By on April 30, 2009

The Presidential Task Force on Automobiles (PTFOA) has claimed its second Motown CEO scalp. Chrysler CEO Bob Nardelli announced his departure in paragraph eight of Chrysler’s official statement on the automaker’s Chapter 11 bankruptcy filing. “Now is an appropriate time to let others take the lead in the transformation of Chrysler with Fiat,” said Nardelli. “I will work closely with all of our stakeholders to see that this new company swiftly emerges with a successful closing of the alliance.” (Star Wars fans need apply.) Our sources tell us what common sense suggests: PTFOA head Steve Rattner read Nardelli the riot act. Nardelli joins former GM CEO Rick Wagoner in that special place where pensions are bankruptcy-proof (insured by the company), and mythical share option fortunes are bemoaned from a place of complete financial security. While Wagoner was immediately replaced by his clone, former CFO Fritz Henderson, the PTFOA has not named Nardelli’s successor. The lack of speculation speaks volumes.

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27 Comments on “Bailout Watch 516: PTFOA Fires Chrysler CEO Nardelli...”


  • avatar
    Richard Chen

    He’s not gone yet as he’s in it through C11, unlike Wagoner.

    Nardelli letter to Chrysler employees (usatoday.com)

  • avatar
    TRL

    There will now be all kinds of snarky remarks about how he did to Chrysler even more damage than he did to Home Depot. Consider this one of them.

  • avatar
    rpol35

    Good!

  • avatar
    pb35

    As someone who worked for The Home Depot, I hate that POS more than most CEOs.

    Now maybe I can consider a Chrysler product again.

  • avatar
    motownr

    How would Rattner know what kind of job Nardelli has or has not done? Once again, the know-nothings taking a shot at on the job training at the taxpayer’s nickel.

    Nardelli was a less than enlightened pick in some ways, but he did bring (along with Cerberus) a level of financial logic and discipline that was missing at Chrysler.

    He also had some role in something more subtle–the actual improvement of some of the product. The new interior in the Patriot being but one example.

    On the ground here in Detroit, the whole thing reeks for what it is…a politically influenced outcome whose winners and losers fall into clear categories that have little to do with the rule of law.

    It’s unfair to blame Nardelli.

  • avatar
    Pch101

    On the ground here in Detroit, the whole thing reeks for what it is…a politically influenced outcome whose winners and losers fall into clear categories that have little to do with the rule of law.

    That’s an erroneous way to look at it.

    The deal is fairly obvious — if Fiat is going to come in, Fiat is going to run the show. The management choices will be Fiat’s to make.

    They already have some North American operations on the ground, such as their ownership of Iveco. They may draw on some of that talent. I suspect that they don’t want Nardelli, so out he goes.

  • avatar
    motownr

    @PCH101:

    I’m all in favor of the Board of the reorganized company hiring whomever they please. As someone who has dealt with BN on numerous levels, it’s my opinion that the spin does not match the reality.

    Another comment about this mess: the PTFOA could have easily solved this outside of chapter by simply upping the ante for the lenders. The costs of chapter will easily exceed any notional savings to the taxpayer.

  • avatar
    Pch101

    As someone who has dealt with BN on numerous levels, it’s my opinion that the spin does not match the reality.

    We may be making two different points. I wasn’t commenting on whether Nardelli is the corporate equivalent of Hitler or the best thing since sliced whole wheat bread, I’m just saying that Fiat wants him out of there, so he’s gone.

    Whether or not that’s a good idea is not relevant to the extent that it’s Fiat’s call to make. Usually, incoming firms like to pick their own people for the top slots, so it’s not surprising.

    Another comment about this mess: the PTFOA could have easily solved this outside of chapter by simply upping the ante for the lenders. The costs of chapter will easily exceed any notional savings to the taxpayer.

    It’s a game of chicken. If it were me, I’d be fighting against the bondholders, too. In part, it’s because the bondholders are going to lose; otherwise, it’s because they need to establish a precedent for GM. If they capitulate to the Chrysler bondholders, the price of GM goes up, too.

  • avatar
    SpeedRacerrrrr

    @PCH101:

    It seems strange to me that Fiat is going to “run the show” when the UAW has a 55% stake. I don’t understand why Fiat would agree to that. Or am I missing something …

  • avatar
    Pch101

    Or am I missing something …

    You are. Equity ownership does not equate to control.

    Plus, all equity is not created equal. Different shares carry different priorities and voting rights.

