Lido Anthony "Lee" Iacocca is possibly the best-known U.S. automotive executive since Henry Ford. The larger-than-life, cigar-smoking Iacocca had a lengthy career at Ford Motor Company, but is best known for rescuing Chrysler from the brink of bankruptcy and returning it to profitability. Following his retirement from the automotive industry, Iacocca has dedicated much of his time to charitable causes, principally The Iacocca Foundation, founded after his wife, Mary, died from complications related to her diabetes in 1983. The foundation has raised more than $26 million to fund research on the disease.
Iacocca was born on October 15, 1924, in the industrial city of Allentown, Pennsylvania. His parents, Nicola and Antonietta, were Italian immigrants. On the voyage to Ellis Island from Italy, Iacocca's mother was stricken with typhoid fever, and was very nearly sent back to Italy on the next boat. Iacocca's father, an apprentice shoemaker, eventually opened a restaurant called the Orpheum Weiner House, which carried the family — just barely — through the Great Depression. As a child, Iacocca earned money for the family by carrying groceries home for customers in his little red wagon.
Lee Iacocca himself had a serious childhood bout with rheumatic fever, which eventually caused him to be classified "4F" by the draft board, keeping him out of World War II.
The Orpheum became Yocco's, a hot dog restaurant named for the way many Pennsylvanians pronounced "Iacocca." You can still find Yocco's Hot Dog King ("Fast food at its best since 1922!") in a half-dozen locations in and around Allentown.
It was tempting for Lee Iacocca to follow his family into the food business — he once toyed with the idea of fast-food franchising long before McDonalds was born — and he and his father opened a small but successful restaurant. But after graduating from Allentown High School and then Lehigh University with an engineering degree, he won a fellowship that allowed him to study at Princeton University, and that led to a job at Ford as an engineer. Iacocca moved into sales, then product development. As he worked his way up through the company, he met and married Mary, and they had two daughters, Kathryn and Lia.
Father of the Mustang, Shelby Cobra
Iacocca oversaw the development of the legendary Mustang, which reached dealers in 1964, and cemented his reputation with automotive enthusiasts. Iacocca is also proud of the Lincoln Continental Mark III and German-built Ford Fiesta, as well as products like the Mercury Cougar that reinvigorated that brand. By 1960, Iacocca was a vice president at Ford, and 10 years later, he became the company's president.
Though Iacocca was never the auto devotee many of his colleagues were — or his own father was, incidentally — his product instincts were impressive. After heart problems sidelined his racing career, legendary car builder Carroll Shelby began looking for backing to produce his own sports car. He sought out Iacocca. "I walked into his office and said, 'I need $25,000 to build a car, and I guarantee it'll blow the Corvette off the road.'"
Shelby told Inside Line that Iacocca eyed him for a moment, then told one of his assistants, "Give this guy the money before he bites somebody."
"He thought I was crazy," Shelby recalled, but Iacocca gave the Texan $5 million, and sought his help later to develop the Shelby Cobra Mustang. After joining Chrysler, Shelby said it only took a month for Iacocca to call him and discuss some sort of partnership, "but things were so bad there he spent the next two years trying to save the company." But eventually Shelby and Iacocca conspired for several Chrysler-based products, including the Dodge Omni GLH and the Shelby Charger.
Trouble in Paradise
Had circumstances been different, it is likely Iacocca would have finished out his career where it began — at Ford. Being the company's president was Iacocca's dream job — eventually earning him $1 million a year in salary and bonuses — except for one thing: the presence of Henry Ford II, Iacocca's boss. In Iacocca's autobiography, he characterized Ford as petty, paranoid and destructive when it came to business decisions. "It was incredible," Iacocca wrote. "One man with inherited wealth was making a shambles of everything." Ford, insisted Iacocca, looked for three years to find a legitimate reason to fire Iacocca, but finding none, he did it anyway in 1978. Ford blamed the division on "personal chemistry," or the lack of it. "It seems to have taken Henry Ford 32 years to decide he didn't get along with me," Iacocca wrote.
Some on the outside suspected that Iacocca was Ford's fall guy for the fuel tank problems with the Ford Pinto, which, in June of 1978 was subject to a recall of nearly 1.5 million cars. But Iacocca already had a foot out the door by then, as Henry II, Iacocca insisted, had been trying to fire him since 1975. But since Ford Motor earned $2 billion in Iacocca's last year with the company, the idea was a hard sell to the board of directors, though Ford finally won after he gave the board a simple ultimatum: Me, or Iacocca.
