One on One with Chrysler CEO Robert Nardelli.
Thursday, December 04, 2008
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SUSIE GHARIB: Shortly after those auto hearings, I talked with Chrysler CEO Robert Nardelli. My first question: did you convince law makers to give you the money?
ROBERT NARDELLI, CEO, CHRYSLER LLC: Well, I felt very good about the discussion today. We spent six hours in the committee meeting. They asked great questions, probing questions, clarifying questions. I hope that we were able to provide the appropriate response. And now they will go away and hopefully make an informed decision. We submitted 120 page document of detail so there is plenty there to review and look over and provide both accountability and viability which is what they were looking for.
GHARIB: Mr. Nardelli, you also got some very tough questions on whether Chrysler even deserves to get any kind of government funds. The feeling was that your owner, Cerberus Capital, has plenty of cash and the worry is is that they're going to take government funds to prop up Chrysler and then you are going to go around and sell the company. What is your reaction to that?
NARDELLI: Susie, I think that that is a misconception. I think there is a generalization about private equity companies. Cerberus has been a great partner and a great supporter. They initially put the cash in place in August of last year. They provided additional cash in the middle of this year. We drew down $2 billion more. They continued to support our captive finance company, Chrysler Financial. And so it is not just a group of guys hanging around with a lot of money. They have a number of investors that they put together in this fund, pension funds, financial institutions. And they have fiduciary responsibility like anyone.
GHARIB: OK. You said today that you would be open to talking merger with General Motors. Why wait?
NARDELLI: Well, I think the issue that was put forth today, if that was a criteria, in other words, if that was a mandate, that had to be met to get funding, obviously my goal today was to convince both the Senate today and the House tomorrow to give us that opportunity. And if that was a guideline, than I certainly was willing to have that discussion with General Motors.
GHARIB: So tell us what Chrysler is going to look like, in let's say two years from now. Is it going to be a freestanding company, merged or bankrupt?
NARDELLI: We are -- we submitted a plan, Susie, in response that said freestanding company. We are absolutely committed to complete the restructuring that we've already started in August, downsizing our company, reshaping our company. That we would have a product renaissance coming out on the other side of this economic downturn, 79 percent of our products will have improved fuel efficiency next year. We will have over 24 product launches through '09, '10, '11 and '12. These will be products that the consumers want to buy and will tell others to buy. We'll have over 500,000 electric vehicles on the street by 2012. So we think that this is a company that will become leaner, more agile and certainly responding to customers' expectations on reliability and durability of our product, while gaining energy independence and environmental sustainability.
GHARIB: It's hard to picture that because looking at your November sales, they were down something like 47 percent. And so the question is, how long can you survive with sales so low?
NARDELLI: Well, that's what we've been working on, Susie. We so far this year unfortunately have had to furlough about 32,000 employees. We have taken 1.2 million units of capacity out. We reduced our fixed cost $2.4 billion. And so we have been aggressively trying to resize ourselves to keep up with this unprecedented industry falloff. It's gone from 17 million to 10.5, that is 6.5 million units. If you take a 10 percent share for Chrysler, 650,000 units or about $16 billion of revenue impacts. So we have been chasing that downward spiral to position ourselves to make it through this economic crisis.
GHARIB: And so what do you then say to American taxpayers who say let the American auto makers fail. We know what the consequences are of that. But let them fail.
NARDELLI: Well, I think that would be a terrible mistake. Chrysler was in this position once before. It did receive government support. It paid it back early. It paid it $300 million of additional interest. And thank goodness they did because Chrysler now had been an ongoing entity for 30 some years. It had great employment, great products. We've got over 30 million cars and trucks on the road today that consumers are enjoying and getting the benefit of having gotten the support from the government to make sure Chrysler continued as an entity, as a viable entity. And we're committed to doing that again, Susie.
GHARIB: All right, well, good luck to you, Mr. Nardelli. And thank you so much for your time today.
NARDELLI: Thank you and thanks for the opportunity.
