Chapter 4: Rearview

Obstacles Closer Than They Appear

Photographer: Joshua Roberts/Getty Images

Former Michigan Gov. Jim Blanchard, at a press conference on May 31, 2008 in Washington, DC. Close

Former Michigan Gov. Jim Blanchard, at a press conference on May 31, 2008 in Washington, DC.

Close
Open
Photographer: Joshua Roberts/Getty Images

Former Michigan Gov. Jim Blanchard, at a press conference on May 31, 2008 in Washington, DC.

Jim Blanchard was horrified as he watched the Detroit Three CEOs stumble through the congressional bailout hearings in November and December 2008. They seemed blindsided by the shots they took and came with no ammunition to fire back. "Oh, my God, it was terrible," said Blanchard.

As a baby-faced, 37-year-old congressman from Michigan, Blanchard was the architect of Chrysler's earlier federal bailout, which gave the automaker government backing for $1.5 billion in lifesaving loans. Blanchard convened congressional hearings in October 1979 to try to win over reluctant lawmakers who, like some of their successors 30 years later, believed Chrysler deserved to die.

By summer 2009, Blanchard, still round-faced and thick haired, was almost 67 and in the twilight of a career that saw him rise to governor of Michigan and serve as ambassador to Canada for President Bill Clinton. As he was packing up on a Friday, Blanchard's phone rang. On the line was Ron Gettelfinger, president of the United Auto Workers union, with an intriguing offer: Would Blanchard accept a seat on Chrysler's new board? The UAW could name one member to Chrysler's post-bankruptcy board to represent the union's health-care trust and Gettelfinger said he could think of no one better than the company's original savior.

Sen. William Proxmire, D-Wis., left, shakes hands with Lee A. Iacocca, board chairman of Chrysler Corp., at the start of a Senate finance committee hearing in Washington, Thursday, Nov. 15, 1979. The committee is hearing testimony on a bill to guarantee loans to the auto maker. At center is Sen. Donald Riegle Jr. D-Mich. Photograph by AP Photo Close

Sen. William Proxmire, D-Wis., left, shakes hands with Lee A. Iacocca, board chairman... Read More

Close
Open

Sen. William Proxmire, D-Wis., left, shakes hands with Lee A. Iacocca, board chairman of Chrysler Corp., at the start of a Senate finance committee hearing in Washington, Thursday, Nov. 15, 1979. The committee is hearing testimony on a bill to guarantee loans to the auto maker. At center is Sen. Donald Riegle Jr. D-Mich. Photograph by AP Photo

Reckoning to Revival: Rebuilding the U.S. Auto Industry
Ch. 1
Buckle Up: The Potholes Stay Where They Are
Ch. 2
Off-Road: The SUV's Ride From Peak to Valley
Ch. 3 Recalculating: Failed Talks and an Italian Wedding
Ch. 4 Rearview: Obstacles Closer Than They Appear
Ch. 5 Done Dealership: Collateral Damage to a War Hero
Ch. 6 Idling: Father and Son Live Through Layoffs
Ch. 7 Recall: Insourcing Workers From Detroit
Ch. 8 Trim: Moving the Assembly Line Outside
Ch. 9 High Gear: A New Jeep Every Minute
Ch. 10 Differential: The Divide Over Wages
Ch. 11 Ignition: 'Isn't That What America Is All About?'
Post-Crash Site: Five Scenes of a New Life

Blanchard said yes and immediately called his wife to marvel at the unexpected opportunity to help Chrysler again. Some of his friends didn't see Blanchard's new assignment as heaven-sent. "People were saying to me, `Oh, you poor bastard, they're not going to make it."'

Marchionne wasted no time in the first board meeting that summer explaining why he was the right man for the job. At the top of Marchionne's agenda was the new Jeep Grand Cherokee about to go into production at Jefferson North. Everyone in the room knew that the profits the Jeep could generate had the potential to save the company. "Our question was: When the updated version rolls out, will it be really good?" Blanchard said.

Marchionne took directors on a field trip to Chrysler's proving grounds, a test track in the countryside west of Ann Arbor.

He had a secret.

A few months earlier, just before Chrysler filed Chapter 11 on April 30, 2009, Marchionne arrived in Auburn Hills to take his first look at the Grand Cherokee -- the one Gilles and his team had designed. The CEO, sporting his signature sweater, offered his unvarnished opinion: good, not great. "He thought it was handsome, but I think he thought it was a little innocuous -- probably a little safe in his opinion," Gilles recalled.

Marchionne was appalled by the Jeep's lack of luxury touches -- such as the sparkling LED headlights and taillights that had become standard adornment on luxury cars, like the Ferraris and Maseratis that Fiat (F) makes in Italy. "Where are the leds? Where are the leds?" he demanded in his low, Italian rumble, pronouncing the letters like a word. Gilles explained Chrysler couldn't afford them.

The new boss commissioned a new $60,000 high-end version of the Grand Cherokee, to be known as the Summit, and told Gilles to get those LED lights back in the design as soon as possible.

Marchionne also drove a prototype devoid of identifying brand badges on a weekend getaway to Toronto, where he was disturbed by how few people recognized it as a Jeep. He returned with a to-do list for Gilles before the Grand Cherokee would be ready for the road.

At the same time, Marchionne ordered an overhaul of Jefferson North, a stem-to-stern cleanup, with new lighting, a fresh coat of paint, hospital-clean restrooms and legions of high-tech robots to bring the aging factory into the 21st century. The attention the new boss lavished on the Grand Cherokee invigorated the designers. "We just needed to be believed in, to be honest," Gilles said. "And he really came in and gave us that -- that beacon of hope."

Video: The Five Hottest Cars Driving Out of Detroit

In return, designers worked through Marchionne's to-do list and made the good Grand Cherokee great. That was the model the directors drove at the proving grounds -- and after hot laps in it, they were impressed. They still wanted to know how Marchionne would tackle Chrysler's history of sub-par quality. Marchionne explained he has instituted a policy that if anyone in the company had been "muzzled" by their boss for finding a flaw, he would fire that supervisor. He also promised not to let a single Grand Cherokee out the door of Jefferson North until "it's just perfect."

"We can't afford any little thing to go wrong with this car," Marchionne told the directors.

Press spacebar to pause and continue. Press esc to stop.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.