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Daimler-Benz and Chrysler Merge to DaimlerChrysler
Optimized for 800 x 600 screen resolution.......................................................................................Updated
July 8th 1999
Articles from "Time" (USA), "Der
Spiegel" (Germany) and "Hamburger Abendblatt"
(Germany)
|
Worldwide
Fender
Blender |
..............................................................................................................................................All
photos: Time....Above photos: Time/D.A. Peterson |
Article from "TIME" magazine May 24th 1999...By
FRANK GIBNEY JR. STUTTGART ((GERMANY))
THERE ARE LOTS OF DETAILS THAT can strangle a $48 billion
merger - different accounting practices, the need to rationalize information
technology, patent ownerships - and Tom Stallkamp thought he'd worked through
them all. As president of Chrysler, he had helped orchestrate the American
company's merger with Germany's Daimler-Benz. But last November, as the
new outfit, DaimlerChrysler, approached the date it would debut on the
New York Stock Exchange, the whole thing stalled seemingly over whether
the company would use American- or European-size business cards. The more
tradition-bound Germans dug in their heels, not surprisingly. But the more
flexible Yanks wouldn't budge either. "It got all the way up to me, and
I said, 'What the hell, they're only business cards,"- Stallkamp recounts
- and he chose the slightly wider European style, for novelty's sake.
By now the novelty has worn off - and with it the notion
that DaimlerChrysler was a merger of equals. Just a year ago, the chief
executive officers of Daimler-Benz and Chrysler Corp. - Juergen Schrempp
and Bob Eaton, respectively - made the surprise announcement that their
two companies were going to combine. But Eaton, the executive who presided
over Chrysler's transformation into America's hottest car company, ceded
too much authority too early, giving the Germans an advantage in the high-stakes
game of musical chairs that happens when two huge corporations marry.
It's no surprise that Schrempp is running the show. What
is surprising is the way in which he is putting the two organizations together:
forcing head-on confrontations, with the survivors left to run the company.
"Most mergers have this deadly wish for harmony," says Schrempp. "We put
the tough issues up front."
This deal probably means a lot more to the world than
money and ego. The largest industrial merger in history is a test of whether
globalization can really bring together the leading capitalists of Europe
and the U.S. Can fastidious Germans join with freewheeling Americans and
teach the Japanese a lesson or two? Although only the world's fourth largest
carmaker, DaimlerChrysler's $95 billion market capitalization looms over
General Motors, and the company is sitting on $22 billion in cash. Its
440,000 employees make everything from cars and trucks to Airbuses, trains
and ocean-liner engines.
Schrempp knows this is risky, because mergers often fail,
and big ones fail more often. So DaimlerChrysler is dancing a transoceanic
jitterbug that is testing the limits of corporate convention. German and
American bosses are fusing their cultures on napkins in airport lounges
and in the conference rooms of five-star hotels. The transatlantic traffic
became so heavy that DaimlerChrysler, which owns 20% of Airbus, bought
an A320 and outfitted it like an NBA charter so its executives could get
some sleep between meetings. The 53-seat plane (an A320 normally has 150
seats) flies four weekly round trips between Stuttgart, Germany, and Auburn
Hills, Mich. All that jetlagged jawboning in the wrong language is taking
its toll on top managers. The stress has already led to some marital de-mergers,
including Schrempp's. The chain-smoking CEO is so determined to make DaimlerChrysler
the world's No. 1 transportation-services company that he let his 35-year
marriage collapse, because, as
he told the German tabloid Bild ((Germany's
biggest daily newspaper)) last month, "the merger means more to me than
anything in the world."
