Wednesday, January 23, 2008

Chrysler is proper size for market, chief says

Nardelli praises structure, won't rule out more cuts

CEO Bob Nardelli told a
Detroit audience that his
mission was to restore
Chrysler as a benchmark company

Chrysler CEO Bob Nardelli signaled Tuesday that the automaker, which announced up to 25,000 job cuts last year, has sufficiently reduced its size in anticipation of a worsening auto market but stopped short of saying there won't be more cuts down the road.

"We really believe we have sized ourselves appropriately," he said following a speech Tuesday at the Automotive News World Congress."We have no other cuts planned today, but I can tell you ... any CEO that would say they're done or they don't have to do any more, probably hasn't ... grown the scar tissue that you need to grow to be a CEO," he added.

Nardelli also said the automaker plans to move aggressively in 2008 to set up so-called centers of excellence in foreign regions that will be "all encompassing" -- handling design, engineering and possibly some day manufacturing.

He said the centers could be set up in Mexico and China to begin with. "It's very important not to be insular," Nardelli added.

In addressing his new industry colleagues for the first time Tuesday night, Nardelli delivered a speech extolling the virtues of the Auburn Hills automaker becoming a private company.

"The biggest potential advantage of our new ownership structure is that it encourages an owner-operator mind-set," he said at the Renaissance Center in Detroit. "This attitude enables us to move quickly in order to provide our customers with great value and performance, exceeding their aspirational desires."

Chrysler was acquired in August by private equity firm Cerberus Capital Management, making it the first major U.S. automaker to be privately held in more than 50 years. Previous corporate parent Daimler AG has kept a 19.9% ownership stake in Chrysler.

In talking about the virtues of being a private company, Nardelli pointed to motorcycle maker Harley-Davidson, which went private in 1981.

He noted the company went public again in 1986, when it was listed on the American Stock Exchange.

"How many brands inspire their customers to permanently tattoo the company's name on their bodies?" Nardelli asked. He then joked that he planned to get the Chrysler Pentastar tattooed on his arm.

He said his mission is to build upon the company's "proud heritage and to restore Chrysler to its rightful place, as a benchmark company -- not only in the automotive industry but among the world's best."

Chrysler has lost billions of dollars over the past two years; its U.S. sales dropped 3% last year compared with 2006.

"The job of bringing back 'The New Chrysler' is an opportunity of a lifetime," Nardelli said. The new CEO, a former Home Depot and GE executive, has moved quickly since taking office in August. In recent months, the company has announced the elimination of as many as 12,000 jobs on top of the 13,000 cut in February 2007.

Nardelli's Chrysler has cut four products and made several other changes within the company, including hiring longtime Toyota Motor Corp. executive Jim Press as president and vice chairman.

He said the February 2007 announcement by DaimlerChrysler AG that all options were on the table for Chrysler -- the prelude to Chrysler being sold -- affected consumer confidence, concerned dealers and created insecurity among employees and suppliers.

"Chrysler went from being a company with its own identity, culture and operating metrics to a division of a much larger company that functionalized Chrysler for synergies and integration," Nardelli said. "Now, we have the challenge to re-establish Chrysler as an operating company to re-create metrics and re-establish our company culture."

Nardelli again touted the company's decision to invest $500 million in 260 product enhancements and its new labor agreement with the UAW.

"We have a solid strategy, and the job ahead is to execute," he said.

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