Bob Lutz, president of Chrysler, tells it like it is...all the time.
Paul A. Eisenstein
From the Print Edition:
Arnold Schwarzenegger, Summer 96
(continued from page 2)
With his patrician manner and rugged good looks--ramrod straight posture, a thick brush of silver-white hair and a smile that twists, impishly, from the corners of his mouth--Lutz could be the Marine Reserve's poster boy, the response to (now retired) Air Force Brig. Gen. Chuck Yeager. Smart, strong-willed and unabashedly opinionated, Lutz is the proverbial rugged individualist--whether piloting his Czech-made Albatros fighter-trainer, charging a tight corner on a race track or negotiating the labyrinths of the corporate boardroom as president of the nation's number three automaker. He is a survivor, with a cat-like talent to bounce back to life after every setback. All the while, Lutz is likely to be chewing on the end of a hand-rolled cigar.
While he hasn't the household name of his former boss and mentor, Lee Iacocca, Lutz also owes his share of fame and fortune to Chrysler Corp. Or perhaps, Chrysler owes it to him. In 1989, the automaker was a financial basket case. With a dated line of uninspired automobiles, Chrysler was nearing bankruptcy--again--its second brush with death in less than a decade. With Iacocca off raising money for pet projects like the Statue of Liberty and Ellis Island, Lutz was left in charge. It was the opportunity he'd been waiting for all of his life.
Lutz's philosophy was simple: "You can't be all things to all people. You have to provide the customer with a very clear-cut choice." When the first generation of new Chrysler products rolled off the drawing board and out the factory door in 1992, they won rave reviews. Suddenly, Chrysler became the darling of the media and Wall Street, which was pleased by a succession of record profits. Inside the corporation, however, Lutz got the cold shoulder. He'd scrabbled with Iacocca once too often, sealing his fate by scuttling a proposed link-up with Italy's Fiat S.p.A.--a deal that would have earned Iacocca millions in stock profits. When the 67-year-old Iacocca chose a successor, the once-anointed Lutz was pointedly passed over for an outsider, Robert J. Eaton, then head of General Motors Corp.'s successful European subsidiary, GM of Europe.
Unruffled, Lutz showed a side he'd seldom exhibited before: the ability to swallow his pride. "Being a team player, which I am, you don't sulk and quit when someone else is selected captain of the team," he declared under the glare of a dozen TV klieg lights. It may have been the best decision Lutz has ever made. If he had any doubts, he's discovered there's no shame in being number two. If anything, the president of Chrysler Corp. is having so much fun he has decided to postpone his retirement.
Son of an affluent Swiss banker, Bob Lutz traces his jet-setting ways back to his youth, when he traveled frequently with his father, Robert, on business trips to the United States. Lutz also developed an early taste for automobiles. As a three-year-old, he says, he could identify anything on the road by make and year. "I was a tiny idiot savant, saying, '1929 Ford Model A,'" Lutz recalls with a laugh.
Discipline didn't come naturally. He was, if anything, a wild child. "Seriously behind" in his classes, he was tossed out of boarding school for a series of infractions. Before resettling in the United States, his frustrated father gave the unruly son one more chance to get a high school diploma: He would pay for one more year of school if Bob, then 22, joined the Marines. It wasn't a difficult choice. As a dawdling youngster in the waning days of World War II, Lutz would sketch fighter planes in his notebooks and fantasize about dogfights over Berlin. "I kept hoping the war would last long enough so I could get up in a P-51 and be an ace."
There was a colder war waging when Lutz signed up, so the young Marine recruit had time to tackle the enemy within. He soon earned his wings and by the time he left active duty, in 1959, Lutz was well on his way to a degree from the University of California-Berkeley, which he earned in 1961. A year later he received his master's degree, with highest honors, for a thesis on the interaction between product design and product image.
The Marines taught Lutz another lesson: how to enjoy a good cigar. Stationed on a helicopter carrier off the Philippines, recalls Lutz, "I'd go up to the flying bridge with a friend and sit in the captain's chair to smoke and watch the sun go down. I learned to associate the cigar with peace, relaxation, friendship and beautiful locations."
Lutz comes from a long line of cigar smokers. His father smoked until he was 80, and there's a portrait in the family home of a great-great-grandfather cherishing a cheroot. "The arthritis in his left hand formed a natural bridge for him to hold his cigar," Lutz recalls from family lore.
