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Question of the Day
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 Home Depot Inc. in January after a shareholder rebellion over his outsized pay, was named chairman and chief executive of Chrysler LLC, replacing Tom LaSorda, who is taking the No. 2 slot. The changes were announced just three days after the New York 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,” Mr. Nardelli said. “We have an opportunity to really make a significant change in the auto industry.”
“He’s always been a winner, every business,” Mr. 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 come to the rescue of one of Detroit’s struggling automakers. Ford Motor Co. named former Boeing Co. executive Alan Mulally as its chief executive in September.
Aaron Bragman, an auto-industry analyst with the consulting firm Global Insight, said that Detroit needs outside help. Last month, foreign brands captured more than 50 percent of the U.S. market share for the first time.
Mr. Nardelli said he’s simply there to offer his expertise to Chrysler as it proceeds with its restructuring plan, which includes cuts of 13,000 hourly and salaried jobs in the U.S. and Canada by 2009.
Some wondered what effect Mr. Nardelli’s hiring would have on contract talks with the United Auto Workers (UAW). Mr. 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 slumping stock price. Mr. Nardelli left Home Depot with a golden parachute worth $210 million.
Mr. 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. Mr. Nardelli said Mr. LaSorda will continue to have primary responsibility for the contract negotiations.
Pete Hastings, an auto-industry corporate bonds analyst with Morgan Keegan & Co., said Mr. Nardelli’s aggressive leadership style may hurt the company as Chrysler and the UAW hammer out a new labor agreement.
“He would not have been my first choice if I had been making the decision,” Mr. 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.”
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