The Associated Press reports that Chrysler has slashed the jobs of 12,000 workers -- a Halloween trick for its people if there ever was one. But is this 15% of its workforce layoff going to make Chrysler competitive?
Chrysler's cutting slow selling products and investing in new ones. Specifically, Chrysler is eliminating the Dodge Magnum wagon, the convertible version of the Chrysler PT Cruiser, the Chrysler Pacifica crossover and the Chrysler Crossfire sportscar. And it's introducing the Dodge Journey crossover and Dodge Challenger, along with two new hybrid models, the Chrysler Aspen and Dodge Durango.
In order to compete in these market segments, Chrysler will need to lower its costs enough to make a profit selling at competitive prices. But no company has ever slashed its way to success. In addition, Chrysler needs new products that its customers want to buy -- that takes design, manufacturing, and marketing skills. At this point it's too early to tell whether Chrysler has cut enough or whether those new products will boost its revenues and profits.
One thing's for sure -- if Chrysler's new strategy works, its CEO Bob Nardelli will get a handsome payday and will take some of the tarnish off the bad reputation he earned at Home Depot Inc. (NYSE: HD).
Peter Cohan is President of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter.
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Reader Comments (Page 1 of 1)
11-01-2007 @ 6:02PM
Sheridan Nofer said...
Wouldn't you know it, I purchased a new PT Cruiser convertible earlier this year. Now Chrysler is going to discontinue that model. Too bad, because I love it. I just hope its resale value doesn't drop to practically nothing, now that it is being scuttled.
11-05-2007 @ 9:19AM
Barry said...
Bob Nardelli will get a great payday whether it works or not. He got one for Not doing it at HD. Though he is consistant in getting rid of employees. Did he bring in his minions from GE yet. Gotta massive bonus those high management types that knew nothing about retail and know nothing about cars. Nardelli knows about manufacturing, but nothing about marketing. Hd is his greatest example. B2B sales are all he knows. He never understood that his part of GE made things that were needed(had to have). But HD and Chrysler. People need the things they sell, but don't need to buy it from them. He will crap out Chrysler. Take his bundle and move on to another company. Then, with his chaos behind him he will be reveled in as the Wunderkind of business again and go and take another business to the brink for another big payday.