Nixon, Ford II, Iacocca, and Erlichman: The Automobile Industry and Government Regulation

Meeting on April 27, 1971 in the Oval Office

In 2009 Frontline did a story on SUV rollovers. The point of bringing in a 1971 meeting involving Nixon, Ford II, Iacocca and Erlichman was to show how political pressures hampered federal regulators at the Department of Transportation and the National Highway and Traffic Safety Administration. Additionally, the point was made that while passive restraints and specifically airbags slowly came to be widely accepted by the 1990s, rollover accidents were pushed to a back burner.

You can read from a tape transcript and examine related documents at https://www.pbs.org/wgbh/pages/frontline/shows/rollover/nixon/.

Again, sorting files at the office I looked at this today, and a few things were learned beyond what Frontline emphasized.

1) In this at times rambling discussion, Nixon comes out with a stance that remains with us to this day. Namely, that if one is strident about concerns of the environment or safety, it is merely a cover for the real objective of overturning the capitalist system. When this notion was accepted and who were the main promoters of this idea is in question, but clearly Nixon believed it: He said in the interview:

"But I also know that using this issue, and boy, this is true. It's true in, in the environmentalists and it's true of the consumerist people. They're a group of people that aren't one really damn bit interested in safety or clean air. What they're interested in  is destroying the system. They're enemies of the system. So what I am trying to say is this: that you can speak to me in terms that I am for the system."

2) what followed was a discussion of the bumper standards for 1973 and 1974, and how nonsensical they are. These new and ugly bumpers are only to provide safety at 5 mph.  What about at higher speeds? That s when the damage really occurs. The result of lobbying by the insurance interests.

3) The conversation involving Iacocca clearly indicates that he saw the regulatory threat to the  American auto industry, increasing Japanese competition, and the endgame. He remarked that 91 percent of radios come from Japan. Fifteen percent of car sales are foreign, with Pinto as Ford's best competitive shot with a starting price of $1919. Iacocca continued by saying that 27% of cars sold on the West Coast are foreign.   Labor costs in Japan are $1.50 an hour compared to $7 in the U.S. Inflation was eating America manufacturers alive. Iacocca concluded "we are in a downhill slide, the likes of what we have never seen in our business. And the Japs are in the wings ready to eat us up alive....We cannot carry the load of inflation in wages and safety in a four year period without breaking our back. It's that simple, and that is what we have tried to convey it to these people [Toms and Volpe]."

In sum, while Lee Iacocca received many tributes after his recent death, I see him as the true visionary for what unfolded after 1970. He saw it clearly, and while he would play a role in fighting the good fight against the imports, the die had been cast and history just needed to unfold. And it wasn't just Ford and Chrysler. Iacocca's concerns were most vividly realized in the drop of GM market share in America from over 50% to 15% by 2009.