A lot of my friends are simply too young to remember much (if they were even alive) about 1979. However, I remember 1979 very well. For the most part it was a gloomy period. Jimmy Carter was in office and things were going horribly. Most notably, by the end of the year, hostages from our embassy in Iran would be taken and the resulting 444-day stand-off would have an impact for many years to come.
The economy was a mess on top of all this and Chrysler was in the news almost daily as it looked more and more likely that they’d go completely out of business. At the time pressure came to Washington from every corner of the country. Losing Chrysler meant losing countless jobs in every voting district in America. Politicians figured they should do something instead of risking their own futures.
So, in September of that year Chrysler asked the government for a $1.5 billion loan. We gave it to them as an early Christmas present that December. Major changes came with the loan including the biggest positive of all—bringing in Lee Iacocca from Ford to run the company. Lee was the Dave Thomas (Wendy’s) of his day. You’d see him everywhere on TV and off. The only difference was that he didn’t do funny bits but he was every bit the marketer Thomas was. He told Americans that Chrysler was going to revolutionize the industry and to make good on their loans as a result.
The first deal Iacocca made was to get the government to buy thousands of pick-up trucks from them. Next up Chrysler created the hugely successful minivan. Finally they also created what was called the “K-car“. This design saved Chrysler. It was a highly-competitive model that made buyers feel patriotic and, to top it off, was very profitable to boot.
The end result was that Chrysler was able to repay their loan, several years early, in 1983 with the US government realizing a profit of more than $350 million ($750 million today). It’s quite interesting to note that the original loan would be about $4.4 billion today. In other words, we’ve done something very similar to this before and seen it turn out positive. That was 30 years ago. How many jobs did we save as a result? We rolled the dice before, made a profit and gave countless citizens continued prosperity for more than a generation. Maybe we can get Lee Iacocca to come back?