The Washington Times - May 16, 2008, 01:15PM

 

Ni Hao, Chrysler, welcome to Bejing

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A number of industry observers think that the recent agreement between Nissan and Chrysler to build trucks under Nissan’s brand signals that company’s eventual purchase of the domestic manufacturer. I don’t think so.

Ever since Daimler sold Chrysler to Cerberus Capital Management there’s been speculation about the weakened car company’s future. While Cerberus has a reputation for buying undervalued companies and building them up, I don’t think that’s the plan this time. My cynical outlook is the result of several factors that have made me quite suspicious about CCM’s intentions.

Take the company itself. After all, the very name Cerberus refers to the three-headed dog in Greek mythology that guards the gates of Hell to prevent anyone from leaving. If that’s not sinister enough, add to that a corporate philosophy of maintaining a level of anonymity that exceeds the reputation of the ultra-secretive Mars Candy Company and you have something pretty creepy.

Look at the guy they hired to run Chrysler, Bob Nardelli. The arrogant, critical, autocratic manager rode roughshod through GE and then through Home Depot, destroying employee morale (and the public’s, for that matter) to a lunar degree along the way. A legendary Home Depot annual meeting is on record where he was the sole director present and only allowed shareholders to speak for a minute each. While he did manage to streamline operations of the companies he ran, the toll taken in goodwill and stock prices finally got him axed. When Home Depot’s Board threw him out he took with him $240 million and moved over to Cerberus for a yearly salary of $1 plus “unspecified compensation.” In my view this guy makes Darth Vader look like Richard Simmons, and now he’s running a car company. Hmmmm.

On the other side of the spectrum is Jim Press, now Chrysler LLC’s Vice Chairman. He came over to Cerberus from Toyota where he worked for 37 years. He’s considered a stand-up guy and very capable manager who knows the car business from the bottom up. He’s well regarded both inside and outside the auto industry and has clearly been hired to maintain Chrysler morale as well as steer the company through its shakeup. He’s got to paint on a smile and “make nice” while Chrysler gets “Nardellied.” That is, a number of existing products (7 of them, including the Caravan and Viper) will get killed off and hundreds of dealers will be forced to consolidate.

Then there’s China. History tells us that the Chinese want to produce everything the world consumes without buying anything the rest of the world produces. It’s been that way for a few thousand years and there’s no reason for their culture to change. The Chinese build cars, but not very good ones. State-owned Chery is their “premier” car company and plans to sell the little econoboxes in North America and Europe have been underway for several years.

So here’s the way I see things going down. The Chinese know how to build anything cheaply and Chrysler knows how to sell cars, so purchasing the company is an absolute necessity if Chery wants to expand into the Americas and Europe. In addition, Chrysler has a 75-year infrastructure in those areas that the Chinese would love to have. Chrysler’s owner, Cerberus, is not concerned with jobs, unions, government regulations, international politics, history, workers’ lives or anything other than money. It’s all about amassing personal fortunes for the directors.

My prediction: Cerberus is already greasing the skids through the US government to allow a sale to the Chinese. You can follow the money trail when powerful senators and congressmen retire and become consultants to Cerberus or its subsidiaries. Everyone will blame the “evil genius” Nardelli but he won’t even look back while he cashes in his piece of the multi-billion dollar sale (hundreds of millions will go to Bob, of course) and goes off to work his particular magic on some other ailing company. Press will collect big bonuses too and might even stay on to manage Chery-Chrysler.

In the end Chrysler will soldier on and it won’t be long before their entry level vehicles will be Chery-built in China. Eventually more and more models will be built in China, leaving only Jeep production here. They wouldn’t dare move Jeep - or would they?