    If this ends up as I think it will, the union, VEBA or whatever will have the lowest class of stock. If things work out in the long run and there is some sort of profit and, eventually, a new IPO, their stock will probably be the most heavily diluted. If it fails, they will be the last to be repaid.

    This is not about the percentages. If you focus just on the percentages, you’ll be missing the game.

  • avatar
    SpeedRacerrrrr

    A very telling quote from the Fiat statement released today:

    “The alliance would also allow Fiat Group and Chrysler to take advantage of each other’s distribution networks and to optimize fully their respective manufacturing footprint and global supplier base. The alliance does not contemplate that Fiat would make a cash investment in Chrysler or commit to funding Chrysler in the future.”

  • avatar
    Mr. Sparky

    “Crazy” Bob Nardelli is no more… May I nominate the newly available “Maximum” Bob Lutz for the job of Fi-sler CEO.

    He always wanted the gig, and TTAC really can’t exist without some sort of unstable Bob.

  • avatar
    Edward Niedermeyer

    Mr. Sparky: Thanks for reminding us all that this situation can still become even more surreal.

  • avatar
    Shogun

    Technically, he wasn’t fired. He volunteered to resign by himself.

  • avatar
    windswords

    “Technically, he wasn’t fired. He volunteered to resign by himself.”

    I’m sure some will argue that here but I would like to point out:

    Nardelli was the only CEO who said if Chrysler surviving ment losing his job, so be it.

    If getting the government funds ment making $1 a year in salary, ok.

    None of the other “leaders” of industry said that. Nardelli may not be an angel, but I think he wanted to see Chrysler make it, even if it ment he had to go. He certainly did not want to be the guy in charge if they went down the toilet. He knows FIAT wants to run it or they would not agree to the alliance so he’s stepping aside. He gets to head things up until the BR is over and he rides off to retirement or his next adventure.

  • avatar
    John Horner

    Strike two! Please, don’t put that guy up to bat again.

  • avatar
    CamaroKid

    Strike 2?

    Jack Welsh fired him at GE,
    Home Depot fired him for being a complete failure and now
    Someone Fired him for running Chrysler off of a cliff…

    STRIKE 3… This guy needs to play some golf or sit on a beach somewhere… If he doesn’t I will instantly Short Sell whatever company he is running…

    There is a word for that in the industry… Is call a “sure thing”

  • avatar
    psarhjinian

    Jack Welsh fired him at GE,
    Home Depot fired him for being a complete failure and now
    Someone Fired him for running Chrysler off of a cliff…

    Technically, Welch didn’t fire him, he just didn’t appoint him successor, despite Nardelli’s expectation of such. Personally, I find Jack Welch unpleasant, demeaning, overrated and more than a little narcissistic, and actually though better of Nardelli for earning his disfavour.

    Now, that said, if my former employer paid me nearly a quarter of a billion dollars to get the hell out, I don’t think that a) my reputation would be such that anyone would hire me and b) I would even try getting another job, except for “beach-chair and daiquiri tester”.

  • avatar
    CamaroKid

    Technically, Welch didn’t fire him, he just didn’t appoint him successor, despite Nardelli’s expectation of such

    If you read Jack Welch’s book “Straight From the Gut” Jack actually fires Bob… because in Jack’s words he was afraid that the new CEO would view him as a threat, and he felt that Bob would not be able to get along with or work for the new CEO.

    Take a read… Its all there in black and white.

  • avatar
    Pch101

    Welch didn’t fire Nardelli. Nardelli was one of several people who were vying to being selected as Welch’s replacement, but Welch appointed Immelt, instead.

    Home Depot recruited Nardelli to join them. By all accounts, Nardelli did well at GE. That makes sense, otherwise he wouldn’t have been on the GE CEO short list.

    Nardelli’s run at Home Depot was another matter. Now, it’s ironic to see Nardelli leave, when it was his group that negotiated to bring in Fiat in the first place.

  • avatar
    akear

    Business week just ranked Nardelli as the 17th worse CEO of all time.

    After this debacle could he even get a job managing a local Wendys?

  • avatar
    psarhjinian

    If you read Jack Welch’s book “Straight From the Gut” Jack actually fires Bob

    Jack Welch can write whatever he wants in his ego-stroke-a-thonautobiography. It doesn’t make it any more truthful.

    Home Depot recruited Nardelli to join them. By all accounts, Nardelli did well at GE. That makes sense, otherwise he wouldn’t have been on the GE CEO short list.

