The Chrysler Turn Around

Tuesday, September 9, 2008

My wife and I were in her favorite restaurant, Street Side, waiting for a table while on a business trip to Birmingham, MI. I had gotten there early to put our name in, and in typical fashion, I turned to talk with the people next to me.

“Your kids are really good,” I said, “they’re so well behaved I didn’t even know they were standing besides you until looking down.”

Not really fun bar room chatter but when addressing a parent, that seemed like a pretty good opening. We chatted a bit as my wife made her way to the back of the bar area and joined in. After about five minutes of questioning, we realized the guy didn’t want to talk about his job. He had just moved from California to be both on the “engineering and marketing side of Chrysler.” Yup, it was Jim Press. I couldn’t tell in the dark smokey bar and why would I have even been looking for him? He was very nice and cordial. I think it was within three minutes of him walking away that I wished Chrysler was still public.

It’s now been a year. Chrysler with owner Cerberus Capital Management have slashed, cut and burned to bring a positive EBITA in 2008. But what’s behind the success? How do you take such a dynamic car company with past German ownership, long American history, plants, design centers, people, pensions and make change? You start by using your balls.

What? It takes some sort of trade secret and years of being in the business, ie. 37 that Jim had at Toyota, to come up with:

  • Stop making and marketing cars that compete against eachother
  • Shut down plants and quit producing excess inventory
  • Focus new product development on cars that are right for the market
  • Stop selling into fleet to “make your numbers” when they kill resale values

No, it takes some real cajones to stand up to unions, old management and the board to make the gutsy decisions you need to survive. The masses may glaze over when it comes to political fodder and what to believe when picking a president. But when it comes to buying cars, they pretty much have it nailed down. They look good or they don’t. They work or they don’t and that’s what you are selling against.

Don’t get me wrong, the decisions Mr. Press are making take experience to execute. But read any one of the top buff books and you’ll find the writers have been touting these solution for tens of years. It’s about time someone executed on them so we can build back the great American auto industry. Well done Cerberus.