Wednesday, August 08, 2007

Some people cheer Nardelli's role at Chrysler

That's right, you heard me. Not everybody thinks that the man who ran Home Depot onto the rocks is a poor choice to steer Chrysler between the Scylla of the UAW's bloodsucking demands and the Charybdis of horrific infrastructure costs.

Today's feature in Bloomberg is full of quotes from people who think that he will do a bang-up job:

Bloomberg: Nardelli, Cost-Cutter, Is `Perfect Fit' at Chrysler, Welch Says

Aug. 7 (Bloomberg) -- Robert Nardelli, who stumbled in the public eye at Home Depot Inc., may do better at Chrysler LLC as the now-private U.S. automaker focuses on trimming expenses and generating cash, not stock returns.
``This is an absolutely perfect fit,'' said Jack Welch, retired chief executive officer of General Electric Co., where Nardelli worked from 1971 to 2000. ``They've got to get cost, efficiency, service, all those things in line,'' Welch said. ``He's the best in the world at that.''


``Nardelli is an agent of prompt change,'' said Dan Poole, who helps manage $31 billion at National City Bank in Cleveland including shares in Home Depot and DaimlerChrysler. ``Frankly, a private company might be a better place for him because they want revenue and earnings, and that's what he delivers.''


Keith Davis, a Washington-based analyst with Farr Miller & Washington LLC who helps manage about $600 million, said Nardelli may fare better at Chrysler because the automaker is a manufacturing company like Fairfield, Connecticut-based GE.
`Taking Costs Out'
``He's shown he's great at taking costs out of the business,'' Davis said.

Okay, he's great at cutting costs. Woo Hah. But can he drive more consumers into driving Chryslers? Cutting spending is good, but no one ever made more money by spending less. You make more money by making more money.

Now that Chrysler is private, I don't expect Cerberus to be especially forthcoming about in the media about the progress of the turnaround. Without public shareholders, they don't have to. The UAW, on the other hand, would not appear to have the same self-interest in keeping their lips zipped, especially if they feel they aren't getting their way. I suspect that outside observers will end up with a more candid view of a private turnaround with Chrysler than with previous ventures.

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Charles Farley said...

"Chrysler between the Scylla of the UAW's bloodsucking demands and the Charybdis of horrific infrastructure costs."

that fact that you weaved scylla and charybdis into an apropos comment is a subtle reminder to me to never play Scrabble with you.

Anonymous said...

20 points for the Scylla and Charybdis reference ... and for the UAW bloodsucking comment.

I actually disagree with you here and think that Nardelli is actually that perfect fit. I don't think for a second that turning around Chrysler is the end goal. I think cutting the costs enough to spark a short term share spike is the goal, with the intent of the private owners to sell at the peak and bail out with a few pennies. Long term growth is something I don't think any of them desire.

To truly effect change would require breaking the UAW, which is the 800 lb. gorilla of unions, as you know. Nardelli may be a professional vampire, but he can't kill the UAW and he knows it.

Welch kills me ... after reading a half a dozen books on why he was the best thing that ever hit GE, seeing him like this, commenting on the sidelines and almost cheering the bloodletting about to begin, is kind of strange.