When Daimler gave sold Chrysler to Cerberus, it seemed as if things were looking up for the beleaguered automaker. With a return to American ownership, they no longer had internal factions gunning for each other. Cerberus spoke highly about Chrysler's leadership; they would take a "hands off" approach to running their automotive acquisition. They offered union leaders assurance: we're in it for the long run. No need to worry about "strip and flip." And then Cerberus announced that Robert Nardelli would take over the reins. Ladies and gentlemen, the three-headed dog is finally baring its teeth.
Mr. Nardelli has a reputation for getting results. Before the exec was asked to leave Home Depot's employ earlier this year, he doubled the company's sales. OK, Nardelli's tenure coincided with one of the biggest building booms in years, but he successfully expanded the franchise into Mexico and China and increased earnings 20 percent for four straight years. The fact that Home Depot's stock price fell eight percent during his reign is irrelevant to Chrysler; Cerberus is a privately owned firm that doesn't have to answer to stockholders.
While at Home Depot, Nardelli earned a fearsome reputation as an abrasive and ruthless cost-cutter. While profits soared, customer satisfaction and employee morale plummeted as he replaced experienced full time employees with cheaper part-timers. Nardelli also alienated store managers with his insistence on centralized command and control and micro-management. At the Depot's home office, "Boot'em Bob" replaced 98 percent of the top executives within the first five years.
Nardelli's forced departure from Home Depot was as controversial as his tenure. Of his $210m severance package, House Financial Services Committee Chairman Barney Frank said, "Mr. Nardelli's contribution to raising Home Depot's stock value consists of quitting and receiving hundreds of millions of dollars to do so."
So that's who's at the helm now: an ironfisted, hard-charging beancounter who has no qualms about dumping experienced employees to save a few bucks. He's a perfect fit with a company that emphasizes turning a profit as quickly as possible and doesn't mind tearing new acquisitions apart to do so.
And what of former CEO Tom LaSorda, the guy who had to deal with all the crap Daimler dished out, who Dieter Zetsche ordered to cook up a turnaround plan even as Chrysler's German masters were making plans to dump the company? Indeed, it's only been a few weeks since Cerberus Chairman John Snow praised LaSorda and his turnaround plan at a Detroit Economic Club luncheon.
The party line: LaSorda "agreed" to stay on as vice-chairman and president. Nardelli says LaSorda will "continue to have primary interface, responsibility and authority of working closely with UAW."
Of course they're going to keep him around for that. LaSorda comes from a family of union activists; he has a good relationship with both the United Autoworkers Union (UAW) and the Canadian Autoworkers Union (CAW) leadership.
Nardelli, on the other hand, is about as non-union as they come. During the exec's tenure at GE, roughly six percent of the company's workforce was unionized. It's no secret that Home Depot has an almost Wal-Mart-like aversion to unions. Nardelli may not be the last person the UAW and CAW would want to see sitting across a negotiating table, but he's definitely at the back of the line.
Given Boot'em Bob's rep for ousting execs, once "Tommy" (as Nardelli calls him) finishes dealing with the unions, LaSorda's golden parachute will unfurl. Gerald Meyers, a professor of business management at the University of Michigan and former chairman of American Motors, sums up the situation: "His days are numbered. I thought they were going to give him six months. They aren't going to give him six days."
Burnham Securities' auto analyst David Healy agrees. "It's hard to interpret this move in any other way than they didn't like LaSorda's record. Clearly, they were not happy with LaSorda or they would not be making this change."
How does all this sit with the unions, who are smack dab in the middle of negotiating their new contract? UAW President Ron Gettelfinger is taking his usual ask-me-no-questions, wait-and-see attitude about the management change. Equally characteristically, CAW president Buzz Hargrove hasn't been shy about expressing his "reservations." Hargrove said he was "surprised and concerned" by the choice. "We left [the initial meeting with Cerberus] with an understanding… that Tommy and his team would remain intact."