Despite the odds, and the human costs, the whole thing
just might work. Bolstered by a sizzling auto market in the U.S., the new
company is raking in profits even as its executives redefine the boundaries
of their businesses. At New York City's tony Le Cirque 2000 two weeks ago,
Stallkamp and a chorus line of executives trotted out their achievements:
more than $1.4 billion in savings, a healthy stock price of $94 and 34
new products already on the drawing boards ((These 34 new models in the
next three years are passenger- and commercial vehicles of various sizes
from both Chrysler Corp. and Mercedes-Benz)). "Nobody's done this before,"
crooned Stallkamp. "But we're feeling pretty good about where we are so
far.".....................Photo:Time |
|
.ROLLING
THUNDER .
From opposite ends of the cultural divide,................. |
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The design
mavericks from
Auburn Hills
redefined style
in the 1990s |
1998:A record
3 million cars
and trucks sold.
Sales in 1999
are up 11% |
Bottom: Neon
at $12,000.
Top: 460-h.p.
Dodge Viper at
$71,000 |
The low-cost,
high-volume
kings are still
fighting quality
demons |
120,000
employees, all
in automotive,
90% in U.S.A.
Wage: $22/hr. |
Soup to nuts:
28 models,
from the basic
Neon to macho
RAM trucks |
As freewheeling
as auto
companies get.
No dress code,
no smoking |
Construction
foremen,
boomer families.
Jay Leno owns
a Viper |
Styling |
Sales |
Pricing |
Quality |
Work Force |
Variety |
Management |
Audience |
State-of-the-art
engineering.
Styling? Try
state of the
Soviet Union |
1998:
922,795 cars
sold. Surprise
hit: The M
series SUV |
Bottom: C230
Kompressor at
$31,000
Top: S600 at
$134,250 |
The best ... but
some of the
highest pro-
duction costs
in the industry |
320,000
employees,
many in nonauto
industries.
Wage: $28/hr. |
Striving to add
diversity to its
once staid
collection of
sedans |
Wants to be like
an American
company - plus
ashtrays and
red wine |
Lots of
important men in
suits. Yearning
for a few more
fashion models |
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.Germans
and Americans make a great leap to bridge their futures.................. |
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Ironically, all this came about because two companies
just ... needed each other. Schrempp, the tough-talking 54-year-old iconoclast
who became Daimler-Benz chairman in 1995, had already slashed the company's
divisions from 35 to 25 - taking tens of thousands of jobs along the way.
It was an outrageous move in a country where labor rules. Schrempp wanted
a new empire that would no longer depend on luxury cars, which were becoming
prohibitively expensive to produce.
Eaton was worried that in 10 years only six of the current
30 automakers would be around. Although Chrysler was hugely successful,
he feared it would never have the financial muscle to best Ford and GM.
That's why Schrempp needed a mere 17 minutes around a coffee table in suburban
Detroit in January 1998 to convince Eaton that a combination was a good
idea.
Photo left: Time |
Yet in his enthusiasm for the deal, Eaton acceded to an acquisition
of Chrysler by Daimler-Benz. And over months of secret talks, Chrysler's
leverage was whittled away. Although Chrysler was more profitable, Daimler-Benz
was bigger. Although the Americans wanted the new company to be based in
the U.S., German law made it impractical and expensive. Inevitably, a German-registered
company was going to be dominated by German managers, and it is. When it
came to money, though, Eaton won a handsome premium for Chrysler shareholders
(and top Chrysler executives) in a head-to-head negotiation with Schrempp.
And in a symbolic win, he persuaded Schrempp to crop the "Benz," thus the
name DaimlerChrysler.
The deal was cast publicly as a "merger of equals" because
neither Eaton nor Schrempp wanted to use the word acquisition. Schrempp
feared it would touch off a xenophobic outcry in Washington. Eaton did
not want to seem as if he'd just sold out. But Eaton blundered. He announced
last May that he would step down as co-chairman within three years and
turn the company over to Schrempp.
Stallkamp, sensing what the consequences might be, pleaded
with him not to say it, but Eaton wasn't swayed. "I believed strongly there
should not be two CEOs," he explains. "But I probably made a mistake in
saying I would leave."
