Times changed quickly in the early 1980's, and 1980 to 1983 had been a black period for American constructors, with GM and Ford uncertain, AMC only escaping after the intervention of Renault, and Chrysler surviving thanks to new boss Lee Iacocca and what seemed like a miracle. In all, the American industry recorded losses of $42 billion during the period!
Yet 1984 showed an incredible turn-around; profits for the first quarter were $6.5 billion, GM and Ford saw their profits rise by 60-70%, 150,000 laid-off workers had been re-hired and Ford president Philip Caldwell's total of salary and benefits for 1983 was no less than $7.3 million, arguably at a time when executive renumeration really did have link to performance rather than out-and-out greed. The revival was general, covering both production levels and sales on the domestic market. Both rose by 25%, and the improved situation put the USA back on course towards the position of the world's number one car maker.
In a market that was moving back towards large cars, Renault's associate AMC met difficulties in maintaining the sales of its Renault II clone, the Alliance, but fortunately Jeep sales improved and maintained the company's profitability. Although inflation and unemployment were almost mastered in America, the country's budget deficit remained enormous, and the American constructors were worried about a rise in the quotas of imported Japanese cars. The result was an increase in the number of joint operations similar to GM's "Saturn" project, envisaging the production of small cars in co-operation with the Orient, just in case.
Nevertheless, the situation was well in hand by 1984, with a number of solid relationships between American and Japanese companies; Ford with Mazda, Chrysler with Mitsubishi, and GM with Isuzu and Suzuki as well as the "deal of the century" with Toyota, which sealed the association between the first and third largest car-makers in the world to set up an operation in California to produce 250,000 Corolla-type cars per year starting in 1986.
In addiition, Ford and GM also controlled a quarter of the sales in Europe through their wholly-owned subsidiaries, and in Stuttgart, Paris and Turin there were those who feared that the Americans' massive profits would mean that the world's automobile manufacturing capital would not be Tokyo but Detroit. And if a dismantling of America's tariff barriers lead to an invasion of the home market by the Japanese, the American manufacturers had already made their plans to start production in South-East Asia, where labour costs were roughly half what they were in America.
