Chrysler Has A Much Better Idea. It Moves Design, Engineering, and Production Out Of Michigan And The USA To Reduce Its Dependence On The Costs Of Such Operations In The Domestic American Market

Implications: Chrysler now has multiple deals to sell cars and trucks designed and manufactured by other OEM automotive companies. None of these deals required its own in-house, fading, engineering or design skills, and so none of them added to Chrysler's American costs.

Analysis: Chrysler's Bob Nardelli has begun to reshape Chrysler in the image he knows best: A Home Depot type purveyor of outsourced goods. He has done his cross town rivals one better though by directly outsourcing everything but the sales and servicing of the outsourced vehicles to their suppliers. It is the Chrysler brand as an engineering mark of excellence and  manufacturing that he is allowing to fade; this may not be a bad idea.

Historically Chrysler was the engineering house among the Big Three. I remember well how people in the industry (Note: I grew up in Detroit and still reside in its metropolitan area) would say that Chrysler cars may not be the most stylish but their engineering is the best. Certainly, today, no one would make the latter claim while reinforcing the prior one by pointing to the stale design of the 300.

It is very expensive to design, prototype, order out components, and mass produce a motor vehicle to the standards required by the customers and government of the United States. It has also been repeatedly demonstrated globally that you cannot design a car in one country with lower standards of excellence and quality and expect to export to a country whose cars are higher on the food chain. Remember the Yugo?

It is for the above reason that a car designed and made by Chery is an iffy proposition even to sell in Mexico while cars designed and made by Mitsubishi, VW, or Nissan can be sold anywhere.

Actually Chrysler's (read: Nardelli's) business model is that of a primary financial company, such as Cerberus, which can be stated simply as "Cut Costs." 

Bob Nardelli is not a car guy; he is a marketing guy, and the difference shows.

Skeptics might want to notice that one of the Chinese car companies has opened a design and engineering center in Michigan. The Chinese manager told a MIchigan newspaper that he was shocked by costs of living in Michigan. When then asked why then did his company decide to do just that his answer was "because Michigan today has what we need to get into the US market, skilled unemployed first class automotive designers and engineers."

A man I know was interviewed by the Chinese company; he had been making $95,000.00 at Ford when he was laid off. The Chinese offered him $85,000.00. He refused; they were astounded. I am saddened, because I'm sure that one day I will be paying taxes some of which are used to make welfare payments to this man who is still looking for a pay check suitable to his talents.

Bob Nardelli has recognized that Chryslers sales, distribution, and service operations in South America are its most valuable assets in that market. He has moved to maximize that value. Good luck to him and farewell Michigan and the motor city. It's just business, isn't it?