John Riccardo, Chrysler CEO who helped recruit Iacocca, dies at 91

Embattled chief executive retired months before company's historic U.S. rescue in 1980

February 14, 2016 12:00 AM

Chrysler Chairman and CEO John Riccardo, right, helped recruit Lee Iacocca, left, to Chrysler, but he abruptly retired in September 1979 as the ailing company was negotiating federal loan guarantees to stay afloat. Riccardo's retirement cleared the way for Iacocca to become CEO.

DETROIT -- John J. Riccardo, the former accountant nicknamed The Flamethrower who rose rapidly to become chairman and CEO of Chrysler and later helped recruit Lee Iacocca to become his successor as the company’s fortunes quickly soured in the late 1970s, died on Saturday. He was 91.

Riccardo died after attending a University of Michigan basketball game in Ann Arbor, Mich. His son, Rev. John Riccardo Jr., eulogized his father Sunday during Mass at Our Lady of Good Counsel church in Plymouth, Mich.

"My dad is the greatest man I ever met, and I met (Pope) John Paul many times," Rev. Riccardo said during his homily. "He’s the greatest man I ever met, not because of his career; not because of all the gifts he had; he’s the greatest man I ever met because of his faith."

Riccardo’s climb through the management and executive ranks at Chrysler was one of the speediest ever at a Detroit automaker. But he abruptly retired as chairman and CEO at age 55 in September 1979 as an ailing Chrysler aggressively courted Congress and the Carter administration for a financial lifeline.

His unexpected retirement came about 48 hours after Chrysler was rebuffed by U.S. Treasury Secretary G. William Miller for $1.2 billion in federal loan guarantees. Miller had dismissed the request, detailed in a 102-page survival plan crafted by Riccardo, as "way out of line."

Physically exhausted by Chrysler’s woes and his role as architect of the company’s campaign to secure a government rescue, Riccardo chose to leave because, in his mind and the minds of many, he had become closely associated with the past management of a troubled company.

“It would be most unfair to the new management and to the employees of Chrysler if my continued presence as board chairman should in any way hinder the final passage of our request for federal loan guarantees,” he said at the time.

Riccardo had been hospitalized with a cardiac ailment months earlier in May 1979, and doctors advised him at that time to retire immediately.

Riccardo: Rapid rise at Chrysler

‘Real hero’

Riccardo’s sudden departure cleared the way for Iacocca to become chairman and CEO of Chrysler, a few months earlier than planned, after Iacocca had served as president and COO for less than a year.

“He blew himself out of the water to bring Chrysler back to life,” Iacocca wrote of Riccardo in his 1984 biography, Iacocca. “And that is the test of a real hero.”

John J. Riccardo was born in Little Falls, N.Y., on July 2, 1924. He was the son of an Italian immigrant who built bicycles for a living.

He served as an Army truck driver on the Burma Road during World War II and graduated from the University of Michigan with a bachelor’s and master’s degree in economics. He met his wife, Thelma, in a freshman Spanish class at the University of Michigan. They were married for 66 years.

Riccardo, a certified public accountant and protege of longtime Chrysler chairman and CEO Lynn Townsend, joined Chrysler in 1959 as a finance executive on the international operations staff. He became general manager of the company’s export-import division in 1960.

He later was promoted to vice president of Chrysler Canada, assistant general manager of the Dodge car and truck division and the Chrysler-Plymouth division, and vice president of marketing for Chrysler Corp.

Riccardo was named group vice president in charge of Chrysler’s domestic automotive operations in 1967 and later group vice president of the company's U.S. and Canadian automotive business.

His rapid rise up Chrysler’s executive ladder, championed by Townsend, earned him the nickname The Rocket.

FIAT CHRYSLER

John Riccardo, right, was appointed president of Chrysler in January 1970 after the company successfully restructured, and became chairman and CEO in October 1975, succeeding Lynn Townsend, left, his longtime mentor, after steering another wave of cost reductions.

The Control Book

Riccardo was appointed president in January 1970 after Chrysler successfully restructured, succeeding Virgil E. Boyd, who became vice chairman, a new post. He was named chairman and CEO in October 1975, succeeding Townsend, his longtime mentor, after steering another wave of cost reductions.

He was often reticent, sometimes shy, when meeting with outsiders, such as journalists.

“Brevity is the most important thing for me at this time,” Riccardo, who had just become president of the company, replied in response to questions at a press conference in January 1970 to introduce Chrysler’s revamped management team.

His automotive career spanned some of Chrysler’s greatest successes -- notably the muscle car era of the 1960s -- as well as the extreme challenges of the 1970s, when the oil embargo, inflation, government regulations and Japanese imports battered Detroit's automakers.

Throughout the volatile 1970s, Riccardo and Chrysler’s management team faced one financial crisis after another, prompting moves to cut car and truck prices, temporarily idle plants, and suspend dividend payouts for the first time in decades. The rocky decade culminated in the automaker’s historic federal bailout in January 1980, months after Riccardo retired.

His tough-mindedness and keen cost-cutting skills earned Riccardo another nickname from colleagues: The Flamethrower.

“Do you want to feed the gun or fire it,” he often said of his management style. He was also known for a short fuse and hot temper.

He kept a black loose-leaf binder in his desk -- the Control Book -- that tracked Chrysler’s daily production, cash outlays and balance, dealer orders, sales and other financial results.

“Ultimately, it is all reduced to numbers,” he told the Detroit Free Press in 1971. “My job is to worry about making profits.”

