October 5, 2011
“Minimum Bob” ascends to the Delusional Thinking Hall of Fame.
By Peter M. De Lorenzo
(Posted 10/3, 4:30 p.m.) Detroit. Just when you thought it was safe to peruse the electronic smorgasbord of news that careens around the Internet on a relentless basis comes word that Bob Nardelli is convinced that if Cerberus had only been given the chance by the U.S. government they could have saved Chrysler.
Ace reporter David Shepardson of The Detroit News corralled Nardelli on the sidelines of a recent Dow Jones private equity analysts conference in New York, whereupon Nardelli espoused his views.
"If the government gave us the deal they gave Fiat, we'd be doing just fine — really," Nardelli told The News. "There was no reason for the government to give Chrysler away."
Now I’ll give Nardelli this: Sergio Marchionne and Fiat were given Chrysler for damn-near free simply because Sergio was in the right place at the right time and he presented the only (somewhat) viable alternative to the Cerberus train wreck to the U.S. government.
But Chrysler’s salvation? Cerberus?
You must be joking.
Let’s not forget that the once-vaunted Cerberus was one of the principal pushers of the “private equity will save (and rule) the world” theory, and that they were the closest thing to invincible that the private equity realm had. A maniacal three-headed monster of churn-and-earn success that had left a trail of decimated companies in its wake as it sucked out and sold their assets and moved on, all in the spirit of expending minimal effort to make untold billions.
It was such a beautiful little scam that Cerberus became a veritable juggernaut of profit while basically buying and selling air, making no discernible products of any kind and contributing nothing positive to the nation's landscape whatsoever, other than to be greatly envied by their peers in the private equity fraternity of course.
And Nardelli himself was the infamous ex-CEO of Home Depot who was fired after alienating everyone around him, losing market share, screwing-up customer service and then walking away with a $200+ million pay package before joining Cerberus.
A match made in heaven? If you bought the PR spin generated by Cerberus at the time you would have thought so, but the reality was something less. Much less.
As I’ve said repeatedly, there are legions of executives who have been left busted and broken by the side of the road because they truly believed that the auto industry was a piece of cake, that if they could run their financial empires or private equity whatnots, well, just how difficult could it be?
And Cerberus led by Bob Nardelli was no different. As a matter of fact this relentlessly dismal combination was the most ill-equipped, egregiously misguided posse to ever ride in to “save” an industry, and the results were absolutely devastating.
To add some background, Chrysler had already been left in shambles by Daimler AG, which was then led by the single-worst executive in automotive history – the disgraced Jurgen Schrempp – who, skipping over the detailed due diligence, wildly overpaid for Chrysler and upon discovering just how bad it was, crippled the company in a desperate last stab at cutting costs to eke out at least a shred of profit, only to discover that it was a terminally hopeless endeavor.
And then in marched Cerberus. Paying $7.4 billion to Daimler for an 80.1 percent stake in Chrysler in 2007 (Daimler paid $37 billion for Chrysler just nine years earlier), Cerberus named none other than “Minimum Bob” Nardelli to lead Chrysler’s resurrection, a fateful move that would prove to be the company’s ultimate undoing.
I’ll never forget attending Nardelli’s first brush with the media at the Detroit Athletic Club, when he stood up before the assembled electronic signature-stained wretches and actually said he and Cerberus CEO (and noted recluse) Stephen Feinberg were undertaking the task of rescuing Chrysler for “the good of America” and that his boss was especially driven to do this out of patriotism and wanting America – and Detroit – to succeed.
What, the reigning “Masters of the Universe” were all of a sudden in it out of the goodness of their hearts after rediscovering their patriotic fervor? Uh, hardly. Not even remotely close, in fact.
Nardelli and Co. figured that Chrysler - and the auto biz - were easy pickings, ripe for the Cerberus churn-and-earn gospel. They’d move in, assess the situation, figure out what assets were worth keeping while jettisoning the rest before selling it and moving on to the next kill, leaving Chrysler to fend for itself in whatever state they left it.
That was the ultimate plan, but in the meantime Nardelli, led by his considerable ego and a stunning lack of knowledge of the automobile business – not even a clue, in fact – decided in the interim to lend his wisdom to “help” Chrysler get better.
And it was an unmitigated disaster.
Despite hiring industry veteran and ex-Toyota honcho Jim Press, whom he clashed with and ignored from the get-go, Nardelli proceeded to lead by gut feeling, or more accurately in this case with his head, as he made one boneheaded decision after another all in the name of “saving” Chrysler.
Nardelli’s serial incompetence combined with the economic calamity of 2008 accelerated Chrysler’s headlong rush to oblivion, leaving the company teetering on The Abyss. Chrysler desperately needed a huge injection of cash in order to live to fight another day, and the Obama administration was left with no choice but to consider coming up with one because the implosion of Chrysler threatened to take the rest of the domestic automobile industry and its supplier network down with it.
But the Cerberus plan for saving Chrysler was rejected by the government, and the rest, as they say, is history, with Marchionne and Fiat taking the reins of Chrysler for good.
Today Nardelli actually has the temerity to blame everything on the economy, suggesting that if it weren’t for that calamitous 2008 a Cerberus-run Chrysler would be riding high right now.
"The fact is, we kept (Chrysler) alive when it could have gone down the tubes," Nardelli told The News. "This will sound defensive, but I think we did everything we could."
Really? His delusional thinking clouds the reality of the situation, because Chrysler under Cerberus was reduced to a gutted-out shell of a company, a steaming empty hulk left unable to compete on any level simply because Cerberus and Nardelli were the wrong “leaders,” at the wrong time, let loose on the wrong company, nothing more than parasitic interlopers who brought absolutely nothing good to bear on behalf of Chrysler, unless you consider their own particular brand of no-muss, no-fuss financial mumbo jumbo an asset. (For the record Nardelli has blown his latest Cerberus assignment – as Chairman of the NewPage Paper Company – to smithereens as well, with the company recently filing for bankruptcy, but I digress.)
And with Nardelli’s recent comments he has officially ascended to the Delusional Thinking Hall of Fame, unable to understand what went wrong – and why – and unwilling to take responsibility for any of it.
And that’s the High-Octane Truth for this week.
See another live episode of "Autoline After Hours" with hosts John McElroy, from Autoline Detroit, and Peter De Lorenzo, The Autoextremist, and guests this Thursday evening, at 7:00PM EDT at www.autolinedetroit.tv.
Subscribe via iTunes:
Subscribe via RSS:
If you would like to read previous Autoextremist issues, click on "Next Entry" below.