This doesn't bode well for Chrysler's hopes of remaining a fully integrated American automaker. Clearly, Nardelli is Cerberus' hatchet man. He has no compunction about making changes to produce short-term profits, regardless of the long-range ramifications. "Strip and flip" may eventually look like it would have been the kindler gentler option. Pre-Nardelli, pre-Cerberus, Chrysler was standing on the ledge looking into the abyss. Nardelli is about to kick it off.
Nardelli was a real hardass at GE. Even Jack passed him over for Jefferey. This man holds the ordinary worker in very low regard, and doesn’t subscribe to the idea that people are a companies greatest resource. The unions will just love this guy.
A Home Depot manager told me his departure was the best thing to happen to Home Depot since they opened.
Get your resumes updated folks!
Well, Cerebrus can bring him in to clean house and then after he has been villified for doing it, get rid of him with a big payout and bring in someone to “rescue” the company.
Widget Man to the Rescue! Cue ominous music. If there was any doubt in anyone’s mind that Chryslerabus was uninterested in manufacturing automobiles, this hire should put that to rest. I guess Alfred “Fire ’em all, strip the assets, grab your executive bonuses before the market finds out the company has no future” Dunlop wasn’t available. Sigh. Even though I have never been a fan of Chrysler products over the years (I think the last one I had – 30 years ago – was a ’66 Dart that took a quart of Marvel’s Mystery oil every two weeks), I do feel sorry for their employees. If you work on a Jeep line you may still have a job in 3 years, otherwise, oh crap.
Cerberus just wrote Chrysler’s epetaph with this move. At least, as an American manufacturing company. Give it, oh, a couple of months and suddenly the Chrysler vehicle production will be out-sourced to cheapo-China-Chery. Chery dumped Malcolm Bricklin for this group of people?! Just shows how dumb THEY are. Chrysler has a nasty habit of dumping on foreign car suppliers and companies they’ve bought into – just ask Mitsubishi, Hyundai and NedCar executives. Think that kind of thing is going to stop now? Think again! Chrysler management also has treated it’s bought-in workforce poorly. Just ask any ex-UAW members in Kenosha about what happened when Chrysler bought AMC in 1987, after promising to keep the Kenosha plant open (hint: it was closed and demolished virtually immediately, except for an engine plant).
I understand that Chrysler is going to be sending engineers to Chery in China to show them how to build cars which don’t fold up like cardboard boxes in a crash. (The recent footage of a Chery car in a crash test – following in the footsteps of a Brilliance BS6 car in a crash test – proves the point that the Chinese culture doesn’t care about human lives – hey what’s a few hundred thousand deaths out of 2 billion?! – and are going to keep the US engineers long enough to learn the ropes about building safer cars then they’ll be jettisoned like so much waste material).
Needless to say the crash test on the Chery car was SO BAD, even the Russian testers wanted the car off the market in Russia (where people are only slightly more valued than in China) but Chery refused to pull the car off the market.
This is all happening at a time when China’s government is threatening to wreck the US economy by dumping it’s dollar holdings?! Talk about bad timing.
Cerberus execs don’t fathom there “might” be some resistance on the part of buyers out there if they try selling Chinese cars badged as Dodges, (or should that be “Dogs”), Chryslers and Jeeps?! Yeah the All-American Jeep – made in China? Yikes.
I think I just heard a big sigh of relief from the headquarters of GM and Ford over this move.
This year’s UAW negotiations should be quite interesting.
Of the three domestic automakers, I think Mullaly is the one who most likely “gets it” – that savings from improved productivity and lower costs need to be put back into the product. Provided, of course, that continuing reports of combustible Fords (built before his tenure, to be sure) don’t sink the company first.
I get the feeling that GM believes it has done everything it can on the product front, and now just needs to get its labor costs in line – which is very premature.
With Chrysler, I have the feeling that Mr. Nardelli is going to pick a fight with the union, and both sides will end up losing.
Chrysler is losing $1,100/vehicle sold. They need the neutron bomb approach. Remember the old song: “I Got Along Without You Before I Meet You, I Am Going To Get Along Without You Now.”