Bob Lutz is a self-described "moderate" smoker, though one seldom sees him without a cigar in hand. Even in Chrysler's now smoke-free offices, he keeps a velvet carrying case close by and will occasionally roll a cigar, unlit, between his fingers. A tobacco traditionalist, he favors fine Havanas, a preference frustrated by the long-standing embargo on Cuba. "Just preface it by saying I spend a lot of time out of the country," he says, noting that while abroad, he's likely to seek out a Cohiba--"as good as it gets now out of Cuba." Flor de Cano is another favorite, though the brand has become impossible to find, even in his native Switzerland. The premium Cubans, he grumps, have been deteriorating, though "what we used to consider the secondary brands, like Quintero, haven't deteriorated as much, so they're often as good as the big brands." Closer to home, Lutz will frequently be found puffing on a La Gloria Cubana, handmade in Miami, that's "as close as anything I remember to a Cuban from the old days: that wonderful, rich, satisfying flavor with just a hint of honey and beeswax just before the cigar is lit."
Lutz's routine calls for a Churchill in the morning, another by noon and a robusto or a corona in the evening, "because they're aromatic, draw well and last a long time." On the weekend, Lutz prefers a lighter smoke, like a panatela.
He keeps plenty of cigars on hand in a pine-lined walk-in humidor, custom-built into the basement of his oversized Swiss chalet-styled home. Hidden on the back of a 147-acre gated estate on the wooded south side of Ann Arbor, Michigan, the chalet is home to Lutz, his third wife, Denise, and an assortment of cats and dogs that wander in and out as he relaxes on a blustery fall weekend. The chalet is cluttered with memorabilia and toys of a boy who has never fully grown up. A "really valuable item," he proclaims proudly, is his rubber model '42 Buick. But the real toys are housed outside in the 14-bay garage.
Technically, Lutz is not what's known in industry parlance as a "car guy." He is, by training and a procession of job titles, a salesman. But résumés lie. Ask Lutz about his '53 Cunningham C3 Coupe, his '92 Viper, the '34 Riley, the '41 Chrysler or any of his BMW motorcycles, and he'll rattle off all the vital statistics. He's got an engineer's understanding of aerodynamics, braking systems and suspension dynamics. If it's necessary, he'll crawl under the hood to rewire a misfiring ignition system.
The complete car executive has been in high demand for almost 40 years. Lutz began his automotive career in Europe, with General Motors. He lasted eight years, but despite a series of promotions, he became increasingly frustrated with GM because it was "getting more and more arrogant and hidebound." He barely hesitated when offered a job with BMW--at eight times the pay--where he served three years as executive vice president of sales. Eberhard von Kunheim, former chairman of BMW AG, recalls Lutz's uncanny sense for a great product. "He could go into a styling studio and sense when you needed to change a line by a half millimeter here and a millimeter there. He was always right."
In 1974, Lutz linked up with Ford Motor Co., rising to the rank of chairman of Ford of Europe in 1979 and gaining a seat on the board of directors. But in an unexpected setback, Lutz was later summoned home and put in charge of truck operations. It was, for all intents and purposes, a demotion, and in June 1986, a frustrated Lutz became the newest member of the "Gang of Ford," a procession of top executives who bolted for Chrysler during the 1970s and '80s. Two years later, Lutz was named Chrysler president, and as a series of rivals, including current United Airlines chief Gerry Greenwald, moved on, Lutz seemed certain to succeed Iacocca.
But when would Iacocca leave? To waggish insiders, the aging executive's name was really an acronym for "I Am Chairman of Chrysler Corp. Always," something the board of directors seemed ready to etch in stone when it waived Chrysler's mandatory 65-and-out retirement policy. But as Iacocca approached 67, the mood soured, and for good reason. The comeback company was in crisis again, with losses rapidly rising. Worse, the ill will between Iacocca and Lutz was turning into a feud. On the surface, the two seemed very much alike: bold, brash, opinionated, with a mutual love for a good cigar. But deep within, Iacocca was an insecure man from humble roots, resentful of Lutz's affluent upbringing, according to Doron Levin, author of the recently published Behind the Wheel at Chrysler: The Iacocca Legacy. It didn't help when Lutz deep-sixed the Fiat deal or when he described the ailing Chrysler to reporters--in typically blunt manner--as "a bride...lying on her deathbed."
The board wouldn't let Iacocca fire Lutz, but when it did accede to Eaton, Iacocca's hand-picked successor, the rumor mills quickly started churning. Surprisingly, the two Bobs proved completely compatible. In the months that followed, Lutz admitted to friends that he was happier as president than he would have been in the more visible chairman's post. He didn't have to worry about nervous analysts and investors. He could focus on products and people.
