Thursday, August 30, 2007

Nardelli tells team quality is priority

Josee Valcourt and Bill Vlasic / The Detroit News

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Chrysler LLC CEO Robert Nardelli stressed to senior managers Wednesday that the automaker must bolster the quality of its vehicles and outlined other areas where improvements are needed as the company executes a three-year recovery plan to restore profits.

Nardelli was ill Tuesday and unable to address the group of 300 top Chrysler executives during the first day of a two-day meeting. On Wednesday morning, he walked into the ballroom at the Hyatt Regency Hotel in Dearborn and delivered a rousing speech, according to sources familiar with the session.

The meeting was scheduled months before Nardelli joined the company, but it gave the new CEO an opportunity to share a fresh vision for Chrysler with top executives, the sources said. Chrysler President Tom LaSorda also addressed the group.

Nardelli and LaSorda gave extensive presentations, the sources said. They talked about the company's turnaround plan, dubbed Recovery and Transformation, and how to best implement it. They also discussed possibly speeding up the company's restructuring goals.

Executives also participated in team-building exercises. At one point, Nardelli, attempting to quell rumors that LaSorda may leave after contract negotiations with the United Auto Workers end, said, "Tom's here to stay."

Nardelli was named chairman and CEO of Chrysler earlier this month, days after DaimlerChrysler AG closed the sale of Chrysler to private-equity firm Cerberus Capital Management LP. He replaced LaSorda, who moved to the No. 2 spot as vice chairman and president.

Nardelli took the reins at Chrysler as it is attempting to rebound from $680 million in losses last year and $2 billion in red ink during the first quarter of this year. DaimlerChrysler released second-quarter financial results Wednesday. It did not detail Chrysler's performance, but indicated the company's automotive and financial services operations broke even in the period.

In his remarks, Nardelli focused a great deal on vehicle quality, the sources said. Last month, Chrysler rolled out new lifetime warranty coverage on powertrains meant to show the automaker's confidence in the reliability of its engines and transmissions, and to ease consumers concerns about the durability of its vehicles.

But no Chrysler brand beat the industry average in J.D. Power and Associates' Initial Quality Survey this year, which measures consumer satisfaction during the first 90 days of ownership. In J.D. Power's Vehicle Dependability Study, which looks at vehicles that are 3 years old, Chrysler brands again finished below the industry average, although they showed some improvement.

Quality has been a sore spot for Chrysler, said Neal Oddes, director of product research and analysis at J.D. Power and Associates in Westlake, Calif.

"So it's very encouraging to hear that the CEO is focusing on improving quality," Oddes said. "The way that the industry is moving is that quality will become a key differentiator. I'm glad to hear that Nardelli is getting his team mobilized to improve quality."

Wednesday's meeting was the second time Nardelli addressed senior managers. The first was a hastily organized meeting Aug. 6, when Cerberus surprised the auto industry by announcing that the former Home Depot chief would take over Chrysler.

The sources described the daylong sessions at the Hyatt as more of a "company retreat" and interpreted speeches given by Nardelli and LaSorda as "ensuring that all senior managers were on the same page."

The executives talked about goals that had been in the works for months, such as improving quality. "All areas that we had issues with and that we needed to work on" were talked about, one source said. "But aside from that, nothing dramatic happened."

Nardelli's emphasis on quality offers a glimpse of what he's expected to discuss Sept. 7 when he makes a first-time appearance before the Automotive Press Association during a luncheon in Detroit. The APA typically headlines industry insiders as keynote speakers.

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