Tom LaSorda, a Chrysler president
$500 million generated; Detroit plant expansion is confirmedTRAVERSE CITY -- A week ago, Chrysler executive Tom LaSorda had his blood pressure checked.
Everything was normal, he assured.
That was perhaps one of the biggest surprises in a speech he delivered Wednesday at the Center for Automotive Research's annual Management Briefing Seminar during which he officially announced an expansion of Jefferson North Assembly Plant in Detroit, indicated that Chrysler has sold more than $500 million of nonearning assets, and talked about possible partnerships with Indian, Italian and Russian automakers.
LaSorda's healthy blood pressure is a surprise given that a year ago when Cerberus Capital Management acquired majority control of Chrysler and put Bob Nardelli in as top executive -- demoting LaSorda to president and vice chairman -- many wondered aloud how long LaSorda would stay.
Since then it's been a wild ride for LaSorda and the Auburn Hills automaker as Chrysler has raced to remake itself as the first privately held major U.S. automaker in more than 50 years and to deal with a plummeting U.S. sales market.
Several analysts, including the Center for Automotive Research's David Cole, have praised LaSorda for how he's handled the transition.
Chrysler executives have been fighting rumors about its finances for months, saying Chrysler is meeting all its financial targets set by Cerberus.
In a new twist Wednesday, LaSorda said Chrysler was "meeting -- or exceeding -- its financial targets for our lenders" as well as its owners.
Earlier this month, Chrysler announced it has $11.7 billion in cash and securities on hand and had $1.1 billion in earnings before interest, taxes, depreciation, amortization and restructuring charges -- a figure that indicates how cash flow is doing but does not give a bottom line.
Chrysler officials had said the $1.1 billion included recent sales of assets, such as a design center in California and an engine plant in Brazil.
LaSorda indicated Chrysler, as a privately held company, has sold more than $500 million in nonearning assets out of more than $1 billion in assets identified for sale.
"One advantage of private ownership is that we can sell nonearning assets to generate cash," LaSorda said. "To date, we've identified over $1 billion in nonearning assets and we're more than halfway to achieving that goal."
LaSorda also confirmed what had been reported by the Free Press in February 2007: Jefferson North is getting a large makeover.
Chrysler is investing $1.8 billion into new vehicle programs and to expand and upgrade the Detroit plant, preserving 400 jobs. The state and Detroit City Council have already awarded tax breaks to the project, which city records said would be worth $373 million in actual plant improvements.
The next generation Jeep Grand Cherokee will be made there along with, possibly, another car-based SUV.
"This investment will enable us to produce a new generation of ... world-class vehicles that meet the diverse needs of our consumers not only here but around the globe," LaSorda said.
The 285,000-square-foot expansion at the plant will include a new body shop and employ so-called green initiatives, such as special lighting and energy management, he added.
Throughout the day, LaSorda stressed Chrysler's strategy to team with other automakers to allow the Auburn Hills automaker to expand into new markets with less expense: "Partner early and partner often."
Chrysler has teamed up with Nissan Motor Co. on three vehicles, including two small vehicles that will be made by the Japanese company and sold by Chrysler in various places. In September, Chrysler's management team will be flying to Japan to inspect the small car that Nissan will make for the U.S. car company to sell worldwide beginning in late 2010, LaSorda said.
He denied reports that Chrysler is in talks with Nissan about developing a midsize car but did confirm that Chrysler has had talks with Fiat about a possible alliance.
"Have they approached us? Yes," LaSorda said of Fiat.
To do what?
"That's to be determined between the parties," LaSorda said. "At this stage there are no formal discussions going on."
LaSorda indicated the possibility of having an alliance by the end of the year with an automaker in Russia, where they've had discussions with several companies.
"Hopefully ... we'll see some light at the end of the tunnel by the end of the year in what might result from those discussions," LaSorda said. Chrysler is also talking to automakers in India, he added.
During a Q-and-A session with several industry executives, host Cole, chairman of the Center of Automotive Research, asked Richard Colliver, executive vice president of Honda Motor Co.'s U.S. sales arm, how the automaker was going to expand production with limited extra capacity.
"If you want to buy a plant, I know some folks that are selling one," Cole joked.
LaSorda interrupted: "I'll give him a great deal."
Apparently joking, Colliver responded: "Yeah, Tom offered it to me yesterday when I talked to him for a few minutes. He said he had capacity ... to build cars for us."