Chrysler's Nardelli: Turnaround Plan is Achievable

DETROIT December 23, 2008; Soyoung Kim writing for Reuters reported that Chrysler LLC's plan to return to profitability is "reasonable and achievable", Chief Executive Bob Nardelli told the company's employees in a memo.

Chrysler, which won a $4 billion federal rescue package last week, will continue to work with all of its stakeholders in coming weeks to achieve the "shared sacrifice" it needs to turn around its operations, Nardelli said in the Monday evening memo, a copy of which was obtained by Reuters.

The bailout funds given to Chrysler and General Motors Corp came with the condition that the automakers restructure with massive cuts in labor costs, and a two-thirds reduction in debt that involves convincing creditors to swap debt for equity.

"We have a realistic and achievable plan to turn Chrysler around and return the company to profitability," Nardelli said in the memo.

"With the government bridge loan forthcoming, we'll have the financial backing to implement that plan."

Chrysler was given $4 billion from the U.S. government after having asked for $7 billion. The bailout is Chrysler's second in 28 years.

Analysts have expressed doubt over whether Chrysler and GM can win the steep concessions it needs from bondholders and the powerful United Auto Workers union by March 31. The government has said it would call back the loans if the automakers cannot meet all the conditions and prove they are viable by the end of March.

Chrysler's U.S. sales are down 28 percent through the end of November, below the industry's 16 percent. Auto sales have fallen globally as consumer spending and credit dried up.

Nardelli said Chrysler has acted quickly to reduce costs and cut production to mitigate the effects of the global financial crisis.

Since 2007, the automaker has cut 32,000 jobs, taken out 1.2 million units of capacity, eliminated 12 production shifts and closed two plants.

"These and other difficult but necessary actions have positioned Chrysler to begin 2009 as a leaner, more efficient and focused organization characterized by fewer layers of management with broader spans of control," Nardelli said.