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There’s been no shortage of controversy concerning the government’s numerous multi-billion dollar cash infusions over the last several months. I don’t know all the details, but it started with $700+ billion and I’ve heard the number is going (or has gone) much higher. Fannie Mae, Freddie Mac, billions of dollars to AIG and, most recently, the automotive industry.
In December, $13.4 billion was promised to the Ford, GM, and Chrysler in order to keep the assembly lines running. But, as some of you may know, 2008’s automotive bailout wasn’t the first time the government intervened in the affairs of an auto maker.
In the late 1970’s, the Chrysler Corporation was facing bankruptcy. The 70’s had seen a gas crisis and the cars in Chrysler’s line simply weren’t very efficient. What’s worse, the cars just weren’t all that enticing either. Ricardo Montalban did his best to talk up the line, particularly the Cordoba, but it, along with the Dodge Aspen and Plymouth Volare, simply epitomized boring.
Faced with collapse and the loss of thousands and thousands of jobs, Chrysler asked the government for help. Five months later, the government responded…favorably. On January 7, 1980, legislation was signed by President Jimmy Carter that provided the bleeding car company with $1.5 billion in loans. In addition, a new chairman, Lee Iacocca, was brought in.
And Chrysler made good. A new ad campaign featured Iacocca pointing his finger at us saying, “If you can find a better car, buy it.“ What’s more, Iacocca’s charges lived up to the challenge by building better cars. The Omni/Horizon compacts were small, cheap, really efficient, and had engines that pretty much ran forever. And the K-cars (Aries/Reliant – shown above) were immensely popular, of much better quality, and were the cars that ultimately brought the company back from the brink. Just three years later, Detroit’s number 3 auto-maker was profitable, growing, and had repaid the loans that had saved them. And then came the Caravan…
I think the crisis facing the Big 3 today is much bigger than what Chrysler faced alone in 1980. Will they survive? I have no idea. But solid leadership, quality car lines, and listening to the customer allowed the government’s infusion to have maximum effect nearly 30 years ago. It might happen like that again…only time will tell.