    A friend of Bob Nardelli, who sat on the board of Home Depot and GE effectively appointed him CEO as a consolation prize. How well he did or did not do at GE is rather in doubt, though that’s not entirely uncommon for the Welch-era GE, where upper management–and especially Welch himself—routinely got far more credit than was probably deserved.

    Now, this is just my personal opinion (I very much do not subscribe to his style) but I feel that a lot of what’s wrong with corporate America has to do with Jack Welch’s brand of rock-star leadership, if not the wicked degree of corporate interlock among current and ex-GE people dispersed throughout the corporate world.

  • avatar
    Pch101

    A friend of Bob Nardelli, who sat on the board of Home Depot and GE effectively appointed him CEO as a consolation prize. How well he did or did not do at GE is rather in doubt, though that’s not entirely uncommon for the Welch-era GE, where upper management–and especially Welch himself—routinely got far more credit than was probably deserved.

    Nardelli rose up through the ranks before becoming CEO of GE Power Systems. He was a protege of Welch.

    There was a rivalry for the CEO job, and Nardelli wasn’t the only one who left once Immelt got the job. Welch was trying to protect Immelt from the threat of rivals, but Nardelli would not have been on that short list had he not been well regarded by Welch. If Welch wants to snub him now after the fact, he has some ‘splaining to do.

    At the very least, Nardelli deserves credit for climbing the GE political ladder. He allegedly made Power Systems profitable and successful, when it previously had not been. That apparently didn’t translate into success at Home Depot, though.

    Incidentally, Nardelli was an engineer by training. He has this in common with about 40% of the senior people at GM. Some posters seem to believe that engineering is some ticket to corporate godliness, but that obviously isn’t always the case.

  • avatar
    psarhjinian

    At the very least, Nardelli deserves credit for climbing the GE political ladder. He allegedly made Power Systems profitable and successful, when it previously had not been. That apparently didn’t translate into success at Home Depot, though.

    I’ll give on the success at climbing the corporate ladder—that’s not easy by any stretch—but not so much at making Power Systems profitable: it’s dubious at best as to whether or not he deserves credit for those actions vis a vis his subordinates (a common criticism of Welch), or that the kind of improvements he made are sustainable.

    As for Home Depot: Nardelli did not have significant experience (read: none) in distribution or retail, and the methods that worked so well at an organization like GE (that had a lot of inter- and intracompany fat to cut) flat should not have been applied to Home Depot. They could have been applied to Chrysler, and certainly would have been useful in the DCX era, were Daimler’s management not so arrogant as to disregard anything that they didn’t come up with themselves.

    That he was tapped for the spot at Home Depot should have been a warning to others about the dangers of interlock.

  • avatar
    cos999

    Let’s set the record straight:
    Jack Welch saved FORD as we know it.
    Does anyone recall why Mullaly left Boeing in the first place? He did not get the President’s job.
    Mcnerney did.
    Welch set-up a 3-way competition for his job among Immelt (head of Medical), Nardelli (Power Systems) and Mcnerney (Aircraft Engines). He also set each of the guys up with a head-hunter, knowing the two who did not get the job would leave. He basically told the three that the losers would have to leave and if they did not like it, don’t compete for his job. Immelt “won”.

    As a GE stockholder from the early 1990’s Immelt is a disaster and needs to go. He is a follower, not a leader. The guy who should have got the job had a very successful run at 3M and left 3M for Boeing.
    So, FORD can thank Jack Welch for keeping them out of bankruptcy. If Welch does not choose Immelt, Mcnerney nevers makes it to Boeing, and Mullaly never leaves Boeing for FORD.

  • avatar
    CamaroKid

    He also set each of the guys up with a head-hunter, knowing the two who did not get the job would leave. He basically told the three that the losers would have to leave and if they did not like it, don’t compete for his job. Immelt “won”.

    Yes, that’s what actually happened.

    Like I said.. The winner got to stay… the losers HAD to leave… “Having to leave” is THE definition of getting fired…

    PS I agree Jack Welch is a major A-H… But that doesn’t change what he did… He forced Bob to leave.. This is confirmed by what Bob said to Jack when he got the “bad” news “I want an autopsy”… He knew that at GE he was dead, and he knew that he had to leave.

    There are lots of quotes from Bob… He was very unhappy to leave GE, and he was a fish out of water at the Depot.


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