Why Lee Iacocca was the man
Motor Racing Released - Jan 11, 2015
Before he rescued Chrysler Corporation from bankruptcy, before he was appointed by President Ronald Reagan to spearhead the fundraising campaign that restored The Statue of Liberty to its former glory, Lee Iacocca saved the Ford Motor Company from certain oblivion.
How Lee Iacocca turned Ford around began the day he was appointed vice-president and general manager. He was excited and a little scared, because Ford was producing boring cars that were converting loyal Ford customers into loyal Chevrolet customers. In 1960, the year Iacocca was made head of the Ford Division, General Motors—the maker of Chevrolet, Pontiac, Oldsmobile, Buick, and Cadillac—accounted for half the cars sold in America. The other half of the pie was split among five car companies: Ford, Chrysler, American Motors, Studebaker, and an importer, Volkswagen of Germany. Ford’s sales had been slipping every year since the 1920s, when it ruled the industry with the Model T. Iacocca was faced with the two-fold task of changing Ford’s stodgy image and of increasing market share, while dealing with the company’s implacable bureaucracy.
With these thoughts weighing on his mind, Lee Iacocca went to bed that night wondering where to begin. During his long restless night he was visited by three spirits: the ghost of Ford-Past, the ghost of Ford-Present, and the ghost of Ford-Future. As astonishing as this sounds, it’s true. You can look it up. Before we proceed, however, we first must learn about the man himself, where he came from, and how he became vice president and general manager of the Ford Division.
Lido Anthony “Lee” Iacocca was born in Allentown, Pennsylvania to Italian immigrants: Nicola Iacocca and Antonietta Perrotta. After graduating from Lehigh University with a degree in industrial engineering, he went to work for the Ford Motor Company as an engineer. Young Lee was highly ambitious and soon realized there was little opportunity for engineers to move up the corporate ladder, so he switched to sales. He had one very big problem, however—he was extremely shy. So he attended a Dale Carnegie course and learned to be assertive. He was given a number of very bad sales assignments, but being ambitious and hard working he managed to be successful wherever he went. The 1956 Ford was a prime example. The car was not selling, and Iacocca, by then the assistant district sales manager in Philadelphia, devised a way of speeding up sales. The cars were dull, he thought, so to make them more appealing, he added some flashy side molding and repainted them two-tone. Then he cut the price. If a buyer put down 20 percent of the purchase price of a new Ford, he decreed, all he then had to pay was $56 a month for the next 36 months. Iacocca devised a slogan, “56 for 56.” It pulled Philadelphia from last place among Ford’s 33 sales districts to first. Even better, Iacocca’s slogan was copied by dealers throughout the country. Iacocca’s idea was credited with selling an additional seventy-two thousand cars that year, and saving what had been a bad sales year for Ford.
The general manager of the Ford division, Robert McNamara, was impressed and promoted Iacocca to a management position in Detroit. Unlike other super-salesmen who wore flashy clothes, drank too much and talked too much, Iacocca fit the button-down corporate image. He was tactful, very smart, and hardworking. Where most of his colleagues were content to know all they could about their own area, Iacocca wanted to know everything about the company. If he were to succeed, he knew he would have to be as smart about numbers as the financial people. It was the way to power. When he walked into a meeting he was in complete control. How? By having stayed up the night before not just studying the subject matter but planning what he would say, readying rejoinders to points and objections his opponents were sure to make. Iacocca couldn’t be baffled or intimidated by the number-crunchers because he had taken the time to master the numbers.
Most of all, Iacocca was driven. He was the son of Italian immigrants operating in a WASP-ish world, and therefore handicapped from the outset. To overcome this, he worked harder than everyone else. He constantly made lists of things he had to know. In his early years at Ford he had set goals for himself—how much money he would make by a certain age, what level of advancement he would attain by which birthday. He intended to make vice-president by the age of 35. In fact, he achieved his goal at age 36. No one had helped him; no mentor had guided and smoothed his way up the chain of command. He did it on his own. Now, having achieved his goal, a far more difficult task lay ahead of him—making Ford a winner once again. Which brings us back to the first night Lee Iacocca went to be bed as head of the Ford division and was visited by three spirits.
