Industry outsider takes top spot as Chrysler enters new era
AUBURN HILLS, Mich. – Chrysler began its new life as a private company Monday with an auto-industry outsider taking the wheel.
Bob Nardelli, who left The Home Depot Inc. in January after a shareholder rebellion over his outsized pay, was named to head the company, replacing Tom LaSorda, who is taking the No. 2 slot.
Nardelli and LaSorda shared a handshake and posed for pictures during a celebratory event at Chrysler’s headquarters in Auburn Hills.
“We’ll move forward with speed and a renewed focus on meeting the needs of our customers,” Nardelli said.
LaSorda said that Nardelli is a strong manager who has helped companies grow and that he’s happy to be working with him.
“Leave the egos at the door. Let’s turn around this company,” LaSorda said.
Some wondered what effect Nardelli’s hiring would have on ongoing contract talks with the United Auto Workers. Nardelli said he already has had a two-hour meeting with union President Ron Gettelfinger. LaSorda, Chrysler LLC’s newly named president and vice chairman, still will be at the forefront of “what could be a landmark negotiating period” not only for Chrysler, but for the auto industry, Nardelli said.
Like other U.S. auto companies, Chrysler has been struggling to make a profit while sales were falling and pension and retiree health costs were rising.
Chrysler made $1.8 billion in 2005 but lost $618 million in 2006 and $1.98 billion before interest and taxes in the first quarter of this year. DaimlerChrysler AG didn’t report second-quarter earnings for Chrysler because of its impending sale to Cerberus Capital Management LP.
The automakers, whose labor cost per vehicle is much higher than their Japanese competitors, are emphasizing that workers need to be more flexible if the companies are to survive. Gettelfinger has said that the union is not in the mood for compromise.
Chrysler also said Monday that following a nine-year hiatus, the Pentastar is coming back as the corporate mark for the company. First used as a logo in 1962, the five-pointed star is returning with a three-dimensional update. The symbol will be used on buildings, signage and corporate stationery but not on vehicles or in dealerships, LaSorda said.
Former Chrysler executive Wolfgang Bernhard, a senior adviser to Cerberus, had been widely expected to be named chairman. He was offered a position with the company but elected not to accept it.
On Friday, DaimlerChrysler transferred an 80.1 percent stake in Chrysler to New York-based Cerberus, one of the world’s largest private equity companies, in a $7.4 billion deal. The German automaker, which is to be renamed Daimler AG, retained a 19.9 percent interest in Chrysler.
Cerberus Chairman John Snow previously had said Cerberus planned to keep Chrysler’s management team in place and give it the freedom to implement its restructuring plan, which currently calls for shedding 13,000 hourly and salaried jobs in the U.S. and Canada by 2009.
Nardelli helped increase revenue and profits at Home Depot and boost the number of stores the company operates. But he resigned from the company after it came under intense criticism for his hefty pay and slumping stock price. Nardelli left Home Depot with a golden parachute worth $210 million.
Nardelli said Monday that his compensation at Chrysler would be based on the company’s performance. He said he hopes his Home Depot pay package doesn’t become an issue.
“The last thing that I would want to be as part of the new Chrysler is a distraction,” Nardelli said.
On a personal note, Nardelli said he has moved more than a dozen times during his corporate career, but is looking forward to his latest relocation to Detroit. The 59-year-old said his first car out of high school was, fittingly, a Chrysler product: a Dodge Dart. He said he also has a Chrysler PT Cruiser, a Dodge Prowler and a Jeep.
Besides Nardelli and LaSorda, the 11-member Chrysler board now includes representatives from Cerberus and DaimlerChrysler, as well as independent directors.
Chrysler’s chief operating officer, Eric Ridenour, decided to leave the automaker after 23 years, Chrysler said.
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