Lee Iacocca, born Lido Iacocca on October fifteenth 1924, was the son of
an Italian immigrant named Nicola Iacocca. He had one sister named Antonette.
The family lived in Allentown, Pennsylvania. His father was some what of an
entrepreneur in the food service industry. The family business was called the
Orpheum Weiner House in Allentown, Pennsylvania.
The company is still standing today, operating under the name Yocco's,
his uncles' are still making hot dogs for the public. Growing up in Allentown
was difficult for Lee, because of his ethnic background. Allentown was
primarily made up of Dutch immigrants. In his early years of education he was
ridiculed for his heritage. An his senior year in high school Lee came down
with rheumatic fever. He had a harsh bout with the disease because there was no
modern medicine to aid in the recovery. In 1941 during the World War he was
very excited about joining the military. Ironically, the illness that had almost
killed him, saved him from going to war. Most of his classmates that joined the
service had been killed over-seas and abroad. For college Lee chose Lehigh
University for its engineering program, although he wanted to go to Purdue, he
did not get a scholarship. Lehigh University was one of the sights that Ford
Motor Company used to recruit new employees. He was able to secure a place in
the Ford training program, it was difficult for him to get admission but he
survived. During his time in the training program Lee had become less
interested in the engineering aspect of the business and more in sales. He
dropped out of the program to pursue areas in sales with the Ford Corporation.
During his time at Ford Lee Iacocca came out with several very innovative
purchasing concepts. One concept was the 56 for 56 payment plan. This payment
plan would allowed the consumer to purchase a new Ford vehicle with a twenty
percent down payment and a $56 monthly payment until the vehicle was paid off.
This was one of the first payment plans that was structured to be affordable for
the consumer. The system was responsible for selling over seven hundred fifty
thousand vehicle in 1956. Although his career with the Ford Motor Company was
extensive, all that would come to an end with the production of one vehicle the
"Pinto". After Ford was able to settle law suits over the compact car for
explosive reasons, (the Pinto was noted for exploding from rear end collisions),
they recalled over a million and a half Pintos. This was June of 1978, one
month before Lee was fired.
In 1979 Lee Iacocca was employed with the Chrsler Corporation. Within
his first few month there he had seen Chrysler cancel production of over sixty
thousand cars. After a short period of time he found out there were no dealers
to sell cars for them. Their inventory was bulging because of cars that were
made with no destination. These vehicles were part of Chrysler's sales bank.
It was a large inventory of cars that were manufactured only to keep plants
One of his first ideas was to get rid of the sales bank. He put
pressure on all local dealers to empty the inventory. He made the dealers take
up the slack so he could implement a just in time form of inventory. They would
be manufacture specific orders so no capital would be wasted. Another problem
with Chrysler was they were leasing vehicles to rental agencies instead of
selling to them. Chysler had been running the worlds largest leasing company.
Every six months they would buy them back. The new car dealers wanted nothing
to do with the rented cars. With this policy in effect, Chrysler also made
itself the worlds largest used car broker.
In late 1979, early 1980 Chrysler had wrote off almost 88 million
dollars in used car losses. Between the inventory problem and the leasing issue,
Chrysler's loss was in the five hundred million dollar range.
The next item was the staff. He needed to replace over thirty five stop
level managers, and replace then with people that knew what they were doing.
With over twenty years of experience with Ford it was clear were the
replacements would come from. Sales continued to drop steadily until the
creation of the K car. These were compact vehicles that would put Chrysler back
in the market place or finish them off.
The present problem was that Chrysler had such a large debit already
with no fresh capital. Through the help of government loans and an improving
economy Chrysler was able to save itself. By giving more of the market share
Chrysler was on the way to recovery. Presently the corporation holds a very
large piece of the market from large trucks to compact vehicles.
Lee Iacocca was able to save a failing company by establishing a
competent management team, cutting production runs of vehicles without
destinations and arranging guaranteed loans from the Federal Government during
an uncertain time. Interest rates were very high and the customer base was low.
He had an extensive amount of fore thought by staying with the firm. His
guidance was able to save and American corporation.
With the successful turn around of the Chrysler Corporation there was a
lot of gossip and allegations that Lee would be seeking a political career. In
1983 he signed a three year contract with Chrysler to close his career. In 1986
he retired from the car manufacturing industry completely. In my opinion Lee
Iacocca was blackballed from one of the worlds largest auto manufactures, then
was placed in charge of a company that had little chance of survival in the
present economy. He turned the struggling company around and repaid all debits
owed by the Chrysler Corporation. There is one phrase he also said that will be
remembered for years to come, "If you can find a better car, buy it."
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