Can Nardelli Lead Chrysler — Successfully — Through Bankruptcy?

Short answer, yes, I believe he can.

Here’s the deal: yesterday, Chrysler filed the papers to enter Chapter 11 protection under the U.S. Bankruptcy code. President Obama believes we can fast-track them in less than 60 days… I doubt that, but we’ll see. If it were that simple, creditors would have agreed to a non-bankruptcy settlement(s).

Today/tomorrow should yield the judge’s “first day orders,’ which allow the company to continue operating. Essential since operations must continue — with some gusto — for a company to successfully emerge from bankruptcy protection.

Speaking of the judge, it’s Arthur Gonzalez, the guy who presided over Enron and Worldcom’s bankruptcies. He’s top-notch and no-nonsense. Don’t look to him to tolerate much grandstanding or intentional delays. Essential, since as many of you know, these judges wield near-godlike powers over the decisions to be made while in Chapter 11.

Count on Chrysler cancelling some supplier contracts (or severely — and favorably — renegotiating them), whacking some staff, reducing some wages, and bailing out — at least partially — on their pension system. I’d wager close to 30% of U.S. dealers will lose their franchise — allowable under bankruptcy protection.

What about Nardelli? Is he the one? Can he pull this off? Is he leader enough to do this?

I’ll take the contrarian side and say yes, he is.

Remove all the media hype and bluster from Nardelli’s record, and here’s what you’ve got: Hard-charging, über-successful heir apparent to Jack Welch at GE. Yes, Immelt was selected, and that had to hurt, but being runner-up for one of the most coveted top-jobs in the world puts you in rarefied performance air.

At Home Depot, don’t be misled by out-of-context soundbites. Nardelli doubled revenues, nearly doubled earnings, increased most every available metric for success by some exponential value, then gets whacked as HD stock is on a year-long surge; the stock has trended down consistently since his departure.

Cerberus is top-of-the-line when speaking of private equity (why they got mixed up in Chrysler is beyond me), and they recognized Nardelli’s prowess.

He’s the right man to take them through bankruptcy, then leave for something easier. Like golf. Unless you play like I do, which is closer to work. Oh well.

But that’s just me…

KB

Kevin Berchelmann
http://www.triangleperformance.com/

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