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Yale University EliScholar – A Digital Platform for Scholarly Publishing at Yale YPFS Documents (Series 1) Browse by Media Type 11-12-2008 Examining Chrysler's 1979 Rescue National Public Radio Follow this and additional works at: https://elischolar.library.yale.edu/ypfs-documents Recommended Citation National Public Radio, "Examining Chrysler's 1979 Rescue" (2008). YPFS Documents (Series 1). 12557. https://elischolar.library.yale.edu/ypfs-documents/12557 This Document is brought to you for free and open access by the Browse by Media Type at EliScholar – A Digital Platform for Scholarly Publishing at Yale. It has been accepted for inclusion in YPFS Documents (Series 1) by an authorized administrator of EliScholar – A Digital Platform for Scholarly Publishing at Yale. For more information, please contact elischolar@yale.edu. 3/11/22, 10:06 AM Examining Chrysler's 1979 Rescue : NPRhttps://www.npr.org/templates/story/story.php?storyId=96922222 1/8HOURLY NEWSLISTEN LIVEPLAYLISTECONOMYDONATEExamining Chrysler's 1979 RescueNovember 12, 2008 · 4:00 PM ETHeard on All Things ConsideredListen PLAYLIST DownloadTranscriptIn 1979, Chrysler avoided collapse by getting $1.5 billion in loans from thegovernment. Charles Hyde, professor of history at Wayne State University andauthor of Riding the Roller Coaster: A History of the Chrysler Corporation,says in return Congress insisted that the company come up with some $2billion in cost-savings and concessions.MELISSA BLOCK, host:As Democratic leaders in Congress talk about bailing out Detroit automakers,we thought we'd go back to the last time a lifeline was tossed their way,December of 1979, the bailout of Chrysler, when Congress approved $1.5billion in federal loan guarantees.(Soundbite of vintage recording)Mr. LEE IACOCCA (Former Chrysler Chairman): Chrysler has a strong future.We're ready to move forward.WSHUOn Air Now3/11/22, 10:06 AM Examining Chrysler's 1979 Rescue : NPRhttps://www.npr.org/templates/story/story.php?storyId=96922222 2/8BLOCK: That was Lee Iacocca, then the chairman of Chrysler. DemocraticSenator William Proxmire warned of dire consequences.(Soundbite of vintage recording)Senator WILLIAM PROXMIRE (Democrat, Wisconsin): This is a very, verybad precedent. Having bailed out Chrysler, a big and failing corporation, it'sgoing to be very hard not to bail out others. And then, of course, the effect onthe taxpayer could be perfectly enormous.BLOCK: In 1979, Chrysler was the 10th largest corporation in America, thesmallest of the big three, and it was looking at a half billion dollar loss for theyear. Professor Charles Hyde wrote a history of the Chrysler Corporation andthe bailout. He joins us from Detroit. Thanks for being with us.Professor CHARLES HYDE (History, Wayne State Universit; Author, "Ridingthe Roller Coaster: A History of the Chrysler Corporation"): Thank you.BLOCK: And why don't you tell us why Chrysler was in such lousy shape in1979?Professor HYDE: Well, in essence they made some very bad product choicesthroughout the 1970s. They decided to become specialists in large, gas-guzzlingcars, and they did that right at the time there were two different Arab oilboycotts and crises with the price of gasoline. And their cars simply didn't sell.The other problem they had were very serious quality problems. Their carswere probably the worst-built cars in any showrooms anywhere.BLOCK: Well, when Lee Iacocca came to Congress in 1979 to ask for help, whatspecifically did he want?3/11/22, 10:06 AM Examining Chrysler's 1979 Rescue : NPRhttps://www.npr.org/templates/story/story.php?storyId=96922222 3/8Professor HYDE: Well, he wanted $1.5 billion in federally guaranteed loans,which would be coming from banks. These were not gifts. These were just loansthat the federal government would guarantee. He hoped that that money wouldgive Chrysler about two years to bring its new products into production and getitself turned around.BLOCK: It sounds like, then, Congress did give Iacocca what he wanted. Whatdid they demand in exchange?Professor HYDE: They insisted that Chrysler give them a three-year, detailedbusiness plan on how they were going to cut down the company, make it moreefficient, and get their new products into production. They also insisted thatChrysler come up with $2 