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.
ChryslerLLC has a 1200 month (hundred year depending on the page you are on) manifesto at http://www.chryslerllc.com/aboutus/
But, Cerberus didn’t hire a car guy. As the blog above states “…thrown out of Home Depot for demoralizing…”.
How can this possibly be good?
Can anybody post a reply to the http://www.chryslerllc.com Blogs? I can’t, they never show up.
First, one may ask “why Nartelli?”
Better yet, “why Nardelli?”
Should be an interesting ride. Your political rant aside, the Cerberus crowd should be more demanding of results than some spit-swapping board of directors.
Thanks for the spellcheck. Would you consider it a political rant if a bunch of failed Democrats were part of the firm?
That said, American boards of directors do TEND to give CEOs a free ride – partly because many of them ARE CEOs in an interlocking puzzle of personal profit. DCX’s board seems a bit more split than usual…
It will be an interesting ride indeed. Chrysler has been banking on its 1990s-style empowerment, pushing responsibility down to the ranks, with quite a few success stories – the main problems have been with product and those have largely related to Edicts From On High. With Mercedes removed from the picture even John Snow could probably bring success — if the recent market fall starts to reverse itself and people don’t stop buying cars in the same volumes, and if Toyota really does slow its growth.
Would you consider it a political rant if a bunch of failed Democrats were part of the firm?
People like Robert Rubin or Laura D’Andrea Tyson? We are never rid of such people. If they don’t go to corporations then it’s to universities to misinform the young.
Of course, if government were much smaller then there would be little to fret over.
I know nothing about this guy
it worries me why Wolfgang Bernhard was deleted from the managging team so fast
it dosnt bother me. republicans are big business so it actually comferts me.
can any clarify on what i saw?
i saw a 2001-2007 minivan (looked like 05) in a parking lot at a store and it said plymoth grand voyager on the back. and it had a sail boat on the front. other than that it was a grand caravan. was this a conversion rebadge?
Are Tyson and Rubin people who mismanaged large companies? Am I missing something here?
Tyson went from studying in school to teaching in school. And, of course, to the Clinton administration. She currently is a director at AT&T (Carlos Slim) and Eastman Kodak.
Robert Rubin was at Goldman Sachs when the chairman famously reassured his employees, about who might win the presidential election, that they were covered for donating to both political parties.
“Rubin left the Clinton Administration and joined Citigroup as an executive in October 1999 and remains there to this day. He sparked controversy in 2001 when he contacted an acquaintance at the Treasury Department and asked if the department could convince bond-rating agencies not to downgrade the corporate debt of Enron, a debtor of Citigroup. Rubin wanted Enron creditors to lend money to the troubled company for a restructuring of its debt; a collapse of the energy giant might have serious consequences for financial markets and energy distribution. The Treasury official refused. A subsequent congressional staff investigation cleared Rubin of any wrongdoing, but he was still harshly criticized by political opponents.” http://en.wikipedia.org/wiki/Robert_Rubin
So what’s wrong with Tyson? And as for Rubin… you could argue he was right regarding Enron — and certainly he didn’t break the law or exhibit obvious incompetence. So? If these are the worst you can come up with, there’s just no competition.
Neither has in fact run anything. They are purely political animals.
Cerberus must have a reason for this. I’m sure they’ll watch Nardelli’s and Chrysler LLC’s performance carefully: They’re not in this to lose money.
Let’s see first what he can do before we say anything against him…maybe he had a bad record but who knows this time he can have a good one…
Ok here we go with another Executive that will do nothing but filter profit off the top of a company that can use every penny to build itself back to greatness.
“Neither has in fact run anything. They are purely political animals.” Then they are irrelevant to the issue of putting failed executives in charge of corporations for political purposes, aren’t they?
I know it was mentioned just the other day that Cerberus would stay out of the Dodge Motorsports and let them run themselves, but that was before this CEO change. Leaves me to wonder if something is going to change now with Nardelli at the helm. I do realize that the Motorsports end of Chrysler is not the most important focus at this time but I’m afraid somthing might just happen to the Motorsports program. Good or bad, only time will tell.
Nardelli does have experience with unions, and he may know a few people that design deisel/electrics from GE. That may help with the hybrids. But, I do miss Lutz. There needs to be a car guy somewhere at the top. They say America began slipping when GM of the 70′s worried more about profits than cars.