THE GHOST OF FORD-PAST — The first spirit to appear was elegantly dressed in a blue business suit and bore a striking resemblance to the son of company founder Henry Ford. Iacocca recognized him at once from the portraits inside the executive suite. “Are you Edsel Ford?” he asked, rubbing his eyes in astonishment. “I am,” said the apparition. “But you’re dead,” cried Iacocca. “Think of me as an idea,” the apparition said. “Ideas never die, at least good ideas never do. If you’re going to rescue this company, you have much to learn. Here, take my sleeve.” With that, the spirit of Ford-Past took Lee Iacocca back in time, not to the era of bellowing smokestacks and efficient well-oiled assembly lines that produced Model Ts by the millions, but to the time after that, when the public was no longer interested in cheap functional transportation, but in cars with style and comfort, to the cars Edsel Ford had designed. A number of cars appeared out of the mist. The first was tall, angular, gangly, and painted black—a 1919 Model T.
“Any color you want so long as it’s black,” said the apparition. “That’s what Henry Ford used to say. Ugly, isn’t it? The Model T was my father’s idea of the perfect car—rugged, dependable, and ugly. This particular model was in production when my father made me president of the company.”
“How old were you?” asked Iacocca.
“I was 26, with a lot to learn. The Model T was the making of the Ford Motor Company, but by 1919 its time had passed, only my father wouldn’t admit it.”
Iacocca nodded. “Henry Ford could be a stubborn man; not always a bad thing.”
“Stubborn only gets you so far, but I think he knew this and wanted me to modernize our cars. But he didn’t make it easy; he fought me every step of the way.”
The next car was lower, with rounded lines. “The 1923 Model T, and my first body design. A bit crude, but the best I could do under the circumstances. And it still came only in black.” The next car caused the apparition to smile. It was a 1928 Ford Model A, and painted a pleasant shade of green. “Ah, color, at last,” said the apparition. “This was the first Ford to have four-wheel brakes, a sliding gear transmission, and 40 horsepower, which was a lot then. Notice the lines? They’re becoming more graceful. It was sheer warfare with my father to get this car made: pulling the Model T from production and replacing it the Model A. All I wanted was a car to catch up with the competition, which is what the Model A did. We outsold Chevrolet for the first time in several years.”
Iacocca opened and closed the driver’s door. “Well, Mr. Ford must have been happy with that.”
“Money didn’t motivate him, if that’s what you mean. He was happy with the Model A, but he never let me know. Ah, but this next car, this was my father’s last feat of genius—the 1932 Ford. The body was my design, of course, but the engine—that was my father’s: a revolutionary single-casting V8. The flathead, they called it. No one had anything like it.”
“The Ford flathead V8 is a legend,” said Iacocca, matter-of-fact, “It became a hot-rod classic, like the ’32 Ford.”
The apparition smiled. “Do you know who built the first hod rod?” Look." The next car to appear was a long, low roadster with swoopy fenders and a pointed tail.
“I don’t remember this car,” said Iacocca. “It looks like some type of sports car. What is it?”
“It’s the world’s first hot rod, and my first collaboration with Bob Gregorie. Bob designed yachts in New England, but couldn’t find work after the stock market crash of ’29. He showed up in Detroit looking for a job.”
“You mean E. T. Gregorie?” Iacocca nodded. “I’ve heard of him. He designed the Lincoln Continental, and the Lincoln Zephyr, and the ’49 Mercury. Pretty cars.”
“Bob was a man after my own heart. Once I saw what he could do, I set him up in Ford’s first styling department, and put him in charge. My father hated him because he wasn’t an engineer, and didn’t appreciate what was under the hood. It didn’t help that Bob didn’t appreciate my father’s archaic suspension either, which hadn’t advanced since the days of buggy springs and straight axles, and made our cars sit up too high. Bob was always having to compensate for our antiquated suspensions. Everybody else was switching to independent front suspension and a lower center of gravity. Not us. Our cars were still utilizing running boards well into the 1930s because the body was so high off the ground, which inhibited Gregorie’s effort to create a low-slung body profile. Bob loved boats and airplanes for their smooths lines and pure form. So did I. Between 1935 and 1943, Bob designed the body of every Ford that rolled off the assembly line, with input from me, of course. And it all began with this car, which automobile historians have named as the world’s first hot rod. Pity, but it didn’t go into production. But this next car did. Recognize it?”
Iacocca smiled. The next car was all curves—oval curves at the fenders, downward slopping hood, rounded roofline, and a rounded trunk. “Of course. It’s a Lincoln—1935 or 36.”
“It’s Gregorie’s first masterpiece—the1936 Lincoln Zephyr. I told him what I hand in mind, and this is the result. We named it after the first streamline passenger train—the Silver Streak Zephyr. The Museum of Modern Art called the Lincoln Zypher the first successful streamline car in America. Best of all, it led to this.” The apparition nodded toward a car with a long hood, low roofline, and a short trunk. “The 1940 Lincoln Continental. Movie stars would stand in line to buy one. Frank Lloyd Wright called it the most beautiful car in the world. What do you think?”
