Melting Down at Chrysler

By Paul Eisenstein March 28th, 2008

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In his keynote comments at the New York Auto Show, Chrysler CEO Bob Nardelli took pains to present a positive picture. The automaker, he insisted, is on track to reverse its massive losses, with new product setting the stage for a market turnaround, even in the current, slumping U.S. auto market.

But despite the former Home Depot exec’s rosy picture, things are looking anything but good for Chrysler. Here’s the first of three reports that examine the problems Chrysler faces, and the steps it’s taking to get things under control.

Nearly two decades ago, Chrysler pulled out of another serious slump by lining up a “management dream team,” considered by many observers among the best the auto industry has ever seen. The line-up included President Bob Lutz, top engineer Francois Castaing and design wizard Tom Gale. Under Nardelli, Chrysler has attempted to assemble another powerhouse in the executive suite, starting with Vice Chairman Jim Press (shown above), formerly Toyota’s top American executive; and Deborah Meyer, a highly-regarded marketing manager imported from Lexus.

But things haven’t been going smoothly – at least not if you listen to folks inside Chrysler headquarters. It’s been hard to hide the open hostility between Nardelli and Press, numerous well-placed sources contend. And that’s not the only problem at the executive level.

Chrysler and its parent, Cerberus Management LLC, were rocked again this week, first by the departure of an another key executive and then by a broadside from the head of the Canadian Auto Workers union.

Chrysler's management, which has been fighting to contain the perception of turmoil inside the company, confirmed the departure of Mike Donoughe, a key engineering vice president. Only two months ago, Donoughe was handed the assignment of reviving Chrysler's mid-sized car lines and turning them into true global platforms, which the company could then sell around the world. At least one report suggested that Donoughe left after a clash with one of CEO Nardelli's chief lieutenants.

After the report appeared in the on-line edition of The Wall Street Journal, however, Chrysler fired off a press release, saying it wasn't so. "Chrysler denies that the departure had anything to do with a clash with management," the statement said. Nevertheless, the departure of Donoughe, who, over the years, had worked on several critical projects such as the minivan and Dodge Ram, and was one of the young engineers picked to work at a senior level in Germany during the abortive merger with Daimler, was a clear loss for the company.

Following Donoughe's departure, Chrysler announced the promotion of three other executives:

• Mark M. Chernoby was appointed Vice President and Chief Engineer for Chrysler's Future Midsize Product Team. "In this capacity, Mark will lead the development of future product in the critical midsize vehicle segment, targeting product with appeal in the global marketplace," the company said.

• James B. Issner succeeds Chernoby as Vice President - Core Components, Chrysler said. Issner also will oversee another of Nardelli's pet projects, expanding the company's engineering organization in China, India, Eastern Europe and Mexico.

• Louis Rhodes was appointed Vice President - Advance Vehicle Engineering and President of ENVI, the in-house subsidiary created to sharpen its focus on the environment and to integrate emerging technologies into Chrysler's future vehicles, Chrysler said in a statement.

If all the in-fighting wasn’t bad enough, Buzz Hargrove, the president of the Canadian Auto Workers, also took a dig at the management of Cerberus and Chrysler, saying he now believes Cerberus founder Stephen Feinberg misled him last summer. Hargrove, who supported the Cerberus takeover, early in 2007, said, in an interview with Bloomberg, that Cerberus was now trying to cut its way to profitability.

"That's great for Cerberus but it's not great for workers, because a lot of people are going to lose their jobs and a lot of people have lost their jobs," said Hargrove, who has to negotiate a new labor contract with Cerberus this summer. Chrysler vice chairman Jim Press, however, had said last week Chrysler is moving to right-size in the face of a very competitive market. —Joe Szczesny and Paul A. Eisenstein

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9 Responses to “Melting Down at Chrysler”

Nardelli is a _____ and everyone knows it. Why is he here? He has no distinguished career, he has made no serious contributions to Chrysler or Home Depot. His reputation is not s good one, he is arrogant, and a dicatorial know it all? What gives? If Chrysler dies it’ll be his doing. Guys like LaSorda who loves the company and is what, 3rd Generation, and Press are car guys who know and love the business. The set up is arguably solid: LaSorda builds the cars and deals with the unions, Press: is a salesman and can car czar the different brands. Nardelli runs the business… is there no one that would have been a better fit? Steve… you’re brilliant, everyone know that, what gives?

They’ll never get it. Bob Nardelli, ran Home Depot into the ground through excessive cost cutting and little focus on the customer.

Under Bob Nardelli’s Leadership at The Home Depot University of Michigan’s annual American Customer Satisfaction index shows Home Depot dead last among major U.S. retailers.

