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THERE ARE TWO LEE IACOCCAS. ONE is the shrewd, high-powered executive known to hundreds of millions around the world as the father of the Mustang, savior of Chrysler, defender of the Statue of Liberty and bestselling author. The second, known mostly to a small number inside the auto industry, is a money-driven car man who hogged credit for collective success and blamed others for his mistakes. That would have shocked the public before April 12, the day billionaire Kirk Kerkorian announced his audacious plan to buy Chrysler Corp. for $23 billion. The Iacocca name was meant to add luster and credibility to Kerkorian's offer. Kerkorian obviously doesn't need lacocca's money, but he needed credibility to convince potential investors, since he knows zilch about the auto business.
As it turns out, Kerkorian may have overestimated Iacocca's star appeal. Instead of hailing his return from retirement, opinion leaders from editorial boards and banks to union rank-and-file workers have been overwhelmingly critical. Nowhere have reviewers turned thumbs down on the deal as resoundingly as in the Motor City. Said Chrysler retiree John Montgomery in the Detroit Free Press: "I think what the company needs least right now is the return of Lee Iacocca." But while Kerkorian may have picked the wrong partner, the hostile takeover battle may unravel Iacocca's once sparkling reputation, which has been a lifetime in the making.
Iacocca began to sharpen his image in 1964 when Ford's Mustang became a smash hit. Several Ford engineers and planners could have been singled out for their roles in creating the Mustang. However, only Iacocca, then the general manager of Ford's automobile division, had the savvy to dispatch his tireless PR man, Walter Murphy, to spread the word. in fact, Murphy was instrumental in getting his boss on the covers of NEWSWEEK and Time.
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A decade later Henry Ford II, grandson of the founder, grew restive about Iacocca's self-aggrandizing nature and promoted another executive-Philip Caldwell-ahead of him. Henry Ford wanted a manager who was skilled in finance, personnel, government relations and manufacturing- disciphnes that went beyond lacocca's expertise in sales and marketing. Lee responded by trying to overthrow Henry by going directly to Ford's board members and was fired as his punishment. Over the years Iacocca told many stories about his dismissal. He told friends, among other things, that Henry wanted to promote his son, didn't like Italian-Americans and was even losing his mind.
Chrysler directors were desperate to hire an experienced executive to lead their troubled company. Iacocca was available. Within a year, lobbyists were pleading with the government to guarantee loans rather than allow Chrysler to file for bankruptcy. Iacocca occupied center stage in testimony before Congress and, years later, he loved to remind Chrysler directors during salary talks that "I saved the company." A careful reading of history shows that Steve Miller, now Morrison Knudsen's chairman, and Gerald Greenwald, now United Airlines' chief, played large roles and helped persuade lawmakers to approve the loan guarantees-as did Douglas Fraser, then president of the United Auto Workers, and Michigan politicians like former Detroit mayor Coleman Young. It was a team effort, but guess whom the press canonized?
History is written by the survivors -and few executives have the chance to spin their career as Iacocca did in his 1984 blockbuster, "Iacocca: An Autobiography." His book succeeded because it was an easy read and Americans identified with a man who tried to get revenge against a former boss who wronged him. Against the din of acclaim, few reviewers pointed out the distorted account of how Iacocca was thrown out of Ford. Or the omissions, like his lobbying President Richard Nixon to block air bags.
Those inside Chrysler who knew the real Iacocca had a big stake in perpetuating the legend. Boosted by his literary stature, Iacocca proved a pitchman who could persuade untold numbers of shoppers to select Chryslers, Dodges and Plymouths. And he deserves credit for correctly sensing that the minivan would become very popular with families, then expanding production at the first signs of strong sales.
Still, by the late 1980s Chrysler's vehicles had fallen dangerously behind the competition. The fall came partly because Iacocca was preoccupied with celebrity appearances and Statue of Liberty fund raising the ceremonial trappings of being a CEO. He pursued diversification forays -such as buying Gulfstream, a maker of corporate jets to drive Chrysler's stock price higher. Rather than concentrate on manufacturing quality and customer satisfaction, Iacocca believed he could stimulate sales with facelifts of outdated sheet metal and razzmatazz advertising starring you-know-who. Iacocca's relentless criticism of Japan and his calls for protection were meant to obscure the fact that Japanese automotive quality had far outstripped that of Chrysler.
With Iacocca preoccupied by his outside activities, president Bob Lutz and a cadre of executives produced several new models in record time. Lutz's support among junior engineers and planners had also grown so strong that Iacocca felt threatened. He began grilling Lutz's subordinates and springing surprise audits of engineering expenses. Nevertheless, Iacocca had little choice but to go along with a reorganization of Chrysler's engineers into superefficient teams -a Lutz-driven move and a departure from the time-consuming and expensive bureaucracies of the existing regime. When interviewers asked about the changes, Iacocca declared that he was in favor of teamwork. He even filmed a TV commercial saying so.
Despite Lutz's efforts, the recession of 1990 struck Chrysler hard. The company was even headed for a second brush with bankruptcy. Its finance subsidiary was a few months away from being unable to raise money for its dealers' inventories. Iacocca was already a year beyond normal retirement age and saw no contradiction in spending $2 million on redecorating the suite he used at the Waldorf and other perks. Greenwald, who Iacocca had said would succeed him, tired of waiting for his boss's retirement and quit.
In the face of Iacocca's reluctance to find a successor, the board finally forced him to retire (though he denies this) at the end of 1992. But he got his revenge against Lutz, who had won the allegiance of the troops, by recruiting Robert Eaton from General Motors to be chairman. Though Iacocca had already been paid more than $100 million in cash, shares and options during his tenure, he demanded more compensation from the board, which flatly refused. To this day he believes he was treated shabbily.
Kerkorian and his advisers were surprised to discover within days of their announcement that the public's valuation of Lee Iacocca had sunk as low as Chrysler's share price. The former Chrysler chairman's insatiable hunger for corporate power, money and glory-once a family secret in Detroit finally was out in the open in a manner that may have compromised Kerkorian's ability to secure financing for his takeover. Iacocca abruptly stopped giving interviews - including any for this article -and has lowered his profile. For perhaps the first time in his professional career, this was a deal for which Iacocca didn't want all the credit.
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