“It’s gorgeous. What did Mr. Ford think?”
The apparition chuckled wryly. “The prettier our cars became, the harder he became to deal with. By the 1940s, I was experiencing stomach ulcers and seeing doctors regularly. They eventually operated, but by then my condition was hopeless. My father was becoming senile and had no idea how sick I was. I continued working right up to very end.”
“The company nearly went bankrupt after you died.
The apparition nodded sadly. “Our time grows short. I have one more car to show you.”
It was a racecar that competed in the 1935 Indianapolis 500. “In the early days, my father raced the cars he built, as a means of publicity. Once the company took off, he lost interest. This racer was my idea, built in California by Harry Miller and powered by a modified Flathead V8. We committed too late to the effort, and weren’t a factor in the race, but the cars were fast. Had we competed the following year we would have won. Several of the special engine components we developed were manufactured by suppliers and began showing up on souped-up Fords across America. No one was hot-rodding Chevys or Dodges, only Fords. My father and I worked at cross-purposes, but the hot rod phenomenon was a collaborative effort—his engines and my tasteful car bodies.”
“That’s all very interesting,” said Iacocca. “But what’s it got to do with me?”
“That is what you’re about to find out.” With that, the apparition disappeared, and Iacocca found himself back in his bedroom. Moments later a second apparition appeared, dressed in a greasy t-shirt and jeans, and his hands were calloused and greased-stained.
THE GHOST OF FORD-PRESENT—“Who the devil are you?” Iacocca asked, slightly indignant.
“I’m a guy who loves cars. I love the way they look, the way they move, the way they sound, the way they smell.”
“Amen to that,” said Iacocca. “But who are you?”
“The ghost of Ford-Present, but you can call me ‘Car Guy.’ Here, touch my t-shirt.” In an instant they were at a drag strip in Southern California, watching cars burn off the line and accelerate down a quarter-mile of black top; all kinds of cars—stock cars, modified cars, hot rods, and sling-shot dragsters.
“Why did you bring me here,” asked Iacocca. “This has nothing to do with me.”
“It has everything to do with you. Look around. See any Fords?”
“Ten years ago this place was thick with Fords. Now all you see are Chevies and Pontiacs, Plymouths and Dodges. The engines that power the sling-shot dragsters are Chryslers. Come.” A moment later they were inside a custom car shop. “Look around,” said Car Guy. “What do you see?”
“A decade ago this place was filled with Fords and Mercuries. The young guys who customize cars are going to marry and have kids. What kind of family car do you suppose they’ll buy?” The apparition didn’t wait for answer. The scene changed and now they were in the Deep South, watching a stock car race. The cars were Chevies, Pontiacs, Plymouths, and Dodges. “These people are car crazy,” Car Guy said. “On Sunday they come by the hundreds of thousands to watch stock cars race around in circles. On Monday, when they go to buy a new car, what make do you suppose they’ll purchase. Let me give you a hint—it won’t be Ford.” Next, Car Guy took Iacocca to a jalopy race in the Northeast, to a sprint car race in the Midwest, and to a sports car race on the West Coast. The racing machines were a mixed lot but had one thing in common—a Chevrolet engine. “The small-block Chevy V8 has replaced the Ford Flathead V8 as the racer’s engine of choice. So again, I ask you, what’s the name people are going to remember when it’s time to buy a new car?” Car Guy inhaled deeply. “I just love cars.” Iacocca was about to say Ford had a new small-block V8 in the works similar to the small block Chevy, but woke up back in his room.
THE GHOST OF FORD-FUTURE—The last apparition was dressed all in black and wore a hood that shielded his face.
“What are you?” Iacocca asked. “Some kind of evil spirit? You can’t scare me, so don’t even try.”
“I’m the ghost of Ford-Future. I could show you boarded-up manufacturing plants and dealerships that once displayed the Ford logo and now display the Chevrolet logo. I’m sure that would scare you. But I won’t do that. What I am going to do is present you with several opportunities. I’m going to show you people with ideas, people in need of someone who will listen to them.”
“Who are they?” asked Iacocca. “Do they work for Ford? Have I met them? I’m a good listener, or try to be. Did I toss any of them out of my office?”
“No, but you might. Some are working for Ford right now. Let’s start with Bob Carrig.” A young bookish man suddenly appeared, bearing a stack of papers with various graphs and numbers.
“Oh, god, not another bean counter,” moaned Iacocca.
“Relax, Bob’s a computer programmer. He’s been interning at Ford while attending Michigan University. He’s working on a program that will revolutionize how suspensions are designed, speed up the process considerably, but lately he’s been talking with General Motors about a job after graduation. Don’t let him get away, Lee. And for heaven’s sake, write down his name, so you won't forget.”
