Running Head: THE CHRYSLER BAILOUT OF 1980
Big Money Bust For Chrysler Corporation: The Government bailout of 1980
Class: Economics 203: Macroeconomics
Professor: Drew McMurray
Due Date: April 3, 2008
Author: Nicole Chesser
Introduction
History of Chrysler Corporation
The Chrysler Corporation during the 1970’s found themselves in major financial trouble. They suffered from major mismanagement of the company. Chrysler invested a bunch of money and resources into the production of very large up-scale vehicles like cars, vans and SUV’s that had major quality problems and were said to be the worst build vehicles of the time. They were the only company producing vehicles that were on hand and did not have to be ordered. Other
Government Help of Chrysler
The Unions
How the Bailout Affected Chrysler
Iacocca was determined to get the company out of the red. He started by taking a pay-cut going down to $1.00 a year until Chrysler was out of the red and had the ability to cut the labor costs $ 2.00 an hour (Hickel, 1983). Chrysler in 1980 introduced a new automobile called the K car, which was a smaller car with good gas mileage. The K car became very popular with the American consumer. After the K car, they introduced a mini-van and a number of other vehicles (NPR, 2009). Chrysler was returning to its position as one of the top three automotive giants with every decision and change. Chrysler was able to pay back the government loan seven years ahead of schedule, and the government made a profit of around $500 billion dollars. The government’s $500 billon profit was partially a result of the stock warrants originally negotiated between Iacocca and the government (Hickel, 1983).
to the point, taxpayers suffered while Lee Iacocca, executives and shareholders benefited immensely (Gregoriancant, 2009).
Conclusion
References
Chrysler’s Crisis Bailout. (1979, August 20). Time. Retrieved February 15, 2009 from
Eley, T. (2008,...