More excessive cost cutting at Chrysler will only further hurt its reputation and continue to bring the company down. Look at all the websites there are against Chrysler, more than even GM and Ford put together.

After seeing sites like http://www.daimlerchryslervehicleproblems.com and http://www.dontbuydodgechryslervehicles.com I wouldn’t buy one either.

Executives like Nardelli only care about “their” bottom line and they’ll cut costs so much that if negatively affects quality, customer service and reputation. They only care about themselves and their own bottom line.

Chrysler has big problems and that is why Daimler paid Cerberus to take Chrysler off its hands.

The problems are so big that no one exec can turn the company around.Cost cutting is needed for survival by Chrysler.

I think that Chrysler needs to really look at its quality. Look at Toyota and Honda, they are big sellers because they have quality in their products. I think a lot of the reason they have so much quality is becuae they keep all of their manufacturing in the US, and they take good care of their employees. It goes without saying that if your employees are happy your product will be better. I think they need to build employee morall in their company, and in the auto industry that is an easy thing to do.

I would also say that Chrysler needs to work on how it looks in the eyes of its customers. They need to reinvent the image of Chrysler. They need to make Chrysler the vehicle people want to drive. I think they need to work on company cynergy. It has been my idea for a while that they need to work on putting their name on other things, it may sound stupid now, but it is a very good idea that needs more explination.

Lastly Chrysler needs to reevaluate Nardeli, not necessarily him as a CEO but his pay. The one thing that really hurt the Home Depot was his pay, and when he left he got a HUGE severnce pay. I think Chrysler needs to look at what they are paying him, and decide if his pay is worth his preformance, if not then there is a CUT that can be made. Personally I think we need to give Nardeli a chance. I think Chrysler may know what it is doing with hiring him. I beleive there is a reason for all things. I think it is good that he is not the only one making all of the decisions and that a lot of the other people in the top spots are from the auto industry. I also think they need to listen to LaSorta more. I think they have nardeli to basically make the cuts needed. I just hope it doesnt hurt Chrysler’s quality.

Sounds like that company just survives from one Chrysis to another…

People just don’t get it. Bob Nardelli is doing what he was brought in to do - cut everything to the bone so that the company will turn a profit, or at least break even, for a few quarters. The business will be unsustainable at that point, but it will be sellable. And that’s exactly what the venture capital vultures at Cerberus had planned from the get-go. They always intended to sell off the hollowed out remains of Chrysler (in chunks probably, or maybe the whole thing) to the cash-rich Chinese or Indians.

Anyone still thinking Chrysler is going to make a comeback with these guys in charge just doesn’t know who they are. Google for the names of the board of Cerberus - a few will pop right out at you. They know a lot about deconstruction for their own benefit, and that’s exactly what’s going to happen here. Bank on it.

To all you armchair auto executives,
In 1974 my grandfather was given an early retirement from Chrysler amid talk of doom and gloom. In 1980 I watched my Dad curl up on the couch in the fetal position while the company he had given 26 years of his life nearly collapsed. He eventually retired after 41 years of service. In the mid 80’s I hired in as a designer. Iaccoca’s brilliance was waning. I thought I’d seen it all when Eaton robbed us. Then a decade of German occupation. Layer upon layer of douche-bags. Now we have middle management who have completely lost their sense of self respect, lost their respect for design and the process of designing cars.
An old polack design leader once told me, “the only thing worse than management that don’t know nothing, is management that don’t know they don’t know nothing”. It’s times like these that have me wishing we were back in Highland Park where we could at least go drinking at lunch time, or hire a hitman.
Cerberus can’t do anything with us because NO ONE can burrow enough money, and NO ONE wants a used filthy whore. Especially a whore that still owes the UAW 20 BILLION to fund the VEBA (healthcare) portion of the contract.
Douche-bags! All of em.
I’ll see you when I retire in a couple of years.

I think you guys have it all wrong. Look what Cerberus did for Tower Automotive and GDX Automotive…..oh wait, those didn’t work out very well. Never mind.

Let’s hope some of the financial guys realize that building cars is about passion and product and tap the talent still left at Chrysler to build and design good quality American vehicles. We know you guys can do it.

Sounds LIKE!: the old party system, that ran Russia, and desperately need[ed] to bring the (T-32) tanks to production!, but! the moronic BOSS and Party affiliate system that was in place at the time, Nearly let “all” RUSSIAN die before the Great German advances!; Some how the Russians managed to find a Russian with a brain and saved the day and Russia!,

“CHRYSLER ON THE OTHER HAND MAY NOT BE AS FORTUNATE AS THE RUSSIAN WHERE DURING ( our ) WWII???.

CHRYSLER WILL BE MISSED : OH! WELL!.