Or as Casey used to say: “We can loose a hundred games without him.”
I’ll refrain from using the vernacular and refer to the words of PFC Gomer Pyle instead: “Surprise, surprise, surprise”. It has been an interesting week to say the least.
Starting last Thursday we have a story in the Detroit News about the big changes looming for the new Chrysler. In that story, they tell us about hands-on Cerberus executive Bernhard moving quickly and forcefully to turn around operations.
Then Gol-ly, the next day in an unrelated but very entertaining display, we have CNBC’s Jim Cramer pull a Howard Beal and plead for Gentle Ben to “open the discount window” because “he has no idea how bad it is out there”, that Bill Poole is “shameful” and financial Armageddon has arrived. Earlier in the week Cramer was recommending that homeowners facing default on their mortgages mail their keys back to the mortgage company. I wonder what will happen to the jingle mail that is sent back to the empty store in the strip mall that was formerly Nick & Tony’s Mortgage Company?
Monday morning, Shazam, Cerberus names former Home Depot executive Robert Nardelli as CEO and Chairman of Chrysler. Nowhere is there mention of Mr. Bernhard. But we did learn in a Wall Street Journal story on the announcement about the back room at Cerberus where they keep a reserve of about 150 former CEO’s and other executives dropped in by golden parachutes. They are used as needed because of their high-level experience in the business or industry at hand. We are informed about how they are given high performance goals to achieve and if they fail they are dealt with in the same way S.P.E.C.T.R.E handles failure in the big board room with the electrified chairs.
I don’t know about you, but my fears about Chrysler have been assuaged.
I read somewhere last night that Morgan Stanley underwrote $10 of the $12 billion it took to complete the Cerberus buyout, and that it was they who were pushing for Nardelli to run Chrysler LLC. Unfortunately, I can’t seem to find the link today.
I do see this as being a huge ego trip for Nardelli, who seems to be trying to show Jack Welch that he was the right guy to run GE. BTW, the other guy who Welch turned down for GE CEO, James McNerney, got the nod to run Boeing over our buddy Alan Mullaly.
Whatever statements Cerberus made prior to last Friday about staying the course are already being contradicted by their actions. All bets are off; Chrysler will likely be drawn & quartered over the next several years.
glenn126, the Chinese value human life. But the country is governed by an autocratic regime exclusively devoted to economic growth. And that is why large corporations want to do business with them; secretly, every Nardelli wishes they didn’t have to deal with pesky human rights and enviromental law, or law based on any kind of guideline other than capital. These guys, Cerberus is run by them, they deeply envy China. And because the media there has a boot on its neck and because people do a pretty good job of dissociating themselves from the products they buy (who made your shoes?), Chery-made Chryslers will be very real, very soon.
I imagine the switch to Chinese production will be swift and on a scale Bricklin could only dream of.
No doubt Gordon Gecko (‘Wall Street’)would have been pleased….
Too bad the energy from Walter Chrysler spinning in his grave can’t be harnessed.
I wouldn’t wish Nardelli style management on anyone, except the big 3. He may not be the right answer, but he is a better answer than anyone has tried in a couple decades.
Frankly, they need Change. This will be a change. The more that gets changed, the better. Only then will they be able to sort out what really needed changing.
Nardelli may not get you an omelette, but he will break a few eggs. It’s a start.
The Chinese are devoted to economic growth this decade. History has shown that this monolith can switch hats like I change my shoes. Were I investing for a 100 yr. legacy, I would avoid them like the plague, and invest in Eastern Europe or India with every shekel I could muster. However, the system that has evolved, on OUR watch,is dedicated to the 90 day future, not the 90 year future. So, we doom our children to clean up the mess, and our grandchildren to rebuild.I hope the poor little shites learn from our stupidity. Myself, I’m gone to Banff to watch the rest of you fools try to survive the fallout. Good Luck.You’re going to need it.