Eaton, now a lame duck, had basically surrendered Chrysler's
power base. As Stallkamp had feared, the announcement undercut the Americans'
influence with the Germans. He "abdicated," in the words of a DaimlerChrysler
official. At a top-management seminar in Seville, Spain, last December,
Eaton delivered a passionate speech on the new company and how its leaders
had to band together to make it work. The oration left even Schrempp uncharacteristically
at a loss for words. But by February the Germans were referring derisively
to the speech as "Eaton's farewell."
From the start, the culture gap made DaimlerChrysler's
post-marriage period of adjustment more difficult than that of any other
merger around. When Stallkamp and two other Chrysler execs named Tom were
introduced to their German counterparts, who by custom all use the title
Doctor, Stallkamp broke the ice. "Titles are important in America too,"
he said. "Tom' is the title you get when you have an M.B.A."
The Germans' laughter belied their misgivings. Many Daimler-Benz
executives initially viewed Chrysler as a primped-up matron would regard
an earnest young suitor. Chrysler marketing chief Jim Holden recalls his
first meeting at the Mercedes-Benz U.S. headquarters in Montvale, N.J.
As the Germans presented their view of the brand hierarchy - Mercedes on
top and everything else far, far below - the tension in the room was palpable.
Says Holden: "We felt like we were marrying up, and it was clear they thought
they were marrying down."
From the outset, the German obsession with planning has
kept everyone on edge. No sooner was the merger announced last May than
Schrempp's phalanx of strategic thinkers began issuing reams of organizational
flow charts. Every phase was delineated with titles like "synergy tracking";
every group had its weekly meeting schedule, from last year until 2001,
when the integration is to be complete. The process is directed by Ruediger
Grube, the tireless tactician who helped Schrempp restructure Daimler-Benz.
For Grube, the company's best measure of success is whether
his schedules are being met. He set up a "post-merger integration" (PMI)
structure in which 12 "issue-resolution teams" are assigned to push and
cajole their counterparts into combining everything from supplies to research.
Every time there is disagreement, the integration process for that group
is halted until a solution is found. Progress is tracked in the "war room,"
a nondescript office down a dark second-floor corridor in Daimler's imposing
brown headquarters in Stuttgart.
The Chrysler culture that evolved in the '90s - a creative
collection of industry renegades held in check by Eaton - was spectacularly
unsuited for this European model of management. Eaton shaped a team of
hotshots led by product wizards Bob Lutz and Francois Castaing. In addition
to inventing the minivan and sport-utility vehicle, categories that are
such profit machines today, Chrysler's designers proved with models like
the Viper and the Prowler that cars don't have to be boring.
By 1997 Chrysler had become a world leader in low-cost,
high-volume auto production. Purchasing arrangements had been revamped
so that suppliers took on as much as 70% of the cost and manufacturing
responsibility for new cars - a success that prompted the Harvard
Business Review to describe Chrysler and its suppliers as an "American
keiretsu,"
a reference to Japan's synergistic business groups.
Chrysler managers thrived on spotting opportunities and
going for them, if necessary chucking previous plans as if they were gum
wrappers. And here they were, trapped in Stuttgart's planning hell, bristling
at constantly being reminded what to do. A top manager coined the phrase
"I'm having a bad PMI day." Steve Harris, Chrysler's former communications
chief who defected to General Motors in February, says the Germans played
literally by the book - theirs. "You'd go into a meeting and have to turn
to Volume 7, Section 42, page 597," he recalls. "The Germans pride themselves
on analytical research that produces a plan, while the American way is
to try for the impossible and keep coming up with new ideas to make it
happen."......Photo left:
Time ((showing Chrysler PT Cruiser study to go into production year
2000))
|
At the Seville conference, American managers politely
wondered out loud whether they were wasting time reporting to Grube's PMI
teams. Schrempp's response was less than polite. "What?" he barked at one
point, gesturing so hard his momentum nearly carried him off the podium.
