Nardelli says Chrysler in a financial jam

Chrysler Chief Executive Robert Nardelli tells a grim tale for the automaker's 2007 financial report. He has informed employees that the company is barreling towards a substantial loss this year. Bankruptcy would be imminent without $10 billion recently received from investors during the Cerberus acquisition. The company is in dire need of increased cash holdings. Nardelli hopes to sell off $1 billon in assets, composed partially of old plants and land, to generate more funds. The Chief Executive also calls for improved vehicle interiors, realistic sales forecasts, production reduction and increased use of overseas suppliers.
While the former Home Depot head was criticized at his old job for hard tactics, he has presented a friendlier side with Chrysler employees, particularly the engineers. It does not seem however, that he has warmed up to the upper management in place. Nardelli has brought in other former Home Depot executives to consult in areas of Chrysler such as HR, marketing and purchasing. This move has caused at least one veteran executive to jump ship. Time will tell if his style is just what the company needs to get back on its feet, though.
[Source: Wall Street Journal, Photo by Bill Pugliano/Getty]






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Reader Comments (Page 1 of 3)
Horst 11:08AM (12/21/2007)
..."presented a friendlier side with Chrysler employees, particularly the engineers"? Whoever came up with that statement is not an engineer at Chrysler since it is completely untrue. The engineering ranks at Chrysler have never been so demoralized, so overworked, so afraid of losing their job in order to pay for the high dollar over the hill executives Nardelli and company have been throwing millions at to get. No, anything but friendly...
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Luis 2:18PM (12/21/2007)
Complacency starts at the top and trickles down. If the new boss is tough on the execs, so be it. I think that if he lights a fire under some of these people they'll come to realize the actuality of their financial situation. You can't keep hoping every that every time your company is beiled out by a buy-out things will get better. You'll eventually have to deliver a quality product sooner than later. As far as being overworked and feeling an unfriendly environment; welcome to the real world. How many of us regular non execs feel that way already. You are paid large amounts of money to deliver a quality product, I don't see that being the case.
Luis 2:29PM (12/21/2007)
"bailed"...damn trigger finger...
Horst 2:38PM (12/21/2007)
I'm not sure I understand. You're saying that it's the engineers fault for the terrible product planning, the incompetent marketing, and the cost cutting mandates that come down from on high? I'm sorry, but the bulk of the engineers and middle managers at Chrysler are good-- it's the clueless leadership and constant turmoil at the top that continues to cost us dearly. When we had a stable upper management team (lead by the likes of Lutz, Gale and Castaing) we produced some fine cars for their time.
Things look different when you're an outsider looking in...
Luis 3:31PM (12/21/2007)
@Horst: Perhaps my opening statement is unclear: "Complacency starts at the top"... you stated yourself that when there was "a stable upper management team...we produced some fine cars". My point exactly...there has been a lack of leadership in some of the american auto industry for many years. Is it really acceptable that it takes 10 or more years to realize your product isn't what it needs to be? And now that there's a "new sheriff in town", people within are starting to take notice?! I don't (as a consumer) buy that. Although I agree you may have a different point of view, I think you'll notice quite a few of the posts here are from "outsiders" that are very aware of our auto industry as a whole and the dire financial situation some if not all american manufacturers are in. I think that to those that have a larger portion of the responsibility are to be held in account accordingly.
bill 11:20AM (12/21/2007)
Call me old fashioned, but it would seem you need a car guy at the top of a company that builds cars for a living.
It need not always be the case, I guess, but judging by the results being turned out be Ford and Chrysler it would appear to not be a bad idea.
I never cease to be amazed that our American car companies can tear down cars from Honda, Toyota, Audi, BMW, etc and continue to turn out cars that do not measue up. Hell, all they have to do is copy - it is not like they need to re-invent the wheel or something.
I can't think of the last American car that I really wanted and could actually afford.
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geo.stewart 11:37AM (12/21/2007)
actually I think Mullaly is doing a good job at Ford but he is fighting a lot of inertia from inbred mgmt.
and you are mistaken if you think Toyota has one "car guy" in the company that has any power. toyotas are appliances and 90% of hondas are.
bill 11:47AM (12/21/2007)
Geo. you are correct about Toyota and Honda building "appliances", but Hondas do have direct ties to their multitudinous racing programs because of their engineers spending time on the racing side and then moving over to the vehicle engineering side of the company. A Honda engine is a fine example of quality engineering. If memory serves Ford could have put together a deal to buy Honda engines in the 1970's but Henry The Duece said there won't be any Jap engines in his cars. Doh! As for Toyota there is no disputing their desirability - just look at their sales. I recommend Hondas and Toyotas to anyone who asks, and I have done this for years.
Glenn 4:17PM (12/21/2007)
GM used Honda engines for it Saturn SUV -- as far as I know (correct me if I'm wrong) -- consumers etc all rated it similiar to other Saturns at the the time (which was not that wonderful). It just seemed to me that it was a great idea; but the consumer will often look at the Brand still.
That said - I am not a fan of Toyota for many reasons -- but I have always liked Honda. They are mainly an engine company internationally, but they have also shown they know how to make "good drivers" when it comes to cars.
Brent 11:22AM (12/21/2007)
If Nardelli turns things around, I don't care how big of an ass he is.
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Philip 11:26AM (12/21/2007)
Mr Nardelli.
You are right about Interiors.
Replace that harsh "YES" seat material with something softer and more appealing, it has to be Warm, Inviting and EASY to clean, The YES material is nasty and leaves water stains, The Cloth from the center of the 300 SRT seat is the nicest cloth Ive seen.
