Jerry S. Mendoza / Associated Press
LaSorda keeping an eye on economy as company launches new minivans.
Josee Valcourt / The Detroit News
DETROIT NEWS | WINDSOR -- Chrysler LLC won't hesitate to make deeper cuts or speed up its restructuring should the shaky U.S. economy worsen, President and Vice Chairman Tom LaSorda said Tuesday.
"If there's economic or other factors that make us take another look at it, we will," said LaSorda, referring to the company's turnaround plan, dubbed "Recovery and Transformation." It calls for cutting 13,000 jobs and closing a factory to help restore profits in 2008, after a $680 million loss last year and another $2 billion in this year's first quarter.
"I can never say never on what might happen in the future," LaSorda said at a news conference marking the ceremonial launch of the 2008 Town & Country and Dodge Grand Caravan minivans at Chrysler's Windsor factory. Chrysler is depending on new models like its top-selling minivans outfitted with 35 new or improved features to help it rebound.
But "the economy is pretty tough," LaSorda said, and the unforeseen pressure in the debt market has "created some interesting twists that we had not planned for."
Chrysler was recently sold to Cerberus Capital Management LP, which had some trouble raising cash to buy the Auburn Hills automaker.
Nardelli backs recovery plan
New Chrysler CEO Bob Nardelli, who replaced LaSorda in the top job at Chrysler just days after Cerberus closed the deal to buy 80.1 percent of the company, has said he wants to move quickly to put Chrysler back in the black. At the press conference announcing his appointment, Nardelli praised the company's recovery plan, but said if there was an opportunity to "do it faster, more efficiently, that's what we're going to do."
For now, the existing turnaround effort, revealed in February, remains intact, and Chrysler will wait out the softening economy before deciding to make deeper cuts than originally detailed in its three-year restructuring plan, LaSorda said.
"Bob has communicated not only publicly but internally that the plan we have for recovery and transformation, the plan is the plan," LaSorda said. "That's the road map we're going to follow."
Brad Rubin, analyst with BNP Paribas in New York, said waiting for market conditions to improve makes sense.
"No need to rush into anything," Rubin said. "In the meantime, focus on getting a decent union contract. You're taking some cost out with the restructuring, but if you can't get the contract to mirror a little bit more what it cost Asian OEMs to pay their employees in benefits and so forth, if you can't get it any closer, you're fighting a losing battle."
LaSorda said he and Nardelli plan to unveil a new company vision with other senior managers at the end of the month as Chrysler moves forward as a privately held business, but he declined to disclose details.
LaSorda: No excess inventory
Also at Tuesday's news conference, LaSorda said the automaker will react faster to consumer demand and make production cuts if sales of a particular model start to fade. "If the market and the economy force us to act, we will act before it's too late," he said. "We won't have another inventory problem like we had in '06."
LaSorda, who has been with Chrysler since 2000, also dismissed rumors that he could leave Chrysler after it negotiates a new contract with the United Auto Workers union. The existing contract expires Sept. 14. LaSorda said he had signed a contract with Cerberus, but he would not disclose the length or terms.
Canadian Auto Worker leader Buzz Hargrove, who was among union leaders and Chrysler executives at the minivan event Tuesday morning, said the CAW has got to "play with the cards that we're dealt," referring to the recent management shuffle.
But he said he didn't feel Cerberus backpedaled on an apparent promise to keep LaSorda at the head of Chrysler.
"I don't want to say that they broke their word," Hargrove said. "They really said Tom and his team would be intact. But they never did say they wouldn't put somebody in over them."
Hargrove said he spent more than an hour talking to the new chief Tuesday at a meeting room at the Windsor Casino hotel.
"(Nardelli) said all the right things in terms of what we wanted to hear and that this is not about strip and flip," Hargrove told reporters.