"You have a problem, you call me and we fix it." Schrempp has been convinced
all along that unless one side took the initiative, the union would fail.
"I must have studied 50 mergers," says Schrempp. "And I learned that to
avoid others' mistakes the only answer is speed, speed, speed." |
Speed kills careers. In the scrimmage between Germans and
Americans for jobs, Schrempp lost his top legal counsel, a senior manufacturing
executive and a handful of others. Dennis Pawley, the man who revolutionized
Chrysler's manufacturing operations, retired as he had planned even though
Schrempp tried several times to change Pawley's mind. In February and March
a series of top Chrysler executives defected to Ford and General Motors.
Although company officials have downplayed the departures, they hurt; all
were part of the winning team.
In effect, Schrempp may have saved Chrysler. Even before
the merger, Lutz and Castaing had resigned, and the camaraderie was fading.
"We were in a transition that would have continued, in part because of
Bob's age," concedes Stallkamp. "[The merger] gave us a very strong leader
and solved the problem sooner rather than later."
Cynics abound, especially in Germany, where Daimler-Benz
had to take a huge write-off because of Schrempp's disastrous acquisition
of Fokker, a Dutch aviation company. But the mountain-climbing chairman
has won astonishing support from the Americans for his straight talk, quick
decision making and more charisma than most rooms can handle.
Since DaimlerChrysler's incorporation in November, the
company has melded its duplicate financial-services and technology divisions.
Marketing chief Holden has succeeded in creating a global-sales and marketing
organization with German counterpart Dieter Zetsche. Says chief engineer
Bernie Robertson: 'We have a strong operation here, there's a strong operation
in Europe, and now there's the rest of the world to go after." Robertson
admits, however, that he's still having a tough time getting German and
American engineers to swap jobs.
Most important, the merger is now producing metal. In
Graz, Austria, this month, Mercedes and Chrysler vehicles began rolling
off the same assembly line. The Graz plant originally made the Jeep Grand
Cherokee. But when the merger talks began last year, Mercedes car chief
Juergen Hubbert spotted a golden opportunity to expand production of the
new M-class sport utility vehicle without paying the exorbitant costs of
a new factory. In an odd twist Mercedes saves more than $70 million by
shipping components from its plant in Tuscaloosa, Ala., back to Europe
for assembly alongside the Jeep. "There was the distinct opinion on the
Mercedes side that we would never build a Mercedes under a Chrysler roof,"
says Schrempp, with a smug grin. "We're doing it already."
Your next Chrysler may not be a Mercedes, but chances
are it will share some of the same blood. Early this year the two sides
established an automotive-strategy group that is already coming up with
new products. Plans for a Mercedes minivan have been canceled. Yet the
group has commissioned at least one new minivan-like vehicle to be built
probably by Mercedes, and a Chrysler car that will be marketed in
Europe against Volkswagen's successful Golf. Both products are being designed
with input from both Stuttgart and Auburn Hills. Marketers Holden and Zetsche
insist that brand identities and marketing will remain separate. Yet inevitably,
Mercedes engineering will make Chrysler cars more reliable, and Chrysler's
flashy designs will make Mercedes less boring.
The cross-pollination would not have worked without American
patience and flexibility. "Forget 'merger of equals,'" says Stallkamp.
"We're one company now, and we're making it work." Despite the early arrogance
of the Germans, Stallkamp and his band impressed them with technical prowess
- the best auto-manufacturing option in thee world - and a willingness to
bury differences and just get the job done.
In turn, the Germans began to listen. 'The watershed
moment came when the Yanks (with a little inside help) persuaded Schrempp
in March to drop a long-standing bid to buy Japan's Nissan Motors.
Schrempp wanted Nissan badly, to consolidate his empire,
and he had been negotiating with an absolutely desperate Yoshikazu Hanawa,
Nissan's chairman. But the Americans, who would have been saddled with
turning Nissan around, had been uncomfortable with the plan from the start.
