Chrysler LLC Chief Executive Bob Nardelli said Monday he is pleased with a money-saving labor contract that was approved by workers in voting completed over the weekend and is looking to raise more cash by selling $1 billion worth of unneeded real estate and buildings.
“The auto industry has an insatiable desire for cash,” Nardelli said during an interview before participants in the American Magazine Conference, sponsored by the Magazine Publishers of America and the American Society of Magazine Editors. The interview took place in Boca Raton, Fla., but was broadcast live over the Internet.
Chrysler also announced Monday that it named L. John Cataldo as vice president for business development and mergers and acquisitions, a critical role for the company as it looks to expand overseas sales by partnering with other automakers. Cataldo is a 13-year veteran of General Electric Co. Nardelli is a former GE executive.
Chrysler's labor agreement, which establishes lower wages for thousands of workers and a union-run trust to cover retiree health care, passed by a slim majority of workers after a six-hour strike earlier this month. The vote was spread over more than a week and ended Saturday. The United Auto Workers said 56 percent of production workers and 51 percent of skilled trades workers voted in favor of the pact.
Nardelli said the contract was “revolutionary.” He said the trust should give workers more confidence that their health care will be covered and will allow Chrysler to focus on its core business.
“I would expect some of it is just an uneasiness with change,” he said of the close vote.
Nardelli also said the company will end the year with 100,000 fewer vehicles in its inventory than last year in an effort to control production and pacify dealers angered when the automaker tried to push too many vehicles onto their lots. Chrysler finished 2006 with more than 538,000 vehicles in its inventory, or a 74-day supply. The ideal for the industry is a 60-day supply.
“Those are the kind of decisions … that make us right-sized,” Nardelli said.
Nardelli said the automaker is trying to dispose of property that has been sitting on its books but is no longer needed, such as real estate or old office buildings. He gave no specifics.
Nardelli said it's refreshing to be at a private company, where decisions to dispose of assets can be made quickly and don't have to be reported in an earnings statement.
The private equity firm Cerberus Capital Management LP bought a majority stake in Chrysler in August and installed Nardelli, the former CEO of The Home Depot Inc., as chief executive. Nardelli said a recent decision to cut production that was made in several minutes might have taken months when Chrysler was a public company.
“It's either a yes or a no, but not a slow maybe” under Cerberus, he said.
Nardelli also is looking for allies in Washington as he leads Chrysler's turnaround. He is scheduled to meet Wednesday with lawmakers about pending energy legislation, including changes to fuel economy regulations.
Chrysler and other automakers have opposed a Senate measure that would raise the standards to 35 miles per gallon by 2020 and supported an alternative that would give them more time to meet increases while maintaining separate requirements for cars and trucks.
Congressional officials said Nardelli would meet with several senators, including Michigan Democrats Carl Levin and Debbie Stabenow. Colin McBean, a Chrysler spokesman, said he could not confirm or deny any of the meetings.