Front-wheel drive call

Critics said Riccardo failed to make key product and investment moves -- such as the timely introduction of a compact car in the 1970s, when gasoline prices soared -- and was slow to match new offerings from bigger rivals Ford and General Motors.

He also never scuttled the company’s long practice -- first championed by Townsend -- of producing more cars than dealers were ordering.

“Chrysler will always be a boom-or-bust company,” Riccardo famously told Time magazine in 1970.

'Courageous choice'

But in one fateful decision, Riccardo placed a big bet that helped pave the road for Chrysler’s success in years to come.

Chrysler engineers, facing ever strict government fuel economy mandates, were debating whether to adopt front-wheel drive with some 1981 models.

Led by Harold Sperlich, a former star at Ford, many Chrysler engineers were looking way down the road and wanted the cash-strapped company to embrace a front-wheel drive, K car program, even though it would cost $700 million, or $300 million more than a program based on Chrysler’s rear-wheel drive H cars.

In the end, Riccardo made the call to spend more and go with front-wheel drive, a decision that helped Chrysler recover in the early 1980s and eventually spawned the minivan starting in 1984.

“It was a courageous choice,” David Halberstam wrote in his 1985 book, The Reckoning. “It unlocked the future for Chrysler … and placed the company ahead of its American competitors.”

Accounting roots

Riccardo and Townsend first met at Touche, Ross, Bailey & Smart, an accounting firm where both men worked, in 1950.

The two men gained first hand knowledge of the auto industry through key auditing assignments at Touche, Ross -- Townsend on the American Motors and Chrysler accounts and Riccardo with Kaiser-Frazer.

When Townsend left the firm to become Chrysler comptroller in 1957, the two men agreed that if Riccardo ever decided to leave Touche, he would contact Townsend.

Chrysler President and COO Lee Iacocca, left, and Chrysler Chairman and CEO John Riccardo, right, wait for Treasury Secretary G. William Miller at the Treasury Department in Washington, D.C., on Sept. 15, 1979. Riccardo resigned days later after the meeting to review Chrysler's recovery plan and request for government assistance.

War with Washington

As chairman and CEO of Chrysler, Riccardo waged public battles with Washington regulators over safety and environmental laws, insisting the company, one of Detroit's smallest automakers, could not pass the costs of new rules along to U.S. consumers already reeling from inflation.

To raise cash, he sold Chrysler’s international operations in pieces: an Australian unit to Mitsubishi Motors; Venezuela operations to GM; and Brazilian and Argentinean units to Volkswagen AG.

In the biggest automotive divestiture under Riccardo, Chrysler in 1978 unloaded its European operations -- one of Townsend’s great successes -- for $230 million and a 15 percent stake in Peugeot to the French automaker. The sale made Peugeot the largest auto company in Europe at the time.

But with Chrysler still failing, Riccardo called on President Jimmy Carter in early 1979 to create an independent watchdog to assess the impact of government regulations on the auto industry.

When that idea failed, he pitched a tax credit designed to allow Chrysler to recover money spent meeting government safety and pollution standards.

In July 1979, at a dramatic press conference, Riccardo publicly detailed how deep Chrysler’s financial woes went in proposing immediate federal assistance: The company was bleeding red ink. Second-quarter losses totaled $207 million, and Chrysler owed creditors some $4 billion, or nearly 10 percent of all U.S. corporate debt. About 80,000 unsold vehicles, valued at over $700 million, sat on dealer lots.

Riccardo requested an immediate $1 billion U.S. tax holiday, a two-year delay in federal emissions standards -- at a savings of $600 million for Chrysler -- and UAW concessions.

But it would be months before Chrysler received any form of a lifeline.

Wendell Larsen, Chrysler’s head of public affairs, advised Riccardo that Congress would be more receptive to a new-look Chrysler as part of any bailout.

“I told John that Congress and the country weren’t going to act until we’d staged a morality play,” Larsen recalled later in New Deals: The Chrysler Revival and the American System, a 1985 book by Robert B. Reich and John D. Donahue. “And I told him how he’d been cast: John Riccardo takes on himself all the sins of commission and omission, we drive him into the woods, and the company is pure again.”

A month after Riccardo's resignation, when the House Banking Committee conducted a hearing on proposed loan guarantees, it was Iacocca who presented the faltering automaker’s case.

Courting Iacocca

Several Chrysler directors and Riccardo first reached out to Iacocca in 1978 after Iacocca had been fired as president of Ford Motor Co. by the company’s chairman and CEO, Henry Ford II.

Riccardo, Iacocca and other Chrysler directors held several secret meetings, including an initial gathering at the Pontchartrain Hotel in downtown Detroit, as part of the company’s courtship of Iacocca.

“It was sad in a way, because he hadn’t even been pushed by Chrysler’s board of directors to approach me. He did it on his own,” Iacocca wrote in his autobiography. “He obviously realized that the company was in deep trouble and that he wasn’t going to be able to nurse it back to health.”

Iacocca was named president and COO of Chrysler on Nov. 2, 1978, with the intention of succeeding Riccardo by the end of 1979, though it was unclear at the time whether Riccardo would stay on as board chairman or nonexecutive chairman.

In one of his last moves to help secure government aid, Riccardo, like Iacocca, agreed in August 1979 to a voluntary pay cut to $1 a year through Sept. 1981.

But several weeks later, pale and drawn and severely fatigued over the negotiations to save Chrysler, Riccardo decided to step down early.

Riccardo is survived by his wife, Thelma, five children, 11 grandchildren, and 15 great-grandchildren, according to his official obituary.

Philip Nussel contributed to this report.