This is not a subtle town.
Alongside the Detroit Industrial Freeway west of downtown, there is a giant model of a Goodyear tire that flashes auto production figures continuously -- just like an electronic sign in Washington that updates world population figures every second.
So far this year, U.S. automakers have built some 7.1 million cars, down 1.6 percent from the same time last year. There are constant reminders here of such facts because auto output is what keeps this city going. Talk to anyone and the conversation ends up with a focus on the automobile, especially at a time like today when one-tenth of the industry work force is on layoff.
Detroit is the only city where one major newspaper, the News, would devote one-third of its space for editorials one day to a farewell to the British MG sports car, production of which is being stopped by its manufacturer (a government-owned enterprise in Britain). Or where the other paper, the Free Press, would publish an eight-page separate section all about Henry Ford II when he stepped down recently as chief executive of Ford Motor Co.
Thus it came as no surprise several weeks ago when Lee Iacocca, new chairman and chief executive of the troubled Chrysler Corp., sent a telegram to leading newspaper publishers across the country. On six days' notice, he invited them to a "special meeting" at the company's headquarters here. The telegram stated, in part:
"Purpose of this conference is to give you and other key newspaper publishers a private but on-the-record preview of Chrysler's products for 1981, 1982, 1983, plus design concepts for 1984 and 1985. We want to give you this early inside look at the product and marketing rationale that will give Chrysler competitive tools for returning to profitability. We want you to see and understand why we are so confident of the future."
A few days earlier, at a Detroit news conference, Iacocca had expressed bitterness about what he described as negative news media coverage of Chrysler's problems.
Chrysler spokesmen said the idea for a meeting with publishers came from within the company, after which the firm contacted the Newspaper Advertising Bureau. The newspaper organization sent its own telegram to publishers, nothing that Chrysler's 4,800 dealers spend about $120 million on newspaper ads and dealer associations spend another $30 million.
"So we all have plenty at stake in Chrysler's success. Their current financial problem is temporary, but Leetells me needs our help in rebuilding public and official confidence in Chrysler and its prospect," said Advertising Bureau president Jack Kauffman.
About 75 persons gathered here on Sept. 25 for the unprecedented publishers' preview, including reporters. They met the company's new executive team, in place less than a week, and received a pitch apparently quite similar to those Chrysler has made to its bankers, congressional delegations and Carter administration officials over recent weeks.
"We know what we're doing . . . all we need is continued confidence of our dealers and the car-buying public," iacocca said. "A lot is at stake -- the company, Detroit, Michigan, the country."
The Chrysler chief went on to review the firm's request to the federal government for assistance, its unusual public dissemination of a five-year financial plan (the sort of document normally locked up in corporate safes, or the object of espionage) and a showroom full of planned future automobiles or light trucks.
It was a typical day for the new leadership of the nation's third-largest auto manufacturer -- many of them former top executives of rival Ford Motor Co. -- as they sought to build broad support for federal financial aid. Much of the talk has been quiet and behind the scenes, including frequent trips to Washington by Iacocca for meetings at the Treasury or on Capital Hill.
This interlude, which contrasts with the earlier weeks of rough-and-tumble news of multi-million-dollar losses and warnings about Chrysler's imminent failure, apparently was engineered by Iacocca to demonstrate his new team's confidence in the company's future.
Whether he has been successful is not known, buy Chrysler is moving back into the headliens. Within a few weeks, former Ford Motor president Iacocca will have a better idea about the potential success of his strategy to keep Chrysler in all sectors of the automobile business through government support.
Chrysler's originally request for $1.2 billion of loan guarantees was rejected; a counterproposal of perhaps $500 million to $750 million is considered possible in the next round of public discussion.
A skeptical Senate Banking Committee Chairman William Proxmire (D-Wisc.) opened hearings last week in Washington on the potential economic impact of a Chrysler failure, in the wake of various studies showing the adverse consequences on localities near the company's main plants.
At the hearings, the Federal Trade Commission's competition bureau chief, Alfred Dougherty, questioned claims that dire consequences would follow a Chrysler bankruptcy, which he suggested Congress should consider as an alternative to federal aid.
At the same time, the United Auto Workers union is about to begin negotiations with Chrysler for a new contract, having won wage and benefit increases of 33 percent over three yearsat industry giants General Motors Corp. and Ford. Chrysler wants to freeze wages, and the union is expected to agree to some major economic concessions with the No. 3 firm.
Meanwhile, as the Carter administration continues to review ideas from Chrysler about changes in an earlier federal aid proposal that the Treasury rejected as too expensive, legislation will be offered in the House next week to provide federal guarantees for loans to Chrysler. The proposal to set up a procedure for aid that is similar to that provided earlier for Lockheed Corp. will serve as a springboard for House hearings.
The Senate hearings and House action reflect impatience by some members of Congress, who had expected to have a formal administration proposal before them by now in hopes of securing a final vote before Christmas.