I work at a small consulting firm that does expense reduction for a firm like Cerberus (but not in the auto industry). When you look at taking out cost, you focus on (1)reducing overhead function headcount like HR, Finance,etc., (2) eliminating unnecessary activities like Investor Relations and Communications, (3) flattening the organization, reducing the ranks of middle management, and (4) turning the screws on your suppliers and reducing spend in discretionary categories.
Even if Nardelli does all of that, he’ll still be shedding cash. So then you look to exit loser businesses and outsource more activities. This is why you see Allison transmissions and Jaguar/Land Rover being sold. But Chrysler doesn’t have much in the way of assets to sell off.
So Nardelli will have to reduce capacity, taking out manufacturing plants and paying off the UAW. But then, Chrysler loses revenues, and gets locked into a doom loop that ends in bankrupcy.
I was hopeful when I heard Bernhard had been tapped for the job, because I thought here was a car guy who could greenlight some attractive vehicles and start to stimulate demand, and hence, revenues.
Most days I think GM will survive, and some days I even can see Ford getting through. But I don’t know how Chrysler gets out of this mess. They have no ability to develop their own car platforms, and their trucks are second rate and thirsty.
If I were Cerberus, I’d spin off the financing unit and Jeep, and then dump what’s left on Ghosn.
I’d never heard of Mr Nardelli until this week and after reading about him, I thik we’re going to see another “Carlos Ghosn” only without the flair and style. I’m expecting a full blown massacre at Chrysler. But I do wonder if Nardelli knows what he’s getting himself into? I mean Mr Gettlefinger isn’t exactly a pushover and are we going to see a turnaround which involves cheapening cars and their interiors to profitability, then wonder why no-one wants their cars? I think Nardelli, better not alienate the engineers at Chrysler. You see, despite Detroits woeful running of car companies, they do have some world class engineers. If he makes the company so unbearable that they leave (possibly for a competitor) then Chrysler could be knackered. I really hope that we’re not going to see a return to accountants running the business (which is what got GM and Ford into this mess). That is never a good sign for a company.
However, if Mr Nardelli can kill most of the bureaucracy to get car designs through quicker, then maybe all is not lost for Chrysler. I’ve always been sceptical of accountants running companies:
Lee Iaocaca, carguy = Success
Fujio Cho, Lawyer by trade but carguy because of his affiliation with the Toyoda family = Success
Hideo Fukui, carguy = Success
Whereas an accountant will make the company profitable short term, then the company will decline as it will become apparent that the short term profitability came from the cuts and not better cars sales e.g Carlos Ghosn at Nissan.
I said it before, long term vision and planning for the future is what secures a company. Going boom and bust is a very dangerous game to play. It’s no coincidence that Toyota, Honda, Hyundai and Mitsubishi are smashing sales records due to their long term visions.
Still, we’ll see with Mr Nardelli, I hope he proves me wrong, because out of the big 2.8, it Chrysler that I want to survive. In fact, it’d be kind of funny, for Chrysler to be restored to health and then takeover Mercedes-Benz in a “merger of equals” and make Mercedes their bitch! ;O)
“”Boot’em Bob” replaced 98 percent of the top executives within the first five years.”
And when he does the same at Chrysler, it will leave, what, 1500 managers at least.
Nardelli wants to flatten the corporate hierarchy by chopping the bloated manager ranks. He will select a core group of top execs and hold them accountable. The accountability flows down the ranks and tends to P-Off those that don’t want to be held to account aka, bureaucrats. REALLY tough times call for, um, Nardelli. When Cerberus had to borrow $1.5B from Daimler to close the deal, that should have been a wake up call.
“Nardelli says LaSorda will “continue to have primary interface, responsibility and authority of working closely with UAW.””
Can you imagine Nardelli working with the UAW? He would have an anurism.
Here’s that article about Fiat’s recent turnaround by a non-automotive CEO Sergio Marchionne.
Unfortunately, Chrysler can’t hold another company hostage for a few billion dollars to kickstart its turnaround, nor do they have valuable small diesel technology.