The Interior plastics need to be good looking and soft to the touch, similar to the 94 Camry.
PT cruiser seats used to be great, over the last two/ three years its changed in two ways, too tight on the backside plus that awful YES cloth, the interior on the newer PT isnt as nice as the original.
Power seat controls on Ram trucks are in the wrong position, corner of seat, I catch the back of my legs, feels bad, move them back to the side.
Good Luck, Id like to see Chrysler bounce back.
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clevershark 12:12PM (12/21/2007)
"The Interior plastics need to be good looking and soft to the touch, similar to the 94 Camry."
No kidding. I checked out a few Chryslers at last year's Montreal Auto Show, and even cars like the 300 in premium trim had cheap and nasty-feeling interior plastics. I couldn't imagine someone plunking down 35 to 40 thousand for that (yes, we still pay these outrageous prices for cars here, even though our dollar is at a par with the USD; the SRT8 sells for $53k here).
And as an aside, marketing a car like the Charger as a "muscle car", but not offering even the option of a manual transmission is just plain stupid.
When the guys on Top Gear make the (typical) comment that "Americans just don't get car interiors" I used to shrug it off, but after driving a Volvo for a few months I understand what they're on about. Yes, it's still mostly plastic -- but it's better quality plastic, made with feel and appearance in mind rather than having a single-minded focus on giving the contract to the lowest bidder.
Perry 1:56PM (12/21/2007)
This interior quality comment is just on target. I recently drove a 300 with the Hemi and although there is power galore, the dash looks like it was designed by LEGO, all square and hard.
Interiors are the #2 reason you buy a car. First is looks, then interiors. Why would you spend $$$ to sit in a crappy seat and look at the lego tower of terror for hours at a time? It does not take a genious to figure that out. Like another poster said, just copy the other guys. Simple as that. Look at AUDI, the industry's #1 interiors. Hell..look at VW...or closer to home look at GM (they turned things around in that department).
And to clerershark...buddy we Canadians need to wake up. We are getting fleeced over here. I tell you waht we need. We need everyone of us, all 33 million, to stop buying from a particular maufacturer until they lower their prices. Imagine Toyota losing 25000 corolla clients all of a sudden. Same for the civic (made in Ontario btw).
You think they would take notice? Then you do that to the next guy and the next. It is unacceptable that my A4 in Montreal sells for $12000 more that the same A4 in Boston or NY.
Enough said.
clevershark 2:17PM (12/21/2007)
"We need everyone of us, all 33 million, to stop buying from a particular maufacturer until they lower their prices."
Never mind a particular manufacturer, there's no reason why the nation's car needs can't be met by buying used until manufacturers feel enough pain to come down off the pedestal they've built for themselves in the past few years.
Is that going to happen? Probably not. I wrote something on my blog about that, and asked the manufacturers what they were doing about it. The short answer is, they're not doing anything about it. BMW in particular responded that they had every intention to *not* lower prices. Instead their Ottawa lobby pushed to make the feds mandate that if you import a new car into Canada you *must* have the Canada conversion work done at a local dealer (who will probably be glad to charge you several times the real cost of the work to make sure you're compliant). You can have a look at the various regulations for passenger cars here: http://www.tc.gc.ca/roadsafety/importation/VAFUS/list/Section3_0.htm
Tim 11:31AM (12/21/2007)
Bankruptcy for Chrysler in 08'. Those lifetime warranties don't sound so great now.
"Nardelli hopes to sell off $1 billon in assets, composed partially of old plants and land, to generate more funds." Good luck with that.
Ford and GM will follow Chrysler in trying to sell off depreciating assets in the coming months. Detroit has not made money off car sales (not SUV's) since the 70's and I don't think they can magically make money on cars now.
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Stéphane Dumas 3:45PM (12/21/2007)
Not technically "bankrupcy" for Chrysler, I see more being acquired by Renault-Nissan in a not too distant-term. I think Nardelli and Jim Press only keep the seats warm for Carlos Ghosn to come.
"Ford and GM will follow Chrysler in trying to sell off depreciating assets in the coming months."
in the local newspaper ads here, I see some big incentives (around 5000-7000$ Canadian dollars for Accords and Civics as well as some Tundra models), In the Great White North, Toyota and Honda lost some gains to Hyundai and Kia.
Judy Zik 10:15PM (12/21/2007)
The 70's? Are you mad? You do remember a certain car named the Taurus. Pulled Ford out of a slump and made them huge cash. Not to mention was the best selling vehicle year after year. Chrysler's K-car was also hugely profitable as was the first generation Intrepid. The domestics have made huge cash off of cars and will do so again. They let their product slide compared to their competition for awhile but they are getting back on track now. When Consumer's Reports is knocking Toyota over quality and giving new Fords high marks you know the game is changing. It is just going to take time for public perception to catch up.
Alex 11:31AM (12/21/2007)
at least they know their interiors are crap.
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J.Crew 11:31AM (12/21/2007)
Nardelli will not turn Chrysler around, he is going to tear it up. He has no skills for running this company just has he screwed up Home Depot which allowed Lowes to take the lead in that market. He is strictly in this to line his pockets and leave before the final collapse. Please go and read John McElroy's recent blog to see an inside look as to how comfortable, warm, and friendly the staff is now over at Chrysler. I would be looking for work outside of Chrysler if I was working for them. This is not good for anyone in the industry when a clown like this has the wheel of ship that needs repair.
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Brent 1:21PM (12/21/2007)
I would like to believe that he can learn from his mistakes. Also, he has Jim Press at his disposal.