Automotive News - January 28, 2008 - (Page 34) 34 • JANUARY 28, 2008 Nardelli: As private firm, Chrysler is nimble James B. Treece jtreece@crain.com DETROIT — Private ownership is allowing Chrysler LLC to make decisions faster and thus aiding the automaker’s turnaround, CEO Bob Nardelli said. Faced with the need for a decision, the company seeks “a quick yes or a quick no, but not a slow maybe,” Bob Nardelli: In 60 days, Chrysler approved 260 product enhancements costing half a billion dollars Bob Nardelli Title: CEO Company: Chrysler Main point: Under Keynote the ownership of speaker Cerberus Capital Management, Nardelli’s team is dedicated to turning Chrysler around. Saving Chrysler is a larger calling, a patriotic duty to restoring an American industrial icon. Quote: “Success will benefit our owners and is also hugely important for our over 70,000 employees, 115,000 retirees, 948 production suppliers, more than 3,000 dealers and their 130,000 employees. All told, more than a million families depend on Chrysler for their livelihood.” Nardelli told the Automotive News World Congress here last week. For example, last fall Chrysler had to make what he called a “tough decision” to reduce fourth-quarter production. “We had a quick call with our owners that lasted a total of seven minutes,” Nardelli said. The cuts were approved. Within 60 days of the purchase of 80.1 percent of the former Chrysler group by the private equity firm Cerberus Capital Management LP, “Our team approved 260 line-item product enhancements representing an investment of half a billion GLENN TRIEST dollars,” Nardelli said. In response to a question, he said Cerberus CEO Stephen Feinberg has visited Chrysler’s headquarters in suburban Detroit once. Much of Nardelli’s speech was spent affirming the heritage and his- torical strengths of Chrysler. The former head of Home Depot Inc. reminded his audience of how Walter P. Chrysler took over the financially troubled Maxwell Motor Co. He showed classic Chrysler advertisements and hailed such Chrysler in- novations as the Hemi engine, the minivan and the first Jeep Grand Cherokee. “The job of bringing back the new Chrysler is an opportunity of a lifetime,” Nardelli said. “Success will benefit our owners and is also hugely important for our over 70,000 employees, 115,000 retirees, 948 production suppliers, more than 3,000 dealers and their 130,000 employees. All told, more than a million families depend on Chrysler for their livelihood.” c Ross sees decline in N.A. sales causing supplier consolidation David Barkholz dbarkholz@crain.com Wilbur Ross Title: CEO Company: W.L. Ross & Co. Main point: Auto Keynote slump will cause speaker more supplier consolidation in 2008, and his company is prepared to buy more distressed assets. Quote: “My daughter described me as a high-priced repo man.” Replace parts made from petroleum with parts made from natural fibers. Develop more composite parts for underhood uses. Develop plastic windows to replace heavier glass. IAC bought the interiors assets of Lear Corp. and combined them with select assets of defunct Collins & Aikman Corp. Ross also has purchased niche players in Brazil and Japan. IAC now has 20,000 employees in 17 countries. GLENN TRIEST Wilbur Ross: Some of the “walking wounded” suppliers likely will be liquidated. DETROIT — Investor Wilbur Ross predicts that a 750,000-unit drop this year in North American vehicle sales will spur a consolidation of automotive suppliers. He said last week that he expects one or more of today’s “walking wounded” suppliers to be liquidated this year. Ross told a dinner audience here at the Automotive News World Congress that his private equity group has a war chest of about $5 billion to buy attractive parts-making assets. “For all practical purposes, we really have no size limitations,” said Ross, the owner of International Automotive Components Group. IAC, created in 2005, has acquired interiors suppliers with global sales approaching $6 billion. It has done so, Ross said, without taking on any debt. That has allowed the company to invest in r&d. Ross said IAC is working to: Ross said his private equity investors have a long investment horizon, unlike many hedge funds. He said 2008 should offer more acquisition opportunities as falling sales speed the decline of the North American supplier base. A 750,000-unit drop in 2008 would put sales at about 15.3 million units. That represents one of the most pessimistic predictions by an industry executive. Most experts predict sales of 15.6 million to 16 million. Ross said irresponsible consumer borrowing facilitated by lax credit requirements has left consumers tapped out and unable to sustain car sales at historically high levels. Suppliers heavily reliant on North American car companies could succumb or look for buyers to meet their capital requirements, he said. Ross said he is bullish on the car business. He said that for properly positioned suppliers, vehicle sales outside North America and western Europe will more than compensate for any drop in developed markets. c
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