This kinder, gentler Lutz took many by surprise. But it really shouldn't have. Lutz is someone who, in his own words, likes to "challenge the established order of things," even if it's his own firm convictions. He's a hunter who has come to support gun control. And a loner who has learned to play on the team.
"Up there in the cockpit, you have to take charge. You can't wait for a meeting. You do it yourself," says a ranking executive and longtime associate at Chrysler. That's exactly the way the old Chrysler operated. As Levin noted in his book, the number three automaker had always been the "ultimate example of top-down management." But by the late 1980s, it was obvious that thatsystem didn't work anymore.
To Lutz, empowerment has become more than just a catchy buzzword; he believes that while the traditional, authoritarian leader isn't the answer, neither is the new-age team manager, making all decisions by consensus. "A truly effective leader is one who blends both. It's a really delicate mix," he says. "An effective leader is able to inspire people with a clear vision, an image of what the results will be and motivate them by describing what the rewards will be. At my best, I exhibit some of those traits. But sometimes I fall off the wagon on one side or the other."
Former Chrysler vice chairman Steve Miller gives Lutz plenty of credit for his role in helping to change the company, but "sometimes his idea about teamwork is you get on his team," Miller once told a reporter from The Wall Street Journal. Lutz himself admits he can be a difficult man to work for--or with. When Chrysler adopted a more casual dress code, a divisional general manager showed up at a weekly meeting in a polo shirt and slacks. After listening to Lutz's backhanded compliments, the executive wisely opted to return the next week in suit and tie. When a slew of Chrysler employees gathered for the launch of the stubby and oafishly ornate Chrysler Imperial, Lutz brought the celebration to a halt by declaring: "Take a good look at that car. We will never do a car like that again."
Lutz's powerful presence makes him a popular attraction on the press and lecture circuits. There was no way anyone could miss the "smashing" debut of the Jeep Grand Cherokee at the 1992 Detroit auto show--not when Lutz punched it through a huge plate glass window at the Cobo Hall convention center. During the rollout of the Chrysler Neon at the '93 Frankfurt International Auto Show, Lutz adroitly handled questions from European journalists, switching in mid-thought from English to French to German to Italian.
Last August, Lutz was the featured speaker at the exclusive Pebble Beach Concours d'Elegance, perhaps the world's most elegant classic car rally. Stragglers were still nibbling on sushi and lamb chops. More wine had been brought in from the industrial-sized chillers. The band was ready to play. But first Lutz had a few words to say.
Everyone expected some tales about classic cars he's owned and loved, and of course, a few comments about Chrysler, the evening's sponsor. But Lutz had something more cerebral in mind. He wanted to talk about "right-brain thinking," the side of the brain devoted to creativity. "A lot of people think the car business is just technology, an accumulation of assembly plants and money. It's all those things, but it's fundamentally a lot like the movie business. You must have the creativity, people who passionately love automobiles. And I think we have a corner on the market."
Chrysler has certainly shown its creative side with products like the Dodge Viper. Deftly modeled after the legendary Shelby Cobra, this two-seat roadster made its debut as a concept car at the 1989 Detroit auto show, triggering a flood of mail--and checks. "People ask us what made us do the Viper. Nothing! We just thought it up," Lutz says, beaming. The Viper went into limited production in fall 1991. With production restricted to a few thousand hotly sought vehicles per year, the Viper will never make much money for Chrysler, but "that doesn't really matter," emphasizes Lutz, who personally conducted much of the initial road testing. "You can't measure the impact in terms of the money you've made. If you consider what it's done in terms of image, prestige and morale, the car is priceless." Early next year, Chrysler hopes to do it again when it begins building the Plymouth Prowler, the first-ever production-line hot rod.
Odds are, Lutz will drive the first one off the assembly line. At 64, you might expect him to be slowing down a bit, but you'd be wrong. Even when he's not flying across the country on one of Chrysler's corporate jets--a rare luxury that allows him to savor a cigar in the air--he's bolting from his office in the aging suburb of Highland Park to the new Chrysler Technology Center in Auburn Hills. It's a 30-mile drive, and so far, Lutz holds the "course" record, 20 minutes door-to-door. Frequently, Chrysler will schedule track time during a new-car press preview, and Lutz will seldom turn down the opportunity to race an auto writer. He usually wins.
