Meet the new boss

Meet the new boss
Ex-Home Depot head Nardelli takes lead at Chrysler.

Published Tuesday, August 7, 2007

AUBURN HILLS, Mich. (AP) - Chrysler got a taste of its new owner’s swift and decisive style yesterday as its chief executive was demoted and the former head of Home Depot was tapped to lead the automaker through a major restructuring.

Bob Nardelli, who left The Home Depot Inc. in January after a shareholder rebellion about his outsized pay, was named chairman and chief executive of Chrysler LLC, replacing Tom LaSorda, who is taking the No. 2 slot. The changes came three days after the private equity firm Cerberus Capital Management LP acquired a majority stake in Chrysler.

"The new Chrysler has the opportunity to prove that the private business model can thrive in this industry," Nardelli said. "We have an opportunity to really make a significant change in the auto industry."

LaSorda said Nardelli is a strong manager who has helped companies grow, and he is happy to be working with him.

"He’s always been a winner, every business," LaSorda said. "Leave the egos at the door. Let’s turn around this company."

It marks the second time in less than a year that an auto-industry outsider has taken the lead at one of Detroit’s struggling automakers. Ford Motor Co. named former Boeing Co. executive Alan Mulally as its president and chief executive in September.

Aaron Bragman, an auto industry analyst with the consulting firm Global Insight, said that Detroit needs outside help as it tries to reverse its fortunes. Last month, foreign brands captured more than 50 percent of the U.S. market share for the first time.

"Being an outsider in the Detroit world is not really so much a difficulty as it was before as we have seen the Detroit model is in trouble," Bragman said. "This may be the time for fresh eyes."

But Bragman said he’s concerned because Nardelli doesn’t have product experience, and the most important part of Chrysler’s restructuring will be making cars consumers want.

"Who has become the top product guy at Chrysler? Where is the product guru we had all expected to see?" Bragman said.

Nardelli said he’s simply there to offer his expertise to Chrysler as it proceeds with its restructuring plan. Nardelli said he was impressed with the vision and specifics in that plan, which includes cuts of 13,000 hourly and salaried jobs in the United States and Canada by 2009.

"It’s clear to me that Chrysler has an experienced and talented team," he said. "I’m confident that we’ll continue the momentum of Chrysler’s recovery."

Some wondered what effect Nardelli’s hiring would have on ongoing contract talks with the United Auto Workers. Nardelli helped increase revenue and profits at Home Depot and raised the number of stores the company operates. But he resigned from the company after it came under intense criticism for his hefty pay and its slumping stock price. Nardelli left Home Depot with a golden parachute worth $210 million.

Nardelli said yesterday that UAW President Ron Gettelfinger brought up his pay package during a recent two-hour meeting, but he added that the two established a good relationship. Nardelli said LaSorda will continue to have primary responsibility for the contract negotiations.

Pete Hastings, an auto industry corporate bonds analyst with Morgan Keegan & Co., said Nardelli’s aggressive leadership style might hurt the company as Chrysler and the UAW hammer out a new labor agreement. The old agreement expires Sept. 14.

"He would not have been my first choice if I had been making the decision," Hastings said. "Tact is important to get done what you need to do in transforming the company and working with the unions, and I’m not sure that’s his strong suit."