e the mid 1970s, and the often romanticized image of the company's CEO during most of that period, Lee Iacocca. In the 1970s, two phenomena were to occur which together were to create a monumental threat to the domestic automobile manufacturing industry in the United States. In the early 1970s, environmental legislation became effective in the United States which required a reduction in specified emissions from automobiles on a specified time schedule. Foreign manufacturers as well as domestic manufacturers were required to meet the new standards. While most manufacturers complained, the Japanese manufacturers in particular set about to find ways to meet the standards, while the American manufacturers deliberately set about to finds ways to convince the government that they could not meet the standards.
While the American manufacturers were dragging their collective feet on emissions, the second shoe was dropped. In 1973, the Organization of Petroleum Exporting Countries imposed a temporary crude oil export boycott, and began a series of substantial price increases. The resulting increase in the price of gasoline caused American automobile buyers to begin looking for more fuel efficient cars. The more fuel efficient cars, of course turned out to be the smaller Japanese automobiles, where emissions efficiency and fuel efficiency development had occurred concurrently.
By 1979, when the Organization of Petroleum Exporting Countries imposed a second boycott, American automobile buyers were turning in ever greater numbers to foreign manufacturers. Chrysler Corporation was particularly hard hit because the company had not only resisted emissions improvements, but had not downsized its product line, assuming that high gasoline prices were a passing phenomenon.
All domestic automobile manufacturers were experiencing significant difficulties by 1978. United Automobile Workers members were being asked by the manufacturers for ...