I was shocked to see the hiring of this guy. I don’t believe that this was the shot in the arm, confidence builder, hire that Chrysler needed. He brings too much baggage with him. It needed to be a person that had some sort of background in the car industry.
Then they are irrelevant to the issue of putting failed executives in charge of corporations for political purposes, aren’t they?
No.
Have you noticed that the “ruling party” is now the Democratic Party and that Bush’s tenure is about up?
No, after today’s vote, I hadn’t noticed that. The ruling party is the one with the power. The White House, which appears to control military contracts, is Republican, and the Democrats are one man away from being in the minority again. Anyway, the issue that I brought up, anyway, is putting failed executives in charge of corporations for political purposes. You can have other issues which are not relevant to my criticism (which, by the way, was echoed by our very conservative Mr. Redgap in the forums). Someone going from being a student to faculty is hardly rare; it’s normal. Someone being in government, not being criticized in government, moving on to business, and then being criticized is also hardly on the same scale as a company hiring a bunch of people that nobody in their right mind would put into positions of responsibility – Donald Rumsfield, anyone? – while seeking lucrative government contracts.
Unlike Dr. Dave’s experience with Home Depot and Nardelli, mine was mixed. I had made a major purchase of exterior materials of over $1,100.00 which was special order and was to be delivered to my home. After one false start after another, the local manager really screwed up and said “Ha Ha, no delivery. Come and get it.”
Thank God I had my trusty B250 Van/Wagon to solve the problem. But a “nicely” worded letter to Nardelli, who was CEO of Home Depot at the time, got a response from this customer that shook up that store like you wouldn’t believe.
I was contacted within 96 hours (I guess that’s about the time my letter hit the executive suite) by an underling offering me a quick $100.00 worth of freebies of my choice to dry my tears as well as many, many personal apoligies, etc.
Yet, I understand that Nardelli left Home Depot with a severance package of $210 million. Nice, especially if his performance was considered sub-standard.
We haven’t had any worse luck with Home Depot than with independent contractors. We’ve had good work, fair pricing, lousy work, and no shows by both. So it’s about a wash here.
I’ve found the folks working there about as knowledgeable about their product as your average C/J/D dealer. Interpret that as you will :)
I sent a message to Chrysler, stating that the naming of Bob Nardelli as CEO, just cost them 500,00 customers in the form of Home Depot employees and stock holders.
They hate Nardelli He screwed them royally!
The Wall Street Journal wrote, according to “tkl_one,” that: “The investment bankers wanted Chrysler to start cutting expenses on a fast track and demanded a cost-cutting executive be brought in — Nardelli. Initially, there would be two leaders (Bernhard and Nardelli), but Bernhard saw the handwriting on the wall, saw that Nardelli would be the guy really in charge at Chrysler, and he would make the calls on what programs to keep vs cut, and how deep the cuts will be made. As well as make quick deals with low-cost (Chinese) auto makers.” If this is true, than any comfort level promised by Steven Feinberg is illusory.
The only guy that deserves to be in charge is Bob Lutz and Tom Gale in charge of the “Design Dept”. Enough said!
Just had my blog comments censored at Chryslerllc.com… Why? This one didn’t seem so bad:-)
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I am also a huge ‘Cuda fan. Too bad Chrysler LLC WILL NOT resurrect the Plymouth name as revealed in the Answer Guys Blog. I really wanted to see a 2008 or 2009 ‘Cuda based off the new Challenger.
Hello, Chrysler, are you getting any of this? Probably not. Why listen to a couple Mopar nuts? What do we know?
If you can’t catch the subtlety of that, than try to understand this:
IF YOU DO NOT LISTEN TO THE MANY CUSTOMERS BEGGING FOR A PLYMOUTH BRAND, THEN YOU MUST NOT BE LISTENING TO ANY OF YOUR CUSTOMERS! THIS WHOLE BLOG THING IS A SMOKESCREEN!
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Yes, we should be scared. I have said it before and I’ll say it again in reference to the “lifetime warranty” thingy…the lifetime of what? If Chrysler LLC shuts down next month, your lifetime warranty was for one month whether you like it or not.
Ok…so it didn’t get sensored. Just took all night to get there with follow up posts telling them that I also posted here, where considerably more Mopar fans post anyway:-)
censored…sensored…whatever
Don’t flame me on my seillpng