Iacocca's Tightrope Act

(10 of 11)
treadmill, plays a relaxed game of tennis and walks around a nearby lake, always carrying his "anti-goose" stick to ward off aggressive waterfowl. In darker moments, he imagines that the geese were hired by Henry Ford II.

lacocca has forsaken the much publicized $ 1 -a-year salary that he drew temporarily while steering the loan guarantee through Congress; last year he earned $365,676. His Chrysler stock is worth only $16,625, but he has stock options that would net him $4.9 million pretax if he exercised them. His enjoyment of the trappings of the corporate life has prompted his enemies at Ford to dub him "the Queen of Sheba." In 1981, the Government Loan Guarantee Board ordered Chrysler to give up its corporate jets, including lacocca's favored Gulfstream II, to save money. lacocca stalled until he was caught redhanded: Treasury Secretary Donald Regan saw a newspaper picture of him sitting in the New York Yankees dugout in Florida during spring training and figured that he had not gone there in a Plymouth subcompact. Chrysler now leases a jet, but lacocca is irked that he must obtain the permission of the Loan Guarantee Board every time he wants to travel in it.

So far, neither the Treasury nor the taxpayers have lost or lent a cent in connection with the loan guarantee. Indeed, the Government actually nets about $11 million a year from payments Chrysler is required to make. (The money borrowed under the guarantee was raised in the public markets.) All the loans come due in 1990; Chrysler may be strong enough to repay some of them this year.

But Chrysler's long-term survival remains shaky. After giving up $965 million in wage increases and paid holidays, its 65,000 U.A.W. workers make $2 an hour less than industry counterparts, and they hope to make up the difference when their contract expires in January 1984. They could have a powerful ally then in Douglas Fraser, who retires as president of the U.A.W. in May but will stay on the Chrysler board, where he has been since 1980. Chrysler owes the union pension fund $477 million, and has an overhang of $2 billion in unfunded pension liabilities.

For a long time, people did not believe lacocca when he declared that Chrysler was just the leading edge of the problems of the U.S. auto industry. Now they do. Despite the gains that U.S. automakers have made, their higher labor and manufacturing costs still give Japan a $1,000-per-vehicle advantage. When currency and tax differences are figured in, the Japanese advantage is closer to $2,000. Even if import restrictions are kept next year, as they are likely to be, U.S. automakers still face an uphill battle.

Chrysler executives as well as its creditors are worried that lacocca will leave this problem to his successors and decide to retire in a year and a half when he reaches 60. Vice Chairman Greenwald, 47, who was president of Ford's Venezuelan operations, is the heir apparent. A polished Princetonian, Greenwald is articulate, decisive and as dextrous at debit financing as they come; he may not have lacocca's compelling flair for salesmanship, but then who does?

lacocca insists he has no plans to quit, observing that he has seen too many contemporaries retire and then "die in six months." At the same time, he admits that he is tired. Having suffered rheumatic fever as a youth, he worries about his health