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Chrysler CEO sees rays of hope

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Variance    0

Chrysler CEO sees rays of hope

LaSorda predicts new Dodge Caliber compact will be a global hit and is bullish on a slew of new Jeeps

AUBURN HILLS -- For those craving a respite from the gloom-and-doom swamping the hometown auto industry these days, Chrysler Group CEO Tom LaSorda's office is a good place to start.

His folks are making money -- not as much as he and his German bosses would like, but $1.9 billion in operating profits last year ain't chump change. While the bigger boys across town keep slipping, Chrysler's hanging tough with Asian rivals in the market share wars. And LaSorda's team plans to launch 10 new vehicles this year, a "product onslaught" that he says belies talk of flagging momentum in Auburn Hills.

He is, simply put, cautiously upbeat about the prospects for his unit of DaimlerChrysler AG. He predicts the new Dodge Caliber compact will be a global hit and is bullish on a slew of new Jeeps. He's proud of a health care cost-sharing arrangement that goes all the way to the top of the salaried ranks, including him, and the new "flex" plants being installed this year in Sterling Heights and Belvidere, Ill.

Optimism has its limits. Like its local competition, Chrysler still is burdened by billions in annual health care costs that eat into its bottom line. Consumers still expect more cash incentives to buy Chryslers, Jeeps and Dodges, as monthly incentive spending attests, than to buy Toyotas and Hondas.

Worse, Chrysler's hometown is battling a communal kind of depression that LaSorda, a GM veteran who joined Chrysler in May 2000, likens to "business and emotional gridlock."

Many see it, feel it, and intuitively know how corrosive it can be. The parallel restructurings of General Motors Corp. and Ford Motor Co. are winnowing payrolls, pressuring suppliers and stressing local governments in a way that feels interminable, even if won't be because it can't be.

"People are waiting to see what's going to happen" with Detroit's Big Two, LaSorda told me in a wide-ranging interview. "These companies will survive, but people are looking for the indicators to prove that and I think they'll see it this year for both.

"At some point, the positive news has to flow so you can overcome the negative news. Where it hurts us the most is in the supply base. Every time the volumes come down by the other two, they're walking in and saying, 'Hey, we're losing this and losing that.'

"I mean, we've got 24 or 25 companies in Chapter 11 bankruptcy. And there's one or two a week, it seems, or three or four (times) a month that somebody's in trouble. Until these get stabilized and the curve runs forward where's the good news?"

With more stable production volumes come more stable suppliers. Communities can see whether their major players and the jobs they provide have a shot at survival, whether they'll start making money again, whether the specter of bankruptcy and plant closings is passing or permanent.

We're not there yet. But Chrysler's latest comeback is evidence that there is a way back for a Detroit-based automaker that gives familiar meaning to the term "comeback kid."

It begins with the pain of downsizing -- the Auburn Hills-based unit of Germany's pre-eminent industrial company is 40,000 people smaller than in 2000. GM and Ford are heading that way now, but they don't have deep-pocketed foreign parents backing them up because they are the parents.

The comeback includes tough restructuring that closes plants, strengthens balance sheets, outsources services and slays sacred cows. It ends with a reinvigorated product line that shuns a "me-tooism" where American, German, Japanese and South Korean products look alike and gives dealers a lot new to sell.

Quibble about whether Chrysler product appeals to you, but don't quibble with the strategy. Its products turn heads. It has stabilized the business. It marries American design and innovation with core German technology. It is injecting hope, promise and energy into a Detroit-based industry given up for dead -- even when it's still very much alive.

Chrysler's history also provides ample cautionary tales that comebacks can falter. Remember the so-called Dream Team management group that didn't look too dreamy a few years later? Or the time a strong CEO named Iacocca was followed by a weaker one named Eaton?

The German-owned Chrysler is breaking some of the bad old habits that made it a perennial basket case -- and it's doing the job in Michigan with a predominantly American work force now led by a Canadian product of Detroit Auto.

There's hope, people.

Link: http://www.detnews.com/apps/pbcs.dll/artic...393/1148/AUTO01

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MyerShift    7

Eaton was a terrible man to run Chrysler. It was so unfortunate.

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