Monday, August 06, 2007

Chrysler & Bob Nardelli

I would be remiss if I did not comment on today's announcement that Home Depot's ex-CEO, Bob Nardelli, has been named CEO of Chrysler, now a holding of Cerebrus, the private equity group.

There really isn't all that much to say about the move. Oh, there are the obvious aspects.

Having drawn the ire of many shareholders through his overpaid failure to earn respectable returns at Home Depot, being CEO for a small group of private owners removes that problem this time.

But looking more deeply, one wonders why Cerebrus would choose a cost-cutter to save a firm whose major problem is developing, building and selling cars people will actually pay list to buy. Plus, they've given the sack to at least one Chrysler executive, and a former Cerebrus advisor on automotive units.

Since I don't believe Cerebrus made a good deal buying Chrysler to begin with, putting Nardelli in charge simply adds to my scepticism about this situation.

Many people, including some pundits, believe that, as the Wall Street Journal cited today, Ford's Alan Mullaly and, now, Chrysler's Nardelli will, together, bring a radical new perspective to union negotiations, and magically eliminate the two firms' cost disadvantages relative to firms like Toyota.

Let's just say, I remain to be convinced that; a) this will happen, and b) it will matter in the long run.

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