Chrysler: Lee Iacocca's Turnaround

In 1979, Chrysler was weeks from running out of cash. The company had lost $3.5 billion in two years (over $13 billion in today's dollars), its cars were considered the worst in America, and the oil crisis had made its gas-guzzling lineup unsellable. Congress debated whether to let Chrysler die. Lee Iacocca, freshly fired from Ford by Henry Ford II, took over as CEO and did something no corporate executive had done before: he went to Washington and asked Congress for a loan guarantee.

Iacocca's congressional testimony was legendary. He argued that Chrysler's failure would eliminate 600,000 jobs and devastate the Midwest. Congress approved $1.5 billion in loan guarantees (not a bailout -- Chrysler had to pay the money back). Iacocca then cut his own salary to $1 per year, closed plants, renegotiated union contracts, and launched two products that saved the company: the K-car (an efficient, affordable sedan) and the minivan (which Chrysler invented and which Ford had rejected).

Chrysler repaid every dollar of the government loan seven years early. The minivan became one of the most profitable vehicle categories in automotive history. Iacocca became a national celebrity -- his autobiography was the best-selling nonfiction hardcover of 1984 and 1985. From bankruptcy's door to American folk hero.