He does have a personal life, though not as much of one as he'd like, but it helps that his wife, Denise, has given up her day job as a national advertising sales representative and can now travel with him. Tall, striking and smart, "she knows what it's like to work in a corporation. She's a wonderful corporate wife because she likes the interaction," says Lutz. It doesn't hurt that she's also a pilot. One of her most vivid memories is of a "shopping" trip to Prague with her husband to check out his new Czech jet. The factory test pilots gave Denise a ride in the jump seat--a fast pass over the city at 500 miles per hour.
Lutz's home is conveniently located within minutes of two airports. He keeps his four-seat McDonnell-Douglas MD500 helicopter in Ann Arbor, while the Czech Albatros is based at Ypsilanti's Willow Run Airport, which has the advantage of an extra-long runway. There's a certain irony to this. On the edge of the tarmac is an old assembly plant where B-24 Liberator bombers were built during the Second World War. Lutz has nothing but compliments for his relic of the Cold War, which he picked up for a meager $200,000. (It took another $20,000 to retrofit the Aero L-39 with American-style instrumentation.) Lutz spends about 10 hours a month flying his fleet, less if he is on vacation with Denise or his four grown daughters.
Since this interview, Lutz's flying in his Albatros has placed him in some unexpectedly exciting situations. In late February, he was cruising near Willow Run Airport when he heard a "mayday" call on the air traffic radio. Miles away, a young student pilot's engine had stalled, and he needed to land quickly. With no airport nearby, Lutz authorized the pilot to land his plane on the test track at the Chrysler Proving Grounds a few miles away. Within days, Lutz's quick thinking made headlines as far as his native Switzerland. Characteristically, he downplayed his role.
Another incident a month later didn't fare as well. When coming in for a landing, Lutz was distracted by another pilot who aborted his takeoff and crossed Lutz's runway. Lutz landed safely but with his landing gear still retracted. Meeting soon after with a group that included a few journalists, rather than downplay the matter, Lutz strode in with a "you won't believe what I just did" attitude. "I have always wondered since my days in the Marines what it would be like to do a wheels-up landing," he said. "Now I know." Lutz was unscathed by the incident, but his L-39 faces a few months in the shop.
Lutz certainly doesn't look--or act--like a man entering his golden years. He could pass for someone a decade younger. "The aging process has slowed since I became a vegetarian," he offers as explanation. "Everything improves. Your energy level improves. Your sense of taste gets sharper. I get by with less sleep and hardly ever get a cold." He'll nibble the occasional Thanksgiving turkey or a piece of venison from a deer he's bagged, but Lutz says he went vegetarian "partially out of health concerns and partially out of malicious obedience." It's one of the rare barbed comments he'll make about the collapse of his second marriage, which he refers to as "a sad chapter."
With a new wife, a new jet and a garage full of toys, Lutz wouldn't mind a little more time off, but retirement is something he's not looking forward to. He's not alone. "Bob Lutz deserves a lot of credit for the turnaround at Chrysler," says David E. Davis Jr., a former racer, and editor and publication director of Automobile Magazine. "He'll be a hard man to replace." The Chrysler board of directors apparently agrees. This old soldier was supposed to fade away on Feb. 12, 1997, his 65th birthday, but the board has voted to extend his contract. He's likely to relinquish his stripes as president and chief operating officer, but even in a diminished capacity, he'll have plenty to do. "I've tried to be the creative engine," Lutz says. "I'm trying to institutionalize the legitimacy of [right-brain thinking] before I leave."
Though Lutz will stay on at least two more years, there are those inside Chrysler who'd like him to stick around even longer. And Lutz admits, "I'd like to continue working until I'm 75, but at some point we all have to go. At some point, every car executive has lost it, and I'm not going to be an exception."
While Bob Lutz says he'd like a little more time to himself, he doesn't act like a man slipping gracefully into the golden years. He recently signed on as the newest board member at Silicon Graphics Inc., the vaunted computer company that brought dinosaurs to life in Jurassic Park. Lutz describes Silicon Graphics as the "ultimate right-brained company." He's also considering the idea of teaching "the creative approach to decision making."
Blowing a perfect smoke ring that lingers in the air, Lutz knows there are still some things left to accomplish. He'd love to get his hands on that Talbot Lago coupe he longed for as a child, but when you get down to it, there isn't much room left in the garage. He's received all the accolades anyone could expect in a career. And when it comes to marriage, the third time is proving to be a charm. The man from Zurich is living the American dream.
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