Chrysler Suicide Watch 14: Tom LaSorda: From Zero to Hero and Back

In Greek mythology, Heracles performed twelve tasks set by King Eurystheus. Any one of these tasks would have finished off a mere mortal, but the dynamic demigod persisted, prevailed and finished the job. Of course, ol' Herc only had to do things like slay the Nemean Lion, kill the Stymphalian Birds, obtain the Girdle of Hippolyte and capture Cerberus the guardian dog of Hades (not to be confused with Cerberus the guardian dog of GMAC). I mean, it's not like he had to do something really hard, like save the Chrysler Group. That's the one task that could have turned our hero back into a zero. Just ask Chief Executive Officer (CEO) and President of Chrysler Group, Tom LaSorda.

Last fall, DaimlerChrysler hit the wall. Sales of Chrysler's truck-heavy product portfolio were dead. The company was saddled with a surplus of over half a million vehicles Dealers were fed up, thanks to corporate "channel stuffing" (forcing dealers to take vehicles they didn't want and/or hadn't ordered) and other heavy-handed Chrysler mismanagement. And while the Mercedes-blessed 300 was a solid hit, DCX corporate development boss Ruediger Grube publicly stated he didn't want Chrysler polluting Mercedes by pursuing cross-brand platform sharing.

During a fiscal year that ended-up dropping $1.4b, every management decision seemed ill-advised and inappropriate; carefully designed to push the Chrysler Group over the ledge. Ignoring his own management malpractice, DCX CEO Dieter Zetsche took a good hard look at his dazed and confused American patient and told LaSorda to sort it out. LaSorda was charged with preparing a recovery plan in time for DaimlerChrysler AG's Annual Press Conference on February 14, 2007.

Although LaSorda inherited Chrysler's mess from his German overlords, our intrepid hero rolled up his sleeves and set about cleaning up DCX' Augean stables. LaSorda set a cost-cutting target: $1k per vehicle. Meanwhile, DCX finally came to their senses and dumped Joe Eberhardt (the man who alienated their entire dealer network). LaSorda added sales and marketing to his labors and set about devising a Hades exit strategy.

LaSorda developed a comprehensive Recovery and Transformation plan. It addressed Chrysler's key problems in seven different areas: product strategy, fixed costs, structural changes/manufacturing, material costs, revenue management, quality and capital management. Chrysler's Main Man was set to announce the plan with a publicly stated goal: returning the Chrysler Group to profitability by 2008. And then…

Doktor Dieter used the same press conference to drop a bombshell: DCX was thinking about dumping Chrysler "exploring all options" concerning Chrysler's future. It didn't take a genius to figure out what Zetsche meant. Instead of "can we turn Chrysler Group around?" it's "who'll give us the most for this turkey?" It was a stunning though perhaps inevitable betrayal of LaSorda's Herculean efforts.

Although LaSorda was told to press on, the rug-pulled-from-underfoot situation has taken its toll on Chrysler's mental health. Employee morale is at an all-time low. German stockholders are pushing for a quick sale. The Canadian Auto Workers union (CAW) doesn't want them to sell. The United Auto Workers union (UAW) is covering all bases, from talking with potential buyers to considering bidding themselves. Bidding front-runner Magna is sucking up to the CAW and UAW, talking with them about unionizing the company's current operations. Executives are bailing out. Yet the show has to go on.

At this point, Tom LaSorda probably wishes he was facing the Lernaean Hydra. Still, he's made some genuine progress. He's cut production, eliminated the last vestiges of the infamous sales bank, introduced several new (if not exactly stellar) models, and announced a $3b construction program for drivetrain and engine plants. For April, Chrysler Group's sales rose two percent above last year, countering Mercedes' loss and keeping DCX on the positive side of the ledger.

But LaSorda's labors are far from complete.

According to LaSorda's turnaround plan, Chrysler will eliminate/buy out 13k jobs. But even if the automaker finds the necessary cash and shoulders the ongoing legacy costs, it won't be enough. Chrysler needs concessions. With a change of ownership in the offing, it's a Sisyphean task.

LaSorda's doing his best to keep Chrysler employees motivated amid the uncertainty. In an effort to shore up flagging morale, the exec sent an email to his employees all but begging them to keep their focus. "Let me be clear. We have a solid plan, but success depends on your active engagement. It is all about harnessing our energy to execute the Recovery and Transformation Plan."

Given the overwhelming "sell" vibe coming from of the majority of the DCX board and German shareholders, LaSorda has to feel that he, like Hercules, is expected to accomplish his tasks unassisted. Hercules took twelve years to get ‘er done; LaSorda's expected to make Chrysler Group "solidly profitable" in two. If he does, it will be the stuff of legend.