Of course, Iacocca did not stay unemployed for long. One of his top employees at Ford, engineer and product planner Hal Sperlich, was another employee at Ford whom Henry II decided he didn't like, and he was fired before Iacocca. Sperlich soon began working for Chrysler, and less than two years later, Iacocca was again his boss.
After Iacocca was fired from Ford at age 54, he was not ready to retire. He had an offer from Renault, and considered launching an enterprise that would create a partnership among some of the largest car companies in Europe, Japan and the U.S. But it was clear that the struggling Chrysler needed strong leadership from someone with a product background, so on November 2, 1978, less than four months after he was fired from Ford, Iacocca joined Chrysler — on the very same day that the company posted a third-quarter loss of more than $155 million, adding to an already enormous deficit.
The Struggle To Save a Sinking Chrysler
Once aboard, Iacocca identified multiple problems. The executive organization was fractured and inefficient, the company was running dangerously low on cash and the Chrysler product lineup needed help. Sperlich, who eventually became president of Chrysler, was already hard at work on that last concern, pioneering projects, such as a front-wheel-drive minivan, that were proposed and then rejected by Ford. "All through the company," Iacocca wrote in his autobiography, "people were scared and despondent. Nobody was doing anything right." Iacocca's takeover was brutal — he fired 33 of Chrysler's 35 vice presidents.
By the summer of 1979, talk had already turned to the possibility that Chrysler may have to look to the federal government for a bailout. By the time the request was made, though, Iacocca had already begun building his team and addressing the company's most pressing problems, including too much inventory and too little emphasis on quality control, resulting in huge warranty costs. An example: "The Aspen and Volare simply weren't well-made," Iacocca wrote. "The engines would stall when you stepped on the gas. The hoods would fly open."
Also a contributor to Chrysler's woes, Iacocca decided, was what Iacocca considered to be uninspired marketing campaigns, resulting in the firing of Chrysler's two longtime ad agencies. Iacocca and the new agency, Kenyon & Eckhardt, tried some innovating marketing schemes of the sort that would later define Iacocca's tenure at Chrysler: They offered $50 to customers who test-drove a Chrysler, then bought a similar vehicle from the competition. And they offered a money-back guarantee — buy a Chrysler, drive it for 30 days, and if you didn't like it, bring it back for a refund, less $100 for depreciation. Industry experts predicted disaster, but just two-tenths of 1 percent of the buyers returned the vehicle after 30 days.
But nothing he could do would solve the economic climate of 1979 and 1980, when the massive gas crisis and problems in the Mideast helped prevent any meaningful recovery. The Japanese companies were well-prepared for a gas crisis, with plenty of appropriate products in the pipeline. Chrysler was not. Thousands of Chrysler employees were fired or laid off.
Eventually it was obvious Chrysler must have help. A partnership with Volkswagen was discussed, then rejected. Finally, there were two choices, and Iacocca, whose reputation as the golden boy was fading fast, didn't like either one — file for bankruptcy or ask the government for help.
He did, of course, choose the latter course, asking not for a handout, but for loan guarantees. To many it was semantics, but to Iacocca, the distinction was important — as was the fact that he reduced his own annual salary to $1.
To say it was a controversial decision for the federal government to back Chrysler is an understatement, much as it was more recently when General Motors and Chrysler both filed for bankruptcy to get help from the government. Under Iacocca, Chrysler did not file for bankruptcy, but the loan guarantees did give him breathing room to develop two products that he hoped would save the company — the K-car and the minivan, as well as the Chrysler LeBaron convertible at a time when Detroit had all but abandoned drop tops.
Iacocca got his guarantees, and as a result, the lifelong Republican began leaning toward the Democratic party. "If there had been a Republican administration in 1979," Iacocca wrote, "Chrysler wouldn't be around. The Republicans wouldn't have even said 'hello' to us."
And in the end, the passage of the $1.5-billion "Loan Guarantee Act" saved Chrysler. In the summer of 1983, Iacocca presided over the very public "repayment" of $813,487,500, written out on one of those enormous, photogenic cardboard checks.
Triumph and Tragedy
On the outside, Iacocca was triumphant, but on the inside, he was not in the mood for celebration — a few months earlier Mary, his wife of 27 years, had died at age 57, weakened by two heart attacks and a stroke. Like Iacocca, she was a fiercely loyal, tough competitor who helped buoy the executive when he needed it most.
