior-in-chief of Chrysler, was the public face of the effort.
Still, Iacocca insists that he couldn't have preserved Chrysler without the help of the company's dealers.
"They descended on Washington in droves," Iacocca, 81, told Automotive News in an August interview. "They did an unbelievable job. They were key in saving the company."
After Chrysler hired Iacocca in 1978, he took on the Herculean task of rescuing the company. The job would take him to Washington, where he went before a skeptical Congress and the Carter administration to convince them that Chrysler was worth saving.
Iacocca's plan called for the government to guarantee $1.5 billion in loans if Chrysler identified $2 billion in cost savings. Its success made Iacocca a national hero. His most ardent supporters pushed him to run for president.
Dealers to Congress: Help!
Iacocca quickly mastered Washington's corridors of power.
"All politics is local, as (former U.S. House Speaker Tip) O'Neill liked to say," Iacocca said. "We set up a war room and had every (congressional) district in the 50 states" covered. "We got the leading dealer in each district" to organize the effort, Iacocca said.
Roger Palmen, then co-owner of a Chrysler-Plymouth dealership in Kenosha, Wis., answered the call and made the pilgrimage to Washington. He remembers trying to persuade Sen. William Proxmire, a Wisconsin Democrat, to support the bailout.
"When we walked into his office, he gave me a song and dance that he was not in favor of the bailout," Palmen recalls. "I told him he was elected by the people of Kenosha, which had AMC; and Janesville, which had GM; and Milwaukee, which had Tower Automotive and other suppliers.
"I told him if Chrysler (were) allowed to go out of business, I thought it would really put the United States in a tailspin," Palmen says. Proxmire ultimately voted against the loan guarantees.
Palmen had better luck lobbying his representative, Democrat Les Aspin. He gained Aspin's backing - but only after agreeing to buy a handful of $500 tickets to a fund-raiser. The experience was an education for Palmen, who admits he knew nothing about what greases the wheels of power.
Michigan dealer McInerney remembers delivering a not-so-subtle message to lawmakers.
"We knocked on the doors of congressmen and senators," he says. "We told them we were the Arsenal of Democracy in World War II, and you're destroying it."
Speaking dealers' language
Part of Iacocca's success was his immediate rapport with the company's dealers, says Tom Pappert, a longtime Chrysler vice president of sales. Pappert, who retired in 1998, remembers Iacocca as a dealer man down to the soles of his shoes.
"When he got the top job at Chrysler, he already understood what dealers do every day on the showroom floor," Pappert says. "Early on, when we had the national dealer meetings in Las Vegas, he talked our language."
So amid the company's financial crisis, Pappert says, Iacocca knew whom he could call on. When Chrysler was "in its darkest days, Iacocca said, 'We need you'" to the dealers, Pappert recalls.
"The dealers really liked the man, and he understood them," Pappert says. "He knew that without a dealer organization to deliver the vehicles we had at the time, we couldn't get through this crisis. He needed the dealers to put the vehicles over the curb, or he wasn't going to have the chance to make the alterations that needed to be made.
"He had to keep a couple of plants running. He had to keep the cash flow going. One of his lines to dealers was: 'You're not going to let me down now, are you?' "
Sales job
They didn't. Neither did Chrysler's work force or supply network. The federal Loan Guarantee Act called for $2 billion in money-saving agreements from outside the government, including concessions from the UAW, salaried workers and suppliers.
The crisis took a toll on Chrysler's dealers. Many no longer could make a living selling the company's vehicles.
"We lost 1,400 dealers during the rough period of 1977, 1978 and 1979," Pappert says. "They didn't go broke. They just abandoned ship."
But the company emerged leaner and more efficient.
"When Chrysler paid back the debt, that stock went straight up," McInerney says. Lenders "got all their interest back, and bonds were good. Every bank that participated came into a big windfall."
Chrysler survived the crisis and returned to profitability. Iacocca reshaped the company in his image.
Says McInerney of Iacocca: "He was an American hero. No one else could have done that. He did a helluva job."
Iacocca remains grateful for all the help dealers gave him.
"They were giants at the time," he says today. "You can't say enough about the dealers. They were in every nook and cranny of the nation."
He adds: "When you want something done, just get a few dealers together."
You may e-mail Bradford Wernle at [email protected]
