Lutz Will Stay With Chrysler, Under Eaton : Management: The auto maker’s popular president surprises many by deciding to work for the former GM executive.
DETROIT — Lee A. Iacocca said Monday that he will step down as Chrysler Corp.’s chairman, as well as its chief executive, at the end of 1992 and turn both posts over to Robert J. Eaton, who was General Motors Corp.’s top executive in Europe.
Eaton was named vice chairman and chief operating officer Monday and given a seat on Chrysler’s board of directors. He will become chairman and chief executive on Dec. 31. Robert A. Lutz, who was passed over for the top jobs, will remain on as Chrysler president.
The changeover also opens a new drama starring Eaton and the man who didn’t get the job. Lutz, a charismatic “car guy†who commands great loyalty among designers and engineers, surprised many by declaring that he will remain at Chrysler under Eaton.
The naming of a General Motors engineer to succeed Iacocca atop Chrysler dismayed company engineers and others who fear that an outsider will disrupt the company’s promising but fragile recovery.
But to hear Iacocca tell it, Monday’s official anointment of Eaton, 52, launches Chrysler toward the 21st Century with a harmonious team of managers who are about to pull off “a mind-boggling performance†in the marketplace and on the bottom line.
Whoever proves correct, the Eaton appointment marks a watershed at the perennially struggling Chrysler.
It sets the stage for a promised final exit by the legendary Iacocca and his replacement by a low-key manager who appears to have little in common with the bombastic, outspoken executive who recruited him.
“He’ll cool it down a little bit. He’ll be less strident than I am,†a relaxed, jovial Iacocca cracked Monday.
The succession plan was approved by Chrysler’s board Saturday night. As part of the plan, Chrysler also announced the formation of an office of the chairman, made up of Iacocca and Eaton, to ease the transition until Eaton takes over.
Until Monday, Eaton was president of GM of Europe, a rejuvenated, highly profitable division of General Motors that is roughly the size of Chrysler.
Iacocca, 67, announced months ago that he would leave as chief executive at the end of 1992, but had left open the question of whether he would stay on as chairman. On Monday, he said his only official role after this year will be as chairman of the board’s executive committee. It remains to be seen how great a force he will be after retirement.
Iacocca, Lutz and Eaton shared the podium at Chrysler headquarters in a scene that eerily recalled a similar episode at Ford Motor Co. in 1978. Iacocca, then president of Ford, sat glumly by as his boss, Henry Ford II, announced that accountant Philip Caldwell had been named No. 2. On Monday, Lutz played Iacocca’s old role.
“I sat at a table with Henry Ford and another guy, and it was tough as hell,†Iacocca said, empathizing with the man he had just passed over.
Said Lutz: “Am I disappointed? Sure, I am. But I accept and respect that decision. Being a team player means you don’t sulk or quit.â€
Of immediate concern inside the company was the effect of an outsider taking over when Chrysler, in the view of some, is at a critical stage in a broad-based transition toward new ways of developing cars and trucks.
Under Lutz’s direction, Chrysler is believed to have gone the furthest of Detroit’s Big Three in implementing Japanese-style “lean†engineering and manufacturing techniques and shrugging off old Detroit ways.
“I don’t personally know anything of Bob Eaton and I have to keep an open mind about the transfer of power, but I think it was a poor choice,†said an engineer assigned to a key Chrysler project. “The people I run with here are disappointed.â€
Said Richard Hervey, president of Sigma Associates, a leading auto management consulting firm: “Chrysler in the last 18 months has built up a hell of a good esprit de corps. I hope this doesn’t ruin it.â€
But others saw Eaton’s style bridging any gaps, replacing Chrysler’s cult of personality with a collegial management style. Said analyst Joseph Phillippi of Lehman Bros., “There is not going to be a visceral reaction to Bob Eaton.â€
Iacocca began trying to head off any such problems Sunday with a daylong gathering of Eaton, Lutz and top-ranking executives at his home in suburban Bloomfield Hills. Lutz and Iacocca also sought to dispel rumors of a mutual distaste that was assumed to be the reason Iacocca wanted Eaton instead of Lutz for the job.
“That’s crap with a capital ‘C,’ †Iacocca said.
But he was hard pressed to give specifics on why Chrysler’s board, at his urging, chose Eaton over Lutz.
Chrysler shares rose 50 cents to $17.25 on the New York Stock Exchange Monday. GM saw its shares close unchanged at $37.125.
Iacocca’s Chrysler Here is a chronology of significant Chrysler Corp. events since Lee A. Iacocca joined in 1978.
Nov. 2, 1978: Iacocca becomes Chrysler’s president and chief operating officer after being fired as president of Ford Motor Co. by Henry Ford II.
Sept. 15, 1979: Predicting year-end losses of $1.07 billion, Chrysler asks the U.S. Treasury for $1.2 billion in loan guarantees.
Sept. 20, 1979: Iacocca is elected Chrysler’s chairman and chief executive.
Dec. 21, 1979: Congress approves $1.5 billion in loan guarantees.
Aug. 10, 1983: Chrysler announces that it will repay all its loans before the week is over--seven years early.
February, 1987: Iacocca agrees to a new four-year contract.
April 18, 1987: Chrysler’s proxy statement reveals that Iacocca earned more than $20 million in 1986.
May 31, 1990: Gerald Greenwald, Chrysler’s vice chairman and Iacocca’s hand-picked successor, resigns to head up an unsuccessful three-union attempt to buy UAL Corp.
June 7, 1990: Iacocca agrees to stay on beyond his four-year contract.
Jan. 8, 1992: Chrysler unveils new line of mid-size cars, dubbed the “LH†series, to compete with comparable Japanese models.
March 16, 1992: Robert J. Eaton, General Motors Corp.’s top executive in Europe, is named the eventual successor to Iacocca.
