Tuesday, August 7, 2007

New era, many questions for Chrysler


Bradford Wernle
Automotive News
August 7, 2007 - 12:01 am EST

DETROIT -- Welcome to the brave new world of a privately owned Chrysler LLC.

Now that Chrysler is owned by Cerberus Capital Management LP, it's going to be a different kind of world, if we can judge by the events Monday at Chrysler headquarters in Auburn Hills, Mich.

For one thing, nobody had the faintest clue that Bob Nardelli, former chairman of Home Depot, was going to be named chairman and CEO of Chrysler. Detroit's ever-vigilant automotive press corps, usually so adept at smoking out the truth before companies are ready to release it, was caught completely flat-footed this time until Cerberus executives let the cat out of the bag Sunday afternoon.

There are several other mysteries:

Who's running this joint?

In its press release announcing the leadership changes, "The New Chrysler" said the following: "Chrysler LLC today announced that its Board of Directors has appointed Bob Nardelli chairman and CEO of Chrysler LLC." The announcement also said Tom LaSorda, who had been CEO until Sunday, was now going to be vice chairman and president.

But we don't know who else sits on that board of directors. Chrysler has only said that it consists of "11 members, including Nardelli, LaSorda, representatives of Cerberus and Daimler, and independent directors." Just who the others are, we don't know yet.

Strange bedfellows or good buddies?

Nardelli and LaSorda stood on the stage together Monday and answered questions from journalists, making a valiant attempt to appear as natural friends and partners. Nardelli continually referred to LaSorda as "Tommy," and LaSorda said he and his wife had met the Nardellis and his wife had pronounced the Nardellis as people they could get along with.

Both men are known for their achievements in the manufacturing realm. LaSorda is known as "the Dean of Lean" for his efforts to bring lean manufacturing techniques to Chrysler. Nardelli made his name at General Electric.

But the question is -- does LaSorda really need another manufacturing guy in the house, especially one who has never made a car in his life?

What's Tom LaSorda's future?

A more pertinent question is how long LaSorda, a likeable man who has proven himself an able survivor, is going to last. Analysts were predicting his easy-going style would not mesh well with Nardelli's hard-driving, take-no-prisoners approach.

Just a few weeks ago, Cerberus Chairman John Snow told a Detroit Economic Club luncheon how much confidence Cerberus has in LaSorda's turnaround plan. Taking away his CEO title does not show lots of confidence in LaSorda and his team.

Eric Ridenour, Chrysler COO and second-in-command, evidently didn't feel the warmth of the Cerberus commitment. The executive resigned after 23 years with the company.

What happened to Wolfgang Bernhard?

Ridenour wasn't the only car guy leaving Auburn Hills. As of the end of last week, many in the auto world expected former Chrysler COO Wolfgang Bernhard to be named chairman today. Chrysler announced that Bernhard had been offered a job as non-executive chairman but had declined for personal and family reasons.

Bernhard is known as a mercurial executive. He's an active product guy who loves to immerse himself in design and engineering details. The non-executive role wouldn't have suited him. In fact, such a position might have been an insult.

Bernhard had reportedly been taking a very active role at Chrysler on behalf of Cerberus, visiting design studios and acting like a man who was already on the job.

Dealers liked his blunt-spoken style and his flair for products such as the Chrysler 300C, launched during his tenure as COO. So what happened?

Meet the new boss

There was a restrained atmosphere at the Auburn Hills celebration Monday. LaSorda and Nardelli both received tepid applause from employees on an extremely warm and muggy afternoon.

Said Nardelli: "I know my appointment probably comes as a surprise to many of you."

UAW President Ron Gettelfinger showed up to give a short speech wishing Nardelli luck and saying the new executive will find a willing partner in the UAW. Canadian Auto Workers President Buzz Hargrove took a cautious line. Hargrove told Reuters he was "surprised and concerned" about Nardelli's appointment.

"We left there with an understanding -- it could all be our misreading -- that Tommy and his team would remain intact," he said.

Military approach

Nardelli is known for his adherence to the business principals of former GE Chairman Jack Welch and "Six Sigma" quality principals, not surprising since he once worked for GE and was heir apparent to Welch.

Nardelli tried to establish military-style discipline at Home Depot but left that company in a storm of controversy over his $210 million severance package. Chrysler hasn't revealed what Nardelli will be paid. But his pay and the pay of all Chrysler executives will be an issue at upcoming UAW contract talks.

A bigger question is this: Will Nardelli's autocratic style and insistence on discipline mesh well with Chrysler's free-wheeling, iconoclastic culture?

There may be more questions than answers over the next days and weeks at The New Chrysler. After all, it is now a privately owned company.

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