By Bob Carney
The story of the rise and fall of John DeLorean is widely known in business and the automotive world. In interviews throughout his life, DeLorean spoke of growing up poor and working relentlessly to eventually lead General Motors’ most important car division to its largest sales and profits ever. He was the youngest division chief in the company’s history.
DeLorean managed the development of numerous vehicles during his time at GM, including the Pontiac GTO, the Firebird, Grand Prix and the Chevrolet Cosworth Vega. It wasn’t all good for him at General Motors; reports of his lifestyle and constant criticism of top management was troublesome to his bosses, leading to his termination from the automotive giant in 1973. The media reported it differently, stating that, “John DeLorean has fired GM.”
DeLorean was good looking and charismatic, and used those attributes to get what he desired. At GM he was a maverick, ditching the suit and tie of a top engineer and executive and the media loved him for it.
He was a jetsetter, married four times to beautiful women, and lived a lavish lifestyle. He could be found on the covers of business and fashion magazines alike.
After leaving GM, the beginnings of the DeLorean Motor Company were formed. There were a series of business disasters, with DeLorean being sued by investors for fraud.
Still, he continued dealing with some of Wall Street’s biggest brokerage and banking institutions. The following, year DeLorean married his third wife, cover girl and actress Christina Ferrare, who was twenty-five years his junior. The media had made him a celebrity and he now ran in the same circles as movie stars.
DeLorean Motor Company
In 1975, the DeLorean Motor Company launched. DeLorean designed a futuristic sports car to be named after him. It boasted a stainless steel body and gull-wing doors, in the style of Mercedes’ 60s era sports cars.
Even before he had investors, DeLorean reported the vehicle would be built in Canada. He needed about $22 million dollars to begin operations and pitched his dream car to whom ever would listen.
In 1977, DeLorean learned of substantial aid packages that Puerto Rico offered to potential investors, in particular to foreign firms that would provide jobs and prestige to its people. A high profile automobile factory would do just that.
Negotiations soon began. DeLorean did fairly well in his first experience dealing with a government. His only real regret later was that he agreed to put up $25 million to start the project.
Saudi Investor
He did have a Saudi investor, Ojjeh Axram, who was excited by the potential prospect, but DeLorian had only eleven days to raise the money. Ojjeh was not going to take DeLorean’s word without doing some research of his own. He asked his principal American bank to conduct a “top secret,” for his eyes only, investigation of the viability of the project.
The report ended up being the best analysis of the DeLorean project. No one would invest in DMC if they had access to the report handed to Axram.
The DeLorean might have been a viable product prior to the OPEC oil crisis, but not in 1977 or beyond. The market had changed, but John DeLorean’s idea of a car had not. The report stated that only those making $75,000 dollars a year would consider a high performance American sports car, and those that might would prefer a car that had an established sex-appeal name, like Mercedes, Porsche or Jaguar.
The 55 mph speed limit had been imposed and those buyers would prefer the top down when cruising in their expensive toys, impossible to do in a car with gull-wing doors. There was also the matter of the stainless steel finish, it’s difficult to put your own stamp on a vehicle that only comes in one color.
In a nut shell, the report concluded the product was wrong, over-priced and not exceptional enough for the current market. Ojjeh Akram pulled his support without explanation.
For the next year, DeLorean stalled Puerto Rico. He did manage to lock in 150 dealers to sell the car, the minimum of the 400 the agreement with Puerto Rico required. All the while, DeLorean was a regular in the media, pitching his fledgling company where ever possible.
In early 1978, Liam Keilthy, Ireland’s Industrial Development Authority (IDA) man in Chicago, was driving through Detroit. Keilthy’s job was to attract American companies to go to Ireland and build factories, creating jobs and wealth for the Republic of Ireland.
He tuned in a Detroit radio station and listened to a report on DeLorean’s project. He pulled off and called his boss. A couple of hours later he was in a meeting with John DeLorean’s top project man.
DeLorean had learned much from his negotiations with Puerto Rico and thought that he could easily manipulate a deal to his advantage with the Irish. He quickly learned the Irish were not the pushovers he had hoped for. They had their own ideas about what would occur and what the DMC would do for Ireland.
Belfast
DeLorean was frustrated and instructed his team to resume dealings with Puerto Rico. As DeLorean was stepping away from a deal with Ireland, a Dublin based lawyer suggested he look north.
Belfast was an industrial town, much more than the proposed site in Limerick. For well over a hundred years, Belfast had been producing fine linen, and was a major shipbuilder site.
Harland and Wolff shipyards had built the Titanic. Textile machinery, aircraft and even guided missiles were manufactured there.
But there were problems; the recession had hit the north hard. Britain’s car industry was in serious decline, textiles were down. Unemployment was as high as 50% in some parts of Northern Ireland. And there were the “Troubles.”
Many politicians believed the best way to defeat the IRA was “Jobs, homes and hope.” John Delorean was seen as part of that approach.
Forty-five days after negotiations began, a deal was struck. A 550,000 sq. ft. factory would be built on a 72 acre site in Dunburry, just six miles southwest of the city.
DeLorean was estatic, no more bowing to Arabs, no more Puerto Rican officials trying to pin him down and no more questions from the Irish in Dublin. He would soon have real money for the first time for his dream.
Northern Ireland and the British government had offered twice as much as Puerto Rico and three times as much as Dublin. The project was pushing ahead far past 55 mph.
Two prototypes were built and the dealers loved them, putting up $25,000 in advance and agreed to take all of the first years production. DeLorean’s financial people on Wall Street were doing their job and things were falling into place.
One thing DeLorean overlooked was his own financial compensation. Now, there is an abundance of evidence to show that when the opportunity arose, he diverted $17.8 million raised for the venture for himself.
Assembly lines started in 1981, after delays and budget overruns. There were also quality control issues that were expensive to repair.
The cars themselves received a luke-warm reception from the public and the automotive world. By February 1982, half of the 7,000 cars produced were unsold.
DMC was $175 million in debt and the factory in Dunburry was placed in receivership. DeLorean implored the British government for aid but was refused unless he could find a matching amount from private investors.
Unknown to DeLorean, he became the target of an FBI sting operation, in which agents and informants posed as bankers and wealthy investors. On October 19, 1982, an informant picked John DeLorean up from LAX and took him to a hotel room, where he presented him with a suitcase full of cocaine before FBI agents burst in and arrested him on drug trafficking charges. The British government shut down the Dunburry factory the same day.
After a long trial, DeLorean was cleared of all charges; the jury had ample evidence that he had been entrapped. Two years later, he was charged with tax evasion and managed to be cleared in that trial as well.
The British government believed DeLorean embezzled millions of British taxpayers money for his personal use, but never got around to extraditing him. In what has been called an act of spite, the government sequestered £990,000 from what they deemed to be surplus money from DMC’s pension for Belfast employees. The dream was over.
To read more of Bob’s Cleveland Comhrá columns, click HERE
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Bob Carney
*Bob Carney is a student of Irish language and history and teaches the Speak Irish Cleveland class held every Tuesday at PJ McIntyre’s. He is also active in the Irish Wolfhound and Irish Dogs organizations in and around Cleveland. Wife Mary, hounds Rían, Aisling Draoi, and terrier Doolin keep the house jumping. He can be reached at [email protected]