Participants in the protracted Chrysler-Treasury talks -- including representatives from the New York investment banking firm of Salomon Brothers -- have indicated their confidence that there will be ultimate agreement on a federal aid program. New commitments by Chrysler's banks and the UAW may be necessary; the administration has suggested that the union's $800 million Chrysler pension fund might be a source of financial support, for example.
The UAW clearly wants Chrysler to stay in business, and the company has many supporters for its programs in Congress.
However, time has eroded some of the overall initial support for Chrysler's survival strategy, particularly since the Federal Reserve Board announced new measures to control credit expansion.
For example, Maryann Keller, vice president and senior analyst at the investment firm of Kidder, Peabody & Co., said last week that because of recent economic developments, "Chrysler's 1980 car and truck sales forecasts are probably too high by as much as 500,000 units."
Economist Alan Greenspan, former head of the Council of Economic Advisers under President Ford, told the Senate committee that Chrysler's entire plan appears to be overly optimistic. The company's forecast that its market share will increase is "not terribly persuasive, particularly if I am a competitior," he said. He also questioned whether the firm could cut its costs per unit by $593 a car and $332 a truck, as projected. "I find that an optimistic assumption," Greenspan added.
Faced with growing questions such as these, congressioinal staff members expect some tough questioning about Chrysler's own view of its future. Enactment of aid legislation may have to be postponed until 1980 but Chrysler executives think federal support of some kind is inevitable.
Vice President Mondale said as much in Detroit on Thursday. "It would be a great shock to our economy if Chrysler was to fail," he said. Mondale emphasized that the administration views the Chrysler problem seriously but described the current talks as evidence of a "very, very difficult, complex problem," on which Treasury Secretary G. William Miller is working "almost full time." Mondale said he is confident a plan will be approved and that, if congressional action is needed, Captiol Hill approval would follow.
Meanwhile, to guide the company through 1980 and beyond, Chrysler has installed a new management. They have been given the task of carrying out the new five-year plan, which projects two years of losses followed by a gradual return to profitability and slight gains in market share. Amoung the key executives in this campaign are five former Ford officials:
Iacocca, 55, the chairman and chief executive since he replaced John Riccardo on Sept. 20. After being dismissed by Henry Ford II, Iacocca joined Chrysler a year ago. He had spent 32 years with Ford, starting as a management trainee and ending up as president.
J. Paul Bergmoser, 63, the new president and chief operating officer who joined the company only last January as an Iacocca-picked consultant. He was at Ford for more than 30 years prior to retirement there, engaged mostly in manufacturing and purchasing.
Gerald Greenwald, 44, executive vice president for finance as of Sept. 20, having been controller only since last April. He joined Ford as a trainee in 1957 and was head of Ford's subsidiary in Venezuela before being lured away by Iacocca.
Gar Laurx, 61, executive vice president for sales and marketing since last May 15, having joined the firm in February. Previously he headed a Cadillac dealership in North Carolina, was president of the Dallas Chamber of Commerce and a Ford employe or executive from 1946 to 1969; his last post at Ford was group vice president for North America.
Harold K. Sperlich, 49, executive vice president for engineering and product development since June. He joined Chrysler in mid-1977 after a 20-year career at Ford and now directs the planning, design and engineering of Chrysler cars and trucks -- the key element of Chrysler's projected recovery.
These men are counting on consumer acceptance of a new line of front-wheel-drive "K-body" compact cars to be introduced a year from now as competition for GM's fast-selling "X-body" line, already on the highways. Chrysler also is going to offer a new Imperial to go after the lower-volume, but higher-profit luxury market. For 1982, there also will be a small van and luxury compact.
Before such models reach the show-rooms, however, Chrysler anticipates a loss of up to $1.5 billion for this year and 1980. The firm's market share will stay about 10 percent before edging up to the projected 12 percent level in the early 1980s. Chrysler states that future profitability from maintaining the company's status as a competitor in all segments of the car and light-truck market will be sufficient to repay the requested loan guarantees by 1985, just as Lockheed repaid all its guaranteed loans and even helped the Treasury make a profit on its transactions.
"The present mood of the new Chrysler management is anything but abject," said Iacocca, at a company where previous management was weak and prone to mistakes. "The really encouraging thing about management weaknesses . . . is that theyare correctable," he added.
Last week, Iacocca got a big boost when General Motors Corp. Chairman Thomas Murphy said that if all other paths of assistance were closed, he would not oppose U.S. assistance to Chrysler. Murphy, who spoke out earlier against federal aid, said he still thinks Chrysler can survive without government intervention. But if U.S. aid is the only thing left, "I guess I'd have to say, 'sure'," he explained.
The National Association of Manufacturers opposes aid to Chrysler, however. And General Electric Co. Chairman Reginald Jones, chairman of the Business Council, said at a weekend meeting of the group in Hot Springs, Va., that most top business executives "think it would be a mistake" for the government to support Chrysler. "The demise of Chrysler would be far less shocking in terms of unemployment and imbalances in the economy than most are predicting," Jones stated.