Since then, meeting schedules have been altered and their
venue changed from Stuttgart to New York in order to reduce travel stress
for both sides. The corporate-communications department, which has lost
top staff members to cross-cultural tension (remember the business cards?)
and job competition, last month hired an outside facilitator to help the
communicators communicate with one another. "I never thought much of outside
consultants," admits Roland Klein, a senior vice president for corporate
communications. "But this seemed to work very well."
Still, says Schrempp, "our toughest times are ahead."
Last year, in a move that still draws an angry reaction from Schrempp,
DaimlerChrysler was refused admission to the Standard & Poor's 500
index - important because inclusion would make the company's stock a must-buy
for many money managers. The majority of the company's shareholders are
now in Europe, though the largest stake is controlled from Kuwait Another
concern is contract negotiations this summer with an increasingly feisty
United Auto Workers union. In Europe the economy still trails Schrempp's
ambitious expectations, and so do sales of the Smart, a clever but perhaps
fatally flawed experiment in making a Mercedes for the masses.
No matter what happens, America's Chrysler Corp. is history.
If Bob Eaton simply cashes in his stock, he stands to make at least $200
million. As early as the end of this year, insiders expect, he will step
down, leaving Schrempp to deliver on a promise that Chrysler's creative
culture will survive.
Schrempp, for his part, is house hunting in the Detroit
suburbs. "I am learning that ultimately a company is people, nothing else,
and I can handle both sides," he says. In fact, he ran a Mercedes truck
subsidiary in Euclid, Ohio, during the 1980s. "I know when to tell the
Germans to loosen up and when to tell the Americans, 'Look we made a decision
on Monday - wouldn't it be nice if it sticks on Tuesday?' If it is managed
well, then we will be so much better than all the others."
If it is managed well, then Tom Stallkamp should never
again have to worry about
the size of his business card.
With reporting by Joseph R. Szczesny/Auburn Hills
End of article from "TIME"
As usual remarks and additions in ((blabla)), but (blabla)
belongs to original text. |
.. |
Translation of a notice from
Germany daily newspaper "Hamburger Abendblatt"" from June 8th 1999
Schrempp for free-trade zone ((of Europe)) with the
USA
DaimlerChrysler chief Jürgen Schrempp has called
the governmants in Europe and the USA to remove the trade barriers and
to establish an European-American free-trade zone. From that the enterprises
and also the consumers and companies from both sides would benefit, too.
End of translation by MBEP webmaster - as usual remarks
in ((blabla)).
Personal comment by MBEP webmaster:
Do I hear some fear that the savings announced at the
time of the merger might not become real?
|
Computer retouch: Andrew Plato |
Translation of an article from
German newsmagazine DER SPIEGEL issue 35/98 August 24th 98 p.85
Groups
Continuous Change
The merger with Chrysler causes worries in the Daimler-headquarter.
Who will have the say in the future - the Germans or
the Americans?
His board of directors Juergen Schrempp already at the
beginning said where he sees the biggest danger for the merger of Daimler-Benz
and Chrysler: In the human factor.
The strategy may be as good as possible, if the managers
from Stuttgart and Auburn Hills do not work together but against each other
the merger will fail. The "soft facts" so the Daimler-head could " become
hard facts quickly ". The "marriage in heaven" then would be a disaster
from hell.
There are already first danger signals, still before
the general meetings of both groups in special meetings on September the
18th finally decide for the merger of the car groups. Especially in the
Stuttgart Daimler-headquarter the infights and whispers for positions and
influence grows.
The new management structure in fact is fixed since weeks.
But details, which only now are realized by many executives at Mercedes-Benz,
cause trouble.
Above all it is about the strong position of the Chrysler-manager
Thomas Stallkamp. Also differences of opinion between Schrempp and his
Chief Financial Officer Manfred Gentz, which in the meantime even are held
in the public, cause disturbances.
