Lee Iacocca, former chairman and CEO of Chrysler, is expecting the release later this month of his third book, "Where Have All the Leaders Gone?” In a recent interview with a leading financial news magazine, the 82-year old Iococca talked about the situation facing the Big 3 automakers and the future of Detroit.
Iacocca, a self-described failure at retirement, gives the current CEOs of each of the Big 3 auto makers, high marks.
GM CEO Rick Wagoner, he said, "had a lot of pressure on him, but he kept his cool and he stayed with his plan.”
Ford CEO Alan Mulally, formerly president/CEO of Boeing, said Iacocca, "knows the business pretty well. Not the auto business, but he knows what it takes to run a big organization and deal with the labor unions.”
Story Continues Below
Lastly, on Chrysler President Tom LaSorda, Iacocca said "he’s doing a great job in manufacturing, but I don’t know what’s going to happen. I’m reading about it every day. I would hate to see Chrysler go under. I would be tough to live with.”
Still, when asked what he thought of Kirk Kerkorian’s $4.5 billion bid Chrysler, Iacocca admitted he supported the bid, "but I had nothing to do with it. I’ve decided to stay neutral on this one.”
Iacocca also admitted he doesn’t know what Kerkorian’s strategy would be for the company if his offer was accepted.
"He’s gambler, and I don’t know what his endgame would be,” Iacocca said about the billionaire.
"He’ll be 90 years old in June, but he’s a healthy guy and he exercises a lot. Twelve years ago we [Kerkorian and I] tried to take over Chrysler, and we couldn’t raise the money,” he added.
Iacocca wouldn’t venture a guess about who will wind up owning Chrysler, although he insists that the United Auto Workers union is very important to any deal.
"The deal is contingent on Daimler sharing the legacy costs and the union negotiating concessions. Those are two big conditions,” he said.
What about private equity funds acquiring the auto maker?
"Private equity funds scare me,” Iacocca admitted. "Do they really understand the car business? I would like to see somebody with a leadership group that has the experience to handle the dealers and the employees.
"If I had the money, I’d buy it,” Iacocca continued. "I’d come out of retirement to buy it…”
The former Chrysler CEO also shared his thoughts on why the Chrysler/Daimler-Benz merger in November 1998 failed.
"There were no synergies,” he opined. "None. And culturally the Germans operated differently than the Americans. It was emotional when Chrysler sold out to the Germans. It’s extra-emotional now that the Germans are selling-they’re throwing us to the curb, in effect.”
Iacocca blames the cost of health-care — the "legacy costs” — for the problems facing the Big 3 automakers.
Retirees "have earned what they’re getting, but we can’t afford it anymore,” he said.
To underscore his point, Iacocca gave this example: Toyota pays $200 per car in retiree health care; GM pays a little over $1,500 a car.
"That’s tough albatross to carry,” he states.
"I hope cooler heads will prevail and we’ll come to some settlement,” said Iacocca referring to the union contract that’s coming up for renewal in September.
"But the union is already threatening a strike. They should wait until they get to the negotiating table to start their talking, but they’re doing it in the press. We’ve got to work this out together because it’s a matter of survival,” he explained.
Iacocca is confident Detroit’s market share will eventually stabilize, even though "it’s pretty bad right now ... GM will start coming back a little bit. But as you know, in this business more share doesn’t come easy.”
Iacocca partly blames the Japanese for Detroit’s decline over the past couple of years. While he respects auto makers such as Toyota, Nissan and Honda as competitors and for their engineering skills, Iococca also asserts that these companies have "had advantages. It’s unfair competition. Their market is closed to us. They still manipulate currency. When they come to this country they don’t have unions, and that’s tough to compete again. Sometimes I think their trade practices are predatory.”
In the 1980s when Ronald Reagan was president, Iacocca suggested assessing a 50-cent-a gallon tax on gasoline as a way to cut the deficit in half. The president quickly nixed that idea.
Iacocca pointed out that "our state and federal taxes add up to about 46 cents a gallon, compared with $5 in Europe.”
While Iacocca still believes in taxing gasoline, he’s changed his mind about global warming and the role the auto industry can play in fighting this trend.
"I campaigned for George W. Bush in 2000 and against Gore because I thought Gore was a little nutty when he was talking global warming. Now I think it’s a serious problem,” he said adding that he's become "a believer.”
For now, Iacocca said the auto industry can do its part by marketing plug-in hybrids.
They’re "expensive and complex, but they do the job and get good gas mileage. That’s the wave of the future,” he said.
As for running cars on hydrogen-powered fuel cells, Iacocca said "that’s way off.” There are a lot of related long term problems that have to be addressed first, he said.
Iacocca has no regrets about never running for U.S. president. Still, he added, "I am a little despondent, because I love this country and I want to do something. I’m running out of time.”
Iacocca is 82 years old.
Editor's note:
Bernanke Reveals `Fiscal Crisis` Ahead
Try Intelligent Options for $99. Our lowest price ever.
Will the Liquidity Crisis Sink Your Stocks? 12 Ways to Profit.