billion worth of cost savings and concessions fromorganized labor, from government, from the banks, anyone else who had aninterest in Chrysler's survival.BLOCK: And I think the government also took all of Chrysler's assets ascollateral. Meaning if the company went under, the government would be paidback first.Professor HYDE: Yes. And part of the deal was that Chrysler had to issueseveral million dollars' worth of stock warrants to the government, and thenthe government had the right to sell that stock later on if Chrysler succeeded.BLOCK: Well, after the loan guarantees did pass at the end of 1979, how didChrysler turn things around? How did they right their fiscalship?Professor HYDE: Well, it really came as a result, first of all, of tremendouseconomies. They were able to reduce their labor costs by about $3 an hourcompared to the other car companies. But most importantly, they began tointroduce a series of very successful fuel-efficient, front-wheel-drive vehicles,3/11/22, 10:06 AM Examining Chrysler's 1979 Rescue : NPRhttps://www.npr.org/templates/story/story.php?storyId=96922222 4/8beginning with the so-called K-car which was introduced in September of1980. And they followed that with minivans and a series of other verysuccessful products.BLOCK: I've seen a photograph of Lee Iacocca standing before a giant checkmade out to, I guess, the federal government, paying back the loan seven yearsahead of schedule.Professor HYDE: Yes.BLOCK: And taxpayers did earn a profit on that loan. How much? How didthat happen?Professor HYDE: Well, federal government basically earned a profit on thestock certificates that they were given as part of the original deal. And I thinkthey ended up making about $500 million altogether on that deal.BLOCK: You know, Professor Hyde, there's an argument then and now that itwould have been better for Chrysler to collapse, that Detroit would have beenhealthier in the long run. It would have been smaller and more innovative andproduced better quality cars.Professor HYDE: Well, I know that argument was made. But the fact is that ifyou look at Chrysler's history since its bailout, it introduced products like theminivan, the earliest generation of SUVs, and a whole lot of other veryinnovative passenger cars as well. I always think it's better to have morecompetitors than fewer competitors.BLOCK: Professor Hyde, thanks very much.Professor HYDE: Well, thank you.3/11/22, 10:06 AM Examining Chrysler's 1979 Rescue : NPRhttps://www.npr.org/templates/story/story.php?storyId=96922222 5/8Sign Up For The NPR Daily NewsletterCatch up on the latest headlines and unique NPR stories, sent everyweekday.BLOCK: Charles Hyde is professor of history at Wayne State University. Hisbook is titled, "Riding the Roller Coaster: A History of the ChryslerCorporation." And this is a perfect excuse to hear Tom Paxton who turned theChrysler bailout into song.(Soundbite of song "Changing My Name To Chrysler")Mr. TOM PAXTON: (Singing) If you're a corporate titanic, And your failure isgigantic, Down in Congress there's a safety net for you. So I'm changing myname to Chrysler, I am going down to Washington, D.C. I will tell some powerbroker, What you did for Iacocca, Would be perfectly acceptable to me. I amchanging my name to Chrysler, I am leaving for that great receiving line...Copyright © 2008 NPR. All rights reserved. Visit our website terms of use and permissions pages atwww.npr.org for further information.NPR transcripts are created on a rush deadline by an NPR contractor. This text may not be in its final formand may be updated or revised in the future. Accuracy and availability may vary. The authoritative record ofNPR’s programming is the audio record.Related NPR StoriesExpert Examines Impact Of Big Three's Collapse Nov. 11, 2008Detroit's Big Three Want Big Bucks Nov. 7, 20083/11/22, 10:06 AM Examining Chrysler's 1979 Rescue : NPRhttps://www.npr.org/templates/story/story.php?storyId=96922222 6/8SUBSCRIBEBy subscribing, you agree to NPR's terms of use and privacy policy. NPR may share your name and email addresswith your NPR station. See Details. 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Examining Chrysler\u27s 1979 Rescue

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Examining Chrysler\u27s 1979 Rescue

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