Why does a company like Chrysler whose products bear the scars of relentless and merciless cost-cutting need a relentless, merciless cost-cutter like Nardelli? What Chrysler needs is more, better quality product. Hopefully Nardelli will spend money where it is needed — product development, fit and finish, and overall quality — and use savings generated by axing needless layers of bureaucracy to fund product resurgence. The thought of a Sebring that suffers more cost cutting (or a 300 with an even cheaper interior) sends shudders down the spine.
secretly, every Nardelli wishes they didn’t have to deal with pesky human rights and enviromental law
This is obviously some strange meaning of the word ‘secretly’ that I was previously unaware of.
Nardelli did start his career at GE as a Manufacturing Engineer so I think he is wise enough to coddle the engineering staff (As much as Nardelli can coddle). He could not have risen as high as he did at GE without recognizing how vital World-Class Engineers are. Chrysler/Nardelli will focus on Engineering and Marketing I think.
Katie: It is physically impossible for Chrysler interiors to become more “cheapened”. LOL
I think Nardelli is a good choice at this time…I will probably be proven wrong though.
Does this mean “Chainsaw Al” Dunlap has a future comeback career in the automotive business?
CAW Chief Basil Hargrove plans to meet Nardelli next week in Detroit, expect they will get along eh?
Buzz will wipe the floor with him! :-)
indi500fan:
I think that Chainsaw Al would be the perfect antidote to Rabid Rick. Bring him on!
Maybe this Nardelli hire has some logic to it. The Sebring sucks as a car, but it could kick ass as a riding mower.
I cry “Bullshit”.
If Lee Iacoca was such a success, why did Chrysler so quickly turn back into trash?
He was a limited success with a great personality.
I just don’t see a scenario for Chrysler’s survival. The long shot (very long shot IMHO) is entering new expanding markets overseas. But I doubt this (or bringing in Chinese autos) happening fast enough to make a difference.
Chrysler doesn’t have any product right now and precious little in the pipeline. You can cut and slash all you want, but a car company without product that consumers want to buy is dead in the water.
Nardelli’s appointment is interesting. He does represent one of the less-friendly sides of capitalism, but maybe that what Chrysler needs.
Cerberus paid ~$8 Billion for Chrysler? Sheesh, Starbucks is worth $20 Billion.
With the right labor agreement that allows them to shed jobs and close factories (even if it takes a strike), the Chrysler and Jeep NAMES alone are worth 8 billion+. It’ll be interesting how they get to the point where they can carve out the value…
Landcrusher: If you want to blame someone, you could equally blame K.T. Keller, who ran Chrysler during the immediate postwar years and utterly failed to recognize the importance of styling. That’s when Chrysler really lost the plot. Chrysler would never again attain the same heights or respect it had in the late 30’s.
Further, you could blame Lynne Townshend, for totally destroying Chrysler’s management structure with his oddball theories on how employees should be trained. And bad investments into foreign car companies. His decisions in the 60’s directly lead to the crisis in the late 70’s/early 80’s.
Without Iaccoca, Chrysler would have ceased to exist in 1981. His greatest failure was that he didn’t reinvest in R&D and core platform development. This led to the problems in the late 80’s. (Most consumers didn’t want new 8 year old cars: who knew…?) But Iaccoca ultimately left the company in pretty good shape, in the early 90’s. They had new platforms, reasonably good cars, and a clear plan for moving forward.
The current failure is the total responsibility of the Germans. Despite having total managerial control over Chrysler and deep cash reserves, they took something that worked reasonably well and had some potential and ran it into the ground. To say the least.
Ah yes, Chrysler styling. I don’t want to wander off thread, but I they have a long history of sabotaging themselves with bad design. 60 was horrific, 61 worse still, and the 62 redesign…well, look them up. When success rears it’s head, whoever is running Chrysler has always found a way to drop marbles under their own feet.
