Iacocca's Tightrope Act

Frank Sinatra. John Houseman. Joe Garagiola. Ricardo Montalban. Chrysler Corp. has hired all of them to tout its cars on television. But the company's premier pitchman is a slightly paunchy, slightly balding 58-year-old who happens to be on the permanent payroll: Chairman Lido Anthony ("Lee") lacocca. "You can go with Chrysler," he booms into the camera, "or you can go with someone else—and take your chances."

lacocca, the son of Italian immigrants, is fighting for his corporation's life, and growing numbers of viewers seem to be buying his act. Says Abe Gurewitz, 54, a Brooklyn cab driver: "I saw him on TV and I like the guy. He's turning around a company that was down the drain. He has guts." Nor has lacocca's commercial charisma escaped notice by Wall Street's savviest auto analyst, Maryann Keller of Paine Webber Mitchell Hutchins. Says she: "I wouldn't doubt that people have bought Chrysler cars just because they wanted Lee lacocca to make it."

Incredibly, it is beginning to look as if he might. Five years ago, lacocca was president of Ford Motor Co., and Chrysler's profits were about to careen off a cliff. In November 1978, four months after he got the ax at Ford, lacocca joined Chrysler as president. From that year through 1981, the company lost nearly $3.5 billion, easily the biggest bloodbath by any American company in history. In 1979, the company was so close to bankruptcy that only an act of Congress saved it, and despite the bailout, Chrysler has almost collapsed several times since. It is therefore something of a modern management miracle that last month lacocca was able to announce that his company had actually made a profit in 1982.

True, it was a small profit, only $170 million on sales of $10 billion, and it came mostly from the sale of the tank division, not from making cars. Yet no one denies that Chrysler's progress has been prodigious. Had not a debilitating five-week strike last fall in highly profitable Canadian plants crippled operations, Chrysler would have eked out a profit in the auto business. More astonishing, the once cash-starved company now has a cash hoard of $900 million. Wall Street has halted its death watch: last year Chrysler's shares more than quintupled in price, from 3% to 17%. It was the second best 1982 showing of any stock on the New York Stock Exchange, surpassed only by Coleco Industries' rise from 6% to 36%.

Chrysler's recovery is largely lacocca's doing, a triumph of brains, bluster and bravado. When the company needed money and the banks dithered, he threatened to go into bankruptcy. When he needed pay cuts and the union protested, he warned that he would shut plants. When Chrysler could not pay its bills, he persuaded suppliers to be patient. It now seems a plausible bet—not yet even money but not 100 to 1 either—that lacocca's company will survive as No. 3 against its behemoth competitors, General Motors and Ford, and occasionally even threaten them. Of course, the tougher battle is the one that all U.S. carmakers are in together: turning back the competition from Japanese and other foreign automobile companies, who drove off with a record 28% of the market last year.

lacocca blames this