The real centre of power of the new Daimler-Chrysler-group
((DER SPIEGEL errs here, the name will be spelled DaimlerChrysler and not
Daimler-Chrysler)) will be the so-called Integration Council, a seven-head
committee within the general board of managers. The Integration Council,
lead by Daimler-head Schrempp and Chrysler-head Robert Eaton, shall push
the merger of the groups. It meets
weekly and debates via video conferencing.
In this committee Daimler chief of passenger cars Juergen
Hubbert formally has equal rights besides Chryslers automotive expert Stallkamp.
Nevertheless the American gets a special role. The integration teams of
both car companies for development, production and marketing, whose work
will be decisive for the future of the group, report to Stellkamp. The
Chrysler-manager, so a Schrempp-confidant, is "the top integrator".
Hubbert, who understands best with Stallkamp, can live
with this division of responsibilities. But the second management level
at Mercedes-Benz regards it as a degradation, to have to discuss future
model decisions with a Chrysler-manager first.
With light commercial vehicles and off-road vehicles
(brand Jeep) the Stuttgarters grant outstanding abilities to their new
partners. But with passenger cars many Mercedes-developers believe they
are head and shoulders above their American colleagues.
Amongst Mercedes-managers disgruntlement spreads about
the fact that the management structure is completely changed for the third
time. Under the regime of Edzard Reuter every subsidiary had an own management
committee besides the holding's board of management. Schrempp united, after
fierce fighting with the then Mercedes-head Helmut Werner, the boards again.
And the companies leaders only just adopted to this everything is upset
again.
Schrempp knows that the continuous change is too much
for some. But for others the merger offers unique chances. One who took
advantage of them is Eckhard Cordes. The group's planner who prepared the
coup together with Schrempp is the clear winner of the merger.
Cordes, before responsible for some shares like the ((German-))
rail-joint-venture Adtranz only, passed other chairmen and joined the Integration
Council. There he is responsible for the group-planning and take-overs.
It is possible that the controlling gets transferred to him which until
now is placed at the Chief Financial Officer Manfred Gentz.
Gentz by contrast is the loser of the merger. He wasn't
present |
|
at the first negotiations, supposedly, so the mockery
of some Daimler-managers, because his English is too bad.
The knowledge of languages of the Chief Financial Officer
is
not too bad. But Gentz has another shortcoming:
In contrast to Cordes he doesn't enjoy the favour of
Schrempp. |
...........Photo and photo
text: Der Spiegel
........Group chiefs Eaton,
Schrempp in a
........historic car in
the Mercedes-museum
........in Stuttgart
........"Marriage in heaven" |
In board meetings Gentz often criticizes the Daimler-head,
urges to more cautious planning. Also at the merger with Chrysler the Chief
Financial Officer did not join in the cheering at first. Gentz, who welcomes
the merger, nevertheless wanted to have all the risks examined.
The Chief Financial Officer will have a hard time to
survive the next reform of the management structure particularly since
he criticizes Schrempp in the public, too.
At the presentation of the results of the first half
of 1998 with a profit of two billion ((German)) marks ((USD 1.053.000.000
assumed USD 1 = DM 1.90)). Schrempp announced that also the second half
of the year would be "very positive". His Chief Financial Officer corrected:
"I do warn" so Gentz, "to double" the results of the first half of the
year. Schrempp, spoken about the contradiction, smilingly said: "We have
just have a very conservative Chief Financial Officer" - still.
Worries about the professional future not only the Chief
Financial Officer has to do. Also the other top managers can be sure of
their jobs for a short time only. After a transitional phase double-filled
provinces will be merged.
Chrysler managers already made best provisions. They
let them self guarantee nice redundancies in case they have to give up
their jobs in the next two years. The new group guarantees the 30 "Executive
Officers" of Chrysler redundancy payments of altogether 96.9 million ((US))
dollars. Bob Eaton alone would get 24.4 million ((US)