Hiring a failed CEO is hardly a hopeful sign regarding Chrysler’s new ownership. It’s nice that Cerebus doesn’t need to deal with pesky issues like producing value for publicly-held ownership, but really…Detroit’s biggest problem over the last several decades has been it’s failure to do exactly that.
Nardelli may well shake things up at Chrysler, and Chrysler may well need shaking up, but as a Home Depot shareholder I’d point out that this doesn’t mean anyone needs things to be shaken up _a_la_Nardelli_.
Hooray for Ceberus. Chrysler needs a good kick in the ass.
I know that I and everyone who comments at TTAC says that it’s the product that sells cars and that detroit (and everyone else) needs to stop making crap…but a thought just hit me: what if that’s not enough? what if people *want* crap?
Waring makes a perfectly great blender–bombproof construction, just two speeds, and about $130. Their sales pale in comparison to $30 Osters with a billion junk buttons at Wal-Mart. There *ARE* good cars out there: BMW 3-series and Toyota Land Cruisers for example. But they’re expensive.
Can anyone really make a GOOD blender for $30 or a GOOD car for $20K? Since cars are appliances to most people, aren’t they just going to buy crap anyway? If good is what they want, well, it’s already out there for the buying, and they’re not doing it.
There’s only room for so many crap blenders and so many crap cars.
A good car for $20k and the equivalent of a 2 speed Waring blender? I suggest the Mercury Grand Marquis.
The reason they don’t sell is people want the cheap crap with a lot of shiny buttons, ala Walmart. That’s why a crappy Mariner outsells a durable Grand Marquis.
This ends with Chrysler manufacturing nothing, in which case an ***-kicker who could care less about what anyone thinks or feels might be just the kind of guy the Three Headed Monster wants.
Big win for Chrysler Purchasing. Think of the deals they are going to get on fasteners and tools.
Let’s look at another GE high exec who was passed over for Welch’s chair and went on to the automotive industry: David Cote.
Cote was welcomed as heir apparent by the (very) longtime head of TRW, a tier-1 automotive supplier of everything from seatbelts and airbags to electronics.
Within 2 years of being named CEO TRW as a company was decimated of employees and manufacturing, had this and that division sold off or spun off, and then quickly ran out the back door, leaving TRW reeling, a shell of its former self.
This Chrysler thing has all the appearance of an individual chosen not for management skills, but for overseeing whatever it takes for quick bottom line enhancement so that Chrysler can a) go public, or b)sold out, Cerberus can make a killing, and whoever the bag holder is in 2-3 years (China, or IPO shareholders) is stuck with the fruits of this play.
The Dog has already put up the gates to keep the troops from bolting….
See:
http://www.detnews.com/apps/pbcs.dll/article?AID=/20070808/AUTO01/708080379/1148/rss25
“Chrysler LLC is discouraging white-collar employees from applying for jobs at former parent Daimler AG or its Chrysler Financial unit in a bid to keep jittery workers from leaving the automaker during its transition under a new owner and a new chief executive.” 8/8/07 Detroit News.
Sit, stay….until we are ready to boot you out the door.
This may be a great thing.
Massive beancounter layoffs are long overdue.
Like I posted previously, I worked at home office for THD and I must say that it was the worst job that I’ve ever had. I couldn’t get out of there fast enough. The final straw was when my position was outsourced to India. I was promoted as a result of this but part of my new job description was to train our “partners in India” or as I call it “digging my own grave.” Rather than complain about my situation I found another job elsewhere.
As for my former position, my sources tell me that my job is coming back stateside this month. Good job Bob! And good luck Chrysler employees.
I hope the Chrysler execs like to eat a catered lunch in coat and tie for two hours every day, no matter what else is hapopening. They will get to hear stories about how great a man Nardelli is, great cost cutting plans and tales and cheers from his playing football at some minor college.
Next will be suppliers and vendors installing their parts on the cars and trucks to save having Chrysler employees do it. Hey, it was a mess at HD, but maybe it will work on a Dodge.
This guy is just out for himself and is an example that idiots can be in charge and rich. He managed to savage Home Depot and provide a great opportunity for Lowes expansion.
