Feb. 14 (Bloomberg) -- No one can accuse Chrysler LLC's new management of lacking urgency in efforts to conserve cash, slaughter sacred cows and in so doing get the automaker spruced up for a sale.

Chrysler in early February balked at a price increase on parts made by Dearborn, Michigan-based Plastech Engineered Products Inc. Instead, Chrysler canceled its contracts, drove trucks to Plastech's plant and demanded the tooling, which it says it owns. Chrysler planned to give the tools to other suppliers.

Plastech filed for bankruptcy and the resulting shortage of injection-molded plastic parts triggered a temporary shutdown of four Chrysler assembly plants. Plastech, which has 35 plants in North America, says it owns the tooling.

While that conflict simmered, Chrysler a week later said it would cut as many as half of its 3,600 U.S. dealers by trimming the number of models it sells. Those dealers that don't agree to consolidate may end up starved of certain vehicles.

Chrysler could, for example, decide to sell minivans only through Dodge or only through Chrysler, rather than at both as it does now. The automaker also told Chrysler, Dodge and Jeep dealers not to expect much, if any, monetary help -- as General Motors Corp. gave to Oldsmobile dealers -- to cover losses when they sell or close their stores.

Permission Granted

Cerberus Capital Management LP, 81 percent owner of Chrysler, has given Chief Executive Officer Bob Nardelli the green light to be as aggressive as he sees fit, and unheeding of Detroit's sometimes-clubby business practices. Cerberus, a private-equity firm, would like to make a profit by selling Chrysler within two or three years. That means turning the ailing automaker into a tightly managed operation that generates cash instead of burning it.

How big the cash burn is no longer clear, since Cerberus isn't obligated to publicize financial results. But the pain last year was enough to make Daimler AG give up and sell for a pittance all but 19.9 percent of the automaker to Cerberus.

Thus, Nardelli was willing to ignore Motor City etiquette and provoke the indignation of Ford Motor Co. and GM with his bare-knuckles tactics against Plastech, whose production of parts for Ford and GM vehicles now might be disrupted. GM and Ford, which have joined Chrysler in pouring millions into Plastech to keep it afloat, aren't pleased.

Open Wallet

Compare Nardelli's confrontation with Plastech and with Chrysler dealers to an earlier, similar situation at GM. GM reimbursed Oldsmobile dealers, in some cases offering millions of dollars per franchise, after deciding to drop the Oldsmobile brand in 2000. GM's bill to close Olds totaled about $940 million.

On Tuesday, GM reported a net loss of $722 million for the fourth quarter of 2007, the latest chapter in a dismal financial performance stretching back to 2004. Beset by high labor costs and falling market share in the U.S., GM is aiming to offset losses at home with expanding sales and profits in emerging markets.

In contrast to Chrysler's new regime, GM often has been generous to a fault, preferring to write a check than to slug it out in court or dig in its heels. In 2005, for example, it paid Fiat SpA $2 billion to settle a dispute about whether GM had promised to buy the part of the Italian automaker it didn't own.

Tough Union

And let's not forget the parade of high-cost GM labor contracts designed to avoid confrontation with a feisty United Auto Workers union.

To its credit, GM may have learned some lessons. The automaker now is consolidating its Pontiac, Buick and GMC franchises (as well as some Cadillac, Saab and Hummer dealerships) by encouraging dealers to buy out one another, which should reduce their number and cost the automaker little. GM, like Chrysler, plans to reduce the number of models it builds, putting pressure on dealers that delay selling or don't have multiple franchises under one roof.

Nardelli, having been tossed from the helm of Home Depot Inc. in 2006 and earlier a loser in the contest to succeed Jack Welch at General Electric Co., is managing Chrysler as though he has much to prove. Though the pay he can receive in a sale of Chrysler hasn't been made public, he's likely to make a bundle when it happens.

The value of Chrysler, and thus the value of Nardelli's pay package, will depend -- if the customs of private-equity incentives hold true -- on how soon he can make the enterprise cash positive. So far he's proving himself determined.

The rest of Detroit, GM foremost, could do worse than pay more attention to Nardelli.

(Doron Levin is a Bloomberg News columnist. The opinions expressed are his own.)

To contact the writer of this column: Doron Levin in Southfield, Michigan, at dlevin5@bloomberg.net

Last Updated: February 14, 2008 00:14 EST