De Lorean's own analysts estimated that he could sell 6,000 to 8,000 units a year (he pegged breakeven at 10,000 to 12,000 cars), but he wanted a plant capable of producing 20,000 cars in its first year, 30,000 in its second. "He couldn't gear himself down to piddling numbers," observed J. Bruce McWilliams, DMC's former vice-president for marketing in the United States. "That plant was built to start big and be expanded," remarks Edward Lapham, senior editor of the trade newspaper, Automotive News. "It was nearly as though he wanted to be an instant General Motors."
De Lorean's misuse of money and people set the stage for disaster, but it was his dogged determination that brought down the final curtain. When critics were finally conceding his company a chance of surviving, he committed it, and possibly himself to a suicidal course.
De Lorean Motor Cars Ltd. (DMCL), the manufacturing subsidiary, broke ground for its plant outside Belfast in October 1978, and 2 1/2 years later, the first commercially produced De Loreans rolled off the line. The cars reached the United States in June '81 and began selling briskly against pent-up demand (some 3,500 in the first six months).
But the impressive debut was short-lived. By December 1981, the recession and one of the worst winters in recent history took hold, severely cutting into new-car sales. "Unit sales dropped from 650 in December to 350 in January," recalls Brown, "but that was still a breakeven for the U.S. operation. We were manufacturing 30 to 35 cars a day. We could handle that, the market could absorb it, and we could break even. We could have gone on forever at that pace, and grown slowly."
But De Lorean was busy selling a stock offering for the De Lorean Motors Holding Co. (which would have become the parent of DMC). He ordered that production be more than doubled, ostensibly to dress up the offering, but also, claims Brown, simply because De Lorean wanted it.
Alarmed by the implications, Brown and two other DMC officers called De Lorean from Belfast. "We told him that we had to cut back on production," says Brown. We explained the situation in the U.S. -- the market conditions, the season we were in, the problems we were having with the car. [Because De Lorean had insisted on starting up so quickly, workers were undertrained; as a result, more than $1,500 in repairs were required on each car when it hit the United States.] We explained that we'd blow our line of credit."
But De Lorean wouldn't hear of it. John just went through the roof. He came back with a lot of obscenities: 'You'll kill the offering,' he told us," says Brown. "I said, 'John, the offering is small potatoes compared to the problems that may occur if we don't cut back on production.' He said, 'Ah, bullshit, all you have to do is sell more cars."
A second telephone call later that day proved equally unpersuasive. Some 1,200 untrained workers were added to the plant's payroll, and production increased as De Lorean had demanded.
"He was a man in a hurry," says Brown. "He wanted it all now -- he couldn't wait."
That decision Brown says, was "a critical one," and it was compounded by an attack De Lorean had recently launched in the press on the British government, which was reluctant to provide another $60 million for a sedan project. "If he'd played it straight, and been nice to the Northern Irish and British, they would have given him anything he wanted. They would have subsidized him forever, if need be, if he'd just been a gentleman.
"What would it have taken to save the company?" Brown says. "If you hadn't had the increase in production, and if John had been a nice guy to the British for what they'd already done -- those two things alone would have saved it."
But by overproducing cars, DMCA quickly exhausted its $33 million financing credit line with Bank of America and devoured DMCL's working capital. In February, the British government declared DMCL insolvent and demanded that De Lorean come up with $22 million.
On October 19, 1982, their demand unmet, the government officially closed the facility. Seven hours later, in a hotel room in Los Angeles, John Z. De Lorean was arrested in connection with a cocaine deal that allegedly would have netted him up to $60 million in about five weeks.
"He says he did it to save the car company," says Lapham of Automotive News. "Well, clearly, there's a lot of room for doubt on that aspect."
William Haddad, former DMC vice-president for communications and planning, agrees. "I'll tell you what he'll say in the courtroom" he told one reporter. " He'll say, 'I did it for the poor Irish Catholic workers who have been oppressed.' That will be his defense, and it's horseshit. He didn't care one iota for those people. All he cared about was John."
"In the large environment, there are checks and balances, common standards, acceptable norms of behavior," notes Howard Stevenson, a professor of entrepreneurial studies at Harvard's Graduate School of Business Administration. "A person becomes all-powerful in a smaller, private situation." And, he adds, "In times of economic difficulty, people may take more extreme positions."
"I had hoped that the organization would serve as a discipline on John," says Brown. "I had hoped that the [Securities and Exchange Commission], the British government, or Arthur Andersen, the CPA firm, would serve as a discipline. But John took each one as a challenge, as a bone in his teeth."
Even De Lorean, describing his own mid-life crisis in Gail Sheehy's book Passages, confided that "the hard thing is always to give up the structure. Corporate life is a security blanket."
"In the final analysis," says Brown, "I think that John needed GM a lot more than he ever realized, and certainly a lot more than GM ever needed him."
