Chrysler LLC boss Bob Nardelli played the roll of Grinch this holiday season, telling The Wall Street Journal Friday that despite instituting a significant restructuring program and winning a concessionary labor deal from unionized workers in 2007 that the automaker remains in a serious cash crunch.
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Nardelli, who signed on at Chrysler in August not long after the company was acquired by Cerberus Capital Management LP, said that the $10 billion cash infusion Cerberus provided means that the company is not, for now, a bankruptcy risk. But things are not progressing as planned. The executive, according to the report, originally had hoped to bring down costs enough to be cash-flow-positive in 2008 and use that cash to fund research into gas-electric hybrids and other new vehicles. That timeline now seems unlikely, forcing Chrysler to either delay R&D and risk falling behind competitors or find other sources of capital.
Chrysler apparently is hoping to generate cash by selling assets, including some idled factories and land. The company could also transfer ownership of the Walter P. Chrysler Museum to a nonprofit foundation, relieving the company of the obligation to fund its operating costs. Other assets rumored to be on the block include Chrysler Transport, which coordinates the movement of supplies between plants, and its Mopar after-market parts unit.
Nardelli said his comments are intended to "convey a sense of urgency" among employees. But they should be well aware of the company’s precarious situation. Chrysler in November announced a 15% cut of its work force as part of a plan to shrink the company to reflect its declining marketshare. – Lou Whiteman
See Wall Street Journal Q&A with Bob Nardelli
See TheDeal.com story on Nardelli taking over as Chrysler CEO
See TheDeal.com story on Cerberus’ takeover of Chrysler
See TheDeal.com story on potential Chrysler divestiture targets
See TheDeal.com story on Chrysler’s latest round of layoffs