“I already have,” said Iacocca, scratching notes on a bedside notepad.
“The next man is from Germany. Ford hired him, but lately he’s been regretting it. He now thinks GM would have been more receptive to his ideas. His name is Klaus Arning. He’s designed and patented an independent rear suspension that Ford has ignored. He’s incredibly bright, and may offer something of value; not now perhaps, but in the future, when Ford begins moving forward again.”
“Ford has no need of an independent rear suspension,” said Iacocca, “not now, not ever. It’s too costly to tool for production, but for a racecar, perhaps. Klaus Arning, you say? I’ll remember his name.”
“You know the next gentlemen,” the apparition said. “He’s a true car guy—a dreamer.”
Iacocca nodded. “Don Frey, from product planning. Of course, I know him. Used to be a college professor, and once raced sports cars. He’s a dreamer, all right. I just wish his ideas were more realistic.”
“He’s been dreaming of a new car, one to compete with the Chevrolet Corvette, but different, less expensive; a family sports car, with room in back for the kids. He even has a name for his car—Mustang.”
“He hasn’t said anything to me about it.” Iacocca rubbed his chin. “Anyway, Ford is not about to invest in a completely new car, not now, not after the Edsel debacle. The company lost a fortune on the Edsel, a car we introduced in 1957 named after Edsel Ford, in honor of his contribution to the company.” Iacocca shook his head. “The Edsel was such a huge failure it became the punchline of jokes. I can tell you right now, the company’s not going to invest another 100 million on another completely new car. I don’t care how good an idea it is. The bean counters will never go for it.”
“Perhaps his car won’t cost as much as you think. Hear him out; see what’s in his portfolio. You’re resourceful. Who knows? His car and your determination might result in a miracle at Ford.”
Iacocca scoffed. “Oh, please.”
“The next individual has just retired from motor racing,” the apparition said. “He has an idea for a limited production sports car that will double as a racecar. He’s been to Chevrolet, but they have the Corvette and aren’t interested. There’s no tooling cost involved. All that’s required of Ford is to supply an engine for a chassis that’s already in production.”
“Forget it,” said Iacocca. “The Corvette doesn’t make a dime. It’s strictly a status symbol, an engineering toy, something to boost the company image with weekend racers, nothing but noise and smoke and . . .”
“And what?” asked the apparition. “Excitement? Is that what you were going to say? Ford could stand some excitement, don’t you think? It could boost their image in the market place. And isn’t that what you want, to boost Ford’s image?”
Iacocca frowned. “You know what? You’re beginning to get on my nerves. What’s his name?”
“His name is Carroll Shelby. He’s doesn’t have anything worked out yet. Originally, he was hoping to put a small-block Chevy in a Japanese sports car, but nothing came of it. Now’s he’s looking into an English sports car and hoping Ford will step up as an engine supplier. One of these days, he’ll be walking through your door.”
“I’ve heard of him. He won the Le Mans 24 Hour last June. I’ll see to it that he gets an audience. I can do that much.”
“There’s one more racer for you to consider; his name is Dan Gurney. He’ll be pitching an idea that will get Ford back to the Indianapolis 500. And it will cost Ford almost nothing, at least not enough to concern the finance people, or Henry Ford II.
“I’ll bet,” said Iacocca. “What’s Henry Ford II going to say when he learns there’s a car running in the Indianapolis 500 with his name plastered on it. I can’t do these things without Mr. Ford’s blessing. It’s his company, for god’s sake. I’m nothing more than hired help.”
“Henry Ford II will help you, if you take the first step.”
Iacocca looked incredulous. “You think so? Hell, Mr. Ford is my biggest obstacle in turning this company around. He won’t go to the bathroom without approval from the company bean counters. He sees them as protection, as preservers of corporate wealth. I see them as drags on the business. I want to get this company moving again, while they want to slam on the brakes. It’s madness. And Mr. Ford goes along with them.”
“How is it any different from the resistance Edsel Ford faced from his father?” asked the apparition. “Edsel was trying to save the company. Isn’t that want you’re trying to do? He found an ally in Ed Gregorie, who gave Ford automobiles a much needed facelift. I’ve shown you a number of people with ideas who can help you reach your goals, in spite of the resistance Henry Ford II and his bean counters may put up. Edsel changed the image of Ford with a few styling changes that made the company profitable again. You can do something equally as significant. Embrace an idea that excites you; see where it takes you.”
—Part 1 of 2. Next time: “How Lee Iacocca Changed Ford’s Image and Saved the Company.”