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Car industry turns to outsiders

Posted in : Chrysler

(added few years ago!)

in his former job, Bob Nardelli steered retailer Home Depot as it doubled sales. Alan Mulally revived Boeing Co.'s commercial airliner business.Now, the car industry outsiders find themselves at the wheel of two of Detroit's once-dominant Big Three automakers -- piloting America's ailing auto icons at a time when they are collectively being outsold in their home market by foreign-based rivals."Detroit has gotten into so much trouble being managed by home-grown talent that they're looking outside," said David Healy, an analyst at Burnham Securities. "For big companies like that, management skills are transferable."Analysts expect Mr. Nardelli to make quick and decisive changes, in part because his compensation is directly tied to Chrysler's financial revival. The executive, who exited Home Depot under pressure with a controversial US$210-million severance bonus, will not draw a salary, according to reports.Instead, his pay will be linked directly to the equity performance of the carmaker, research firm edmunds.com said. Mr. Nardelli declined to provide details, saying only: "My success is rooted in the success of the company."By naming Mr. Nardelli, New York private equity firm Cerberus is putting its first major stamp on Chrysler since it won control of the automaker in the spring. Tom LaSorda, the Canadian who had been Chrysler CEO, becomes president and vice-chairman and will continue to lead crucial current labour negotiations with unions."This is totally off the wall. It caught me completely off guard," said Buzz Hargrove, president of the Canadian Auto Workers union, which represents 11,000 Chrysler workers.

Mr. Hargrove said he was concerned about the new CEO's lack of auto experience at a crucial time in the industry, but was willing to work with him.Mr. Nardelli provided a glimpse yesterday of his determination to reverse Chrysler's US$680-million loss last year and steer it to renewal, beyond the 13,000 job cuts and US$3-billion engine investments announced.He said Chrysler intends to go after new international alliances and partnerships, possibly in Russia and elsewhere, and he intends to move quickly to make improvements.John Snow, Cerberus chairman, has said his company has a "five-year or faster" turnaround plan for Chrysler."I think what I bring is a fresh set of eyes," Mr. Nardelli said. "The most important thing is to have forward-looking designs -- designs that meet the aspiration desire, that certainly fulfill the status of the indivual in making that selection."And then we have to make sure that it is unquestionably of the highest quality and reliability."Chrysler introduced a lifetime warranty on its engine, transmission and drive systems last month for U.S. buyers.It also finalized an agreement with Chinese automaker Chery Automobile Co., which will build small cars for Chrysler.Within three years, Chrysler will likely be much transformed, particularly as it strikes more cooperation deals with other automakers to replace the global reach it had through its DaimlerChrysler connection, said Global Insight analyst John Wolkonowicz.

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(added few years ago!) / 324 views