I do not work for HD but have some friends who did. Chaos at the top and praise for the boss will be the norm, not matter what investors or customers might see.
Whitenose: I didn’t blame Iaccoca for anything, I just pointed out the truth. The dirty secret is that no ONE has blame, it’s all of them! They like it that way.
One of the biggest responsibilities of a leader is to ensure the continued success of his organization after he leaves.
Modern CEO’s don’t seem to be held accountable for that. They should. More of their stock options should be held from vesting until 5 years after they leave. Then maybe they would pay attention.
Nope, none of the late American car guys are getting credit as “great” because they should have made corrections back in the seventies. Anyone after that who had the right ideas apparently never got control.
Believe me, this ship has sunk. The only way to re-float it is going to take a massive herculean effort. People like Nardelli are the only hope. Their self-importance is only exceeded by their ego which are needed to change dramatically the way C operates. What is puzzling though is why they blew out Wolfbang, he is one crazy dude-just what C needs. If Nardelli can’t do it expect the salvage operation to begin by next summer.
I agree with those who blame Chrysler’s current situation on the Germans. The Chrysler 300 proved that a gold mine could be found in the strategy calling for the use of previous-generation Mercedes platforms for the each new generation of Chryslers and Dodges. It was genius. It was perfect.
Until a group of hard-core elitists at Mercedes decided they were terrified at diluting the exclusivity of their brand. And so, the Chrysler Group was starved of product and the funding to develop its own up-to-date platforms. Never mind that Chrysler kept the cash coming in while Mercedes dealt with quality-control problems and sagging sales in the early part of this decade.
Look. Maybe Cerberus’s turn at the helm of Chrysler will work out much better than any of us expect. But, as of right now, it looks like our worst fears are about the be realized. I am not interested in buying a trebadged Chery with a Dodge nameplate on it.
All this is enough to make me think about buying a new Chevy, Pontiac, Ford or Mercury.
Without reading all of the posts, I’m going to offer a different opinion than what is generally seen on these pages. People are constantly posting about how accountants destroy the car companies and what is needed is a “car guy.” However, if you look at the history of the car business as a whole, there are many “car guys” that have fallen by the wayside because they ignored the business side of what is a business. Good accountants just don’t look at the expenditures side of the ledger, they also look at the revenue side. A good accountant looks for ways to grow sales as well as cut the per unit cost. The problem with at least some of the Detroit bean counters in recent history has been the focus on cutting production costs with no regard to sales/product. Saving $20 on the cost of even a cheap car isn’t a good idea if the car ends up feeling and driving cheap. The Corvair has been cited on these pages as the turning point in the culture at GM, when the bean counters took over. In order to save something like $20, they produced a car that was much less than it could have been, and as a result, didn’t sell nearly as well as they needed it to. This is an exmaple of bad accounting at work not accounting in general. This is something that could happen at Chrysler if they just start hacking away without looking at the big picture. Sure it may be cheaper to build cars in China, but if nobody buys them, you will lose money. And, it doesn’t take an accountant to figure that one out.
No, I’m not an accountant; I’m actually an engineer, whose married to a good accountant, one that has grown her company’s business (but, unfortunately hasn’t been able to keep her CEO’s spending in check).
Nardelli should be good for 10 fresh “Death March” columns. Cerberus, feeling Wall Street angst, succumbed to the immediacy that cost-cutting brings to the financials. This ignores the one thing that could save Chrysler: PRODUCT! It’s sad that Wolfgang won’t be there to launch the vehicles people want.
And Cerberus won’t have a turnaround: it will be a Gekko sequel (sell the parts and dump it!).
I, for one, am sorry to hear it.
I was sorry to see what happened to Home Depot, which used to be one of my absolutely favorite stores, also. I still have a $50 gift card to Home Depot because I couldn’t bring myself to buy anything there.
I suspect that the Home Depot story is going to parallel Chrysler’s. I also suspect that Walter Chrysler isn’t going to be thrilled.