Robert Nardelli takes over Chrysler: should we be scared?
From out of nowhere came the bombshell that Robert Nardelli, who was recently CEO of Home Depot, had been appointed CEO of Chrysler. Tom LaSorda will take over Bob Lutz’s old role as president and vice-chair of the board.
One may ask “why Nardelli?” There are two explanations. First, he’s an ex-GE guy, which strikes a cord among the other ex-GE guys at Cerberus. Second, and this idea was also put forward by a staunchly Republican friend, he’s a strong fundraiser for George W. Bush. The Republican Party connection is also the main thrust of other Cerberus hirings, such as John Snow, Donald Rumsfield, and Dan Quayle. None of these men were known as great, or even particularly good, leaders.
It’s easy to discount Home Depot’s success under Nardelli, since the basic formula for expansion was set up well before Nardelli took over (indeed, expansion slowed under Nardelli, though given the rate when he took over, that’s not necessarily a mark against him).
The record profits at Home Depot came partly from the expansion set in place before he arrived, and by short-term moves which made Lowe’s very happy. During Nardelli’s run at Home Depot, product quality fell off a cliff, and customer satisfaction spiralled down, as experienced full timers were replaced by part-timers and costs were slashed apparently without regard to long-term consequences; and what long-term consequences were there for Nardelli? To quote Pete DeLorenzo: “paying his ridiculously exorbitant severance package of $210 million was more palatable than having him hang around for one more day.” In short, the worse you are, the more the company will pay to get rid of you - not just at Home Depot, but at most American corporations. I wonder if that has something to do with the Asian manufacturing boom?
Personal note: I ran into Home Depot’s “we take returns when we want to” policy, coupled with their “we abuse customers until they threaten us with disputing their MasterCard charges” policy, as a result of their “we sell special pumps that last only three hours” policy - the last of which was well known to the plumbing supply house (which sold me a durable pump at about the same price).
The positive aspect of Nardelli’s past is his work at GE, of which little is currently known other than that the departments he headed - the first one for a very brief time, to be fair - are still around and are profitable. Unfortunately, some have implied that Nardelli’s work at GE was similar to his work at Home Depot - sacrificing long-term quality and customer loyalty for short term profits. And, again to quote DeLorenzo, “Nardelli’s blunderbuss reputation for being a ball-busting cost-cutter lost in a GE-tinged Six Sigma fog and blessed with the people skills of a drill sergeant caught up with him at Home Depot, and it will catch-up with him at Chrysler too.” (You gotta love DeLorenzo, unless, of course, he’s talking about you).
On the bright side, Nardelli owns, among other vehicles, a Jeep, a PT Cruiser, and a Prowler. His first car on graduating high school in 1966 was a Dodge Dart GT. But we do have to wonder if the state of American leadership is so poor that this is the best CEO they could find.
Is Chrysler headed by another Chainsaw Al Dunlop, the kind of tough-talking, easy-firing guy who moves from company to company, leaving bankruptcy in his wake but claiming success because the roof doesn’t fall until after he leaves? Is it headed by someone who unsuccessfully tried to find a position at many other concerns before being rescued by “friends” who use their influence within the ruling party to gain highly profitable and sleazy government contracts? Or is it headed by a very competent leader who is capable of increasing sales and profits and tapping into the optimism and energy of what was, not that long ago, one of the world’s most profitable automakers?
Only time will tell.