By then, though, Lee Iacocca was a certified rock star — father of the Mustang, savior of an entire car company, and pals with show business personalities like Frank Sinatra, Vic Damone, Bill Cosby and Bob Hope. He was a regular in TV commercials — "Buy a car, get a check!" — as well as on talk shows, and sometimes even on prime-time TV, in an episode of Miami Vice. During the peak of his popularity, Iacocca's name was often mentioned as a prospective political candidate.
He continued to lead Chrysler until his retirement in 1992 at age 68 as president, CEO and chairman, having presided over a later period highlighted by the acquisition of American Motors and Jeep, and the development of the Jeep Grand Cherokee. Three years later, he played an ancillary role in financier Kirk Kerkorian's bizarre hostile takeover attempt of Chrysler, and it seemed likely that this would be the end of his public connection with Chrysler. But in the summer of 2005, Iacocca starred in similarly bizarre Chrysler TV commercials, appearing with rapper Snoop Dogg and Seinfeld star Jason Alexander, reprising his "If you can find a better car, buy it!" pitch. Iacocca's fees were donated to his Iacocca Foundation for diabetes research.
Iacocca did some consulting work after his retirement from Chrysler, and backed several products, often in return for contributions to his Foundation. In 1996, typically ahead of his time, Iacocca launched EV Global Motors, which sold a $1,200 electric bicycle. Then he moved on to promote the Lido, sort of a jumbo golf cart targeted at retirement communities as an NEV, or "Neighborhood Electric Vehicle." The $10,000 Lido resembled a scaled-down Chrysler PT Cruiser, but in an interview with Inside Line, he bristled at that suggestion, instead insisting that the styling was "retro," and not based on any other vehicle. He and the Lido were featured on the cover of a Hammacher Schlemmer catalog. In the summer of 2009, he helped promote the 45th anniversary "Iacocca Edition" custom Ford Mustang — 45 of the silver cars were marketed at Galpin, a Los Angeles Ford dealer, for about $65,000 each.
In 2000, Iacocca and his son-in-law, Ned Hentz, launched Olivio Premium Products, a line of products such as a butter substitute made from olive oil that are, as you would expect, heart- and diabetic-friendly, with profits going to the foundation.
Iacocca the Best-Selling Author
Iacocca returned, with authority, to the headlines in May of 2007 with the publication of his book, Where Have All the Leaders Gone? The prose was, even for the straight-talking Iacocca, particularly pointed as he decried the lack of leadership in both business and public life.
An oft-quoted sample: "Am I the only guy in this country who's fed up with what's happening? Where the hell is our outrage? We should be screaming bloody murder. We've got a gang of clueless bozos steering our ship of state right over a cliff, we've got corporate gangsters stealing us blind, and we can't even clean up after a hurricane, much less build a hybrid car. But instead of getting mad, everyone sits around and nods their heads when the politicians say, 'Stay the course.' Stay the course? You've got to be kidding. This is America, not the damned Titanic. I'll give you a sound bite: Throw the bums out! You might think I'm getting senile, gone off my rocker, and maybe I have. But someone has to speak up."
Interestingly, that quote, as well as others from the book, has been rewritten anonymously and posted online and is still sent out as e-mails, credited to Iacocca, with added text that has a decidedly conservative agenda. The line "I'll give you a sound bite: Throw the bums out!" was rewritten in the co-opted version as, "I'll give you a sound bite: Throw all the Democrats out along with Obama!" The differences between what Iacocca wrote and what he is supposedly credited with writing, are detailed on the rumor-busting Snopes.com Web site.
Iacocca left his beloved Detroit to move to the Bel-Air neighborhood of Los Angeles in 1993. He also owns a home, and a small vineyard, in Italy. In 1986, three years after his wife Mary died, Iacocca wed publicist Peggy Johnson, described by People magazine as a "statuesque ex-stewardess," but they were divorced in 1987. She died in 2000 at age 49 from a heart attack. Iacocca married Los Angeles restaurateur and ex-model Darrien Earle in 1991, but they divorced in 1994. He remains close to his two daughters and his grandchildren. And he continues to collect multiple awards for his leadership and humanitarianism: In May of 2010, he was one of the first four inductees into the Walter P. Chrysler Legacy Circle, the others being TV personality Jay Leno, racer Richard Petty and designer Virgil Exner.
In an interview with the Detroit News in November, 2010, Iacocca said he had no plans to work for another auto company, build another custom vehicle or write another book. Although, you can keep up with the 87-year-old Iacocca's latest musings at his blog, Straight Talk.