Chrysler CEO Tries to Keep Focus

By TOM KRISHER AP Business Writer
© 2007 The Associated Press

AUBURN HILLS, Mich. — At every meeting, in the hallways as he travels between them, and every time he ventures off Chrysler's gleaming headquarters campus north of Detroit, Tom LaSorda knows he's being watched.

Rank-and-file employees. Dealers. Members of his management team. All are looking for a sign of depression, a facial expression or body language that shows the chief executive is exasperated or afraid of what lies ahead because of that "for sale" sign in the front yard of DaimlerChrysler AG's U.S. operations.

"Unfortunately I get watched a lot," the 56-year-old LaSorda said Tuesday in an interview with The Associated Press. "People can read you every day. Do you have the energy or are you depressed? But I'm extremely excited and I have more energy than I had maybe five years ago."

LaSorda, who has run the company since 2005, said the days have been long and he's worked weekends as well for about five months, well before DaimlerChrysler's Feb. 14 announcement that all options, including a sale, are open for the struggling Chrysler.

In his first interview since the day after the announcement, LaSorda said he tells people in meetings and one-on-one that the only thing they really can control is the company's recovery plan.

"Regardless of what happens, we have to deliver a baseline performance of the company, which is returning to profitability" and a 2.5 percent return on sales by 2009, LaSorda said.

He wouldn't answer questions about the potential sale of the company, but said the possibility of DaimlerChrysler keeping Chrysler remains one of the options.

LaSorda admits to worrying about losing key employees because of the uncertainty, but said he doesn't get depressed and doesn't have to catch himself fighting off a frown.

"I would be foolish not to say that one wouldn't be concerned about losing people," said LaSorda, who proudly adds that no key workers have left despite uncertainty over the company's future.

"And that's after two months," he said.

Chrysler Group, like other Detroit-area automakers, was caught flat-footed with too many inefficient truck-based vehicles when gasoline prices rose in 2005 and 2006. The company lost $1.475 billion in 2006 and said it expects losses to continue through 2007. DaimlerChrysler, however, earned $4.26 billion in 2006.

In the interview, LaSorda said he's disappointed that he couldn't deliver the performance that the company is capable of. But he said many of the company's new products, while not blockbuster hits like the Chrysler 300 sedan, are performing well and together are capable of carrying the company to profitability.

He also said acceptance of buyout and early retirement offers designed to reduce the company's work force by 13,000 is running slightly ahead of plan. And he said that reducing Chrysler's health care costs will be a topic of the upcoming national contract negotiations with the United Auto Workers union.

Chrysler spends $2.2 billion per year on health care for its roughly 80,000 employees, and it has an estimated $19 billion in long-term retiree health care costs. Its Asian competitors, mainly Toyota Motor Corp. and Honda Motor Co., don't have the same costs and make more money per car.

Chrysler didn't get the same health care concessions from the union that its U.S.-based competitors got, but the UAW has reviewed Chrysler's finances for a second time. The union and LaSorda would not say whether a deal is imminent.

"It's going to be an ongoing dialogue just because of the cost structure that's coming at us," he said, adding that government and the health care industry will have to be involved in the solution.

Setting up a trust controlled by the union to handle the retiree health care costs should be open for discussion with the UAW, he said.

"It's an option that we wouldn't discount," LaSorda said.

He said there aren't many books on how to run a company in Chrysler's current state.

"This isn't an experience anybody often writes about because it's not too often this 'all options are open' scenario comes up," he said.

LaSorda tells his managers that they, too, are being watched, and that generally the CEO is the only one who has to worry about their job when a company is sold. Most other employees, he said, keep their jobs.

LaSorda's challenge, while difficult, is not unprecedented for a chief executive. Many have had to lead companies during takeover attempts or as multiple bidders compete for controlling interest, said Robert Wiseman, associate professor at Michigan State University's Eli Broad College of Business.

Still, running a company that's up for sale is a CEO's nightmare that requires frequent communication with employees.

"You really have to be as honest and open with your employees as possible because the rumors and the speculation will inevitably be worse than the reality," Wiseman said.

Chrysler will suffer the longer the sale talks go on, he said, but LaSorda appears to be doing a good job of keeping the company focused.

"I think he's doing the best he can. I haven't heard any complaints from the Chrysler people about him," said Wiseman.

Reports about the Chrysler sale have been numerous in the past few weeks. One to surface recently came from a German newspaper that said Canadian auto parts maker Magna International Inc. was in intense negotiations with DaimlerChrysler. Magna and a private equity partner reportedly bid $4.6 billion to $4.7 billion for Chrysler in late March.

In addition, General Motors Corp. has discussed a potential purchase, and private equity firms Cerberus Capital Management LLC and Blackstone Group, each have reviewed Chrysler's finances and were expected to submit bids. Private equity firms Apollo Management LP and the Carlyle Group, also are said to be interested.

Billionaire investor Kirk Kerkorian, who tried to take control of Chrysler in the 1990s, has made a $4.5 billion bid.

LaSorda wouldn't say when he thought a decision might be made, and some industry analysts have said it could be months off.

All LaSorda knows is that he has to deliver no matter who owns the company. That's all he can really control.

"My job is to deliver the day-to-day performance," he said. "I have to deliver with my team the recovery and transformation plan. We cannot lose a beat going forward. If were not careful, we could."