Better cars, lowers costs, and a dollar-a-year -- saving Detroit again

Economic drama is not new to Detroit. During the late 1970s, Chrysler Corp. was bleeding cash and dancing with bankruptcy. What happened then shows part of what’s wrong with Detroit now, and may point the way out of current swamp.

Lee Iacocca was a career car guy who spent 28 years with Ford. Far from a perfect man, he was fired by Ford.

Chrysler picked him up in late 1978 as president and chief operating officer. Iacocca agreed to work for $1 a year, and vowed to take no greater salary until Chrysler returned to profitability.

Iacocca managed to win $2 billion in concessions from dealers, creditors and labor. Those concessions, and the humility of that $1 a year salary, helped him win passage of the Chrysler Corp. Loan Guarantee Act of 1980 -- $1.5 billion in federal loan guarantees.

He also started producing cars that America actually wanted to buy – what an idea! He famously ordered engineers to lop off the top of a K-car and create a convertible – a market niche abandoned by American manufacturers nearly a decade earlier.

Iacocca was a shameless self-promoter, and his critics sniff that he was nothing but a salesman. But his work looks an awful lot like leadership, even with the warts.

Chrysler lost $1.7 billion in 1980, but by 1983 the company turned things around and posted a profit of $500 million – and, best of all, paid the loans back years ahead of schedule. His template -- sacrificing his own salary, revamping his product line, cutting his overhead -- is what the Detroit Three need today.

I’ve opposed the auto bailout because the markets, and bankruptcy restructuring will best help the D-3 make the rapid transitions that are necessary. The auto companies continue to carry huge legacy costs from oversized dealer networks, labor-related costs and excess production capacity. The necessary concessions from dealers, labor and retirees are all contractual, and won't happen without a judge.

And CEOs are still taking salaries that would make a drug lord blush, all the while posting huge losses. No plan for recovery is in place – the message seems to be, give us money, we’ll let you know if we need more.

But it seems that the new Congress, controlled by a heavy majority of Democrats, will pass some sort of auto bailout after it takes office in January. If the government just has to intervene, it would do well to remember history – and please, try to get a plan out of the D-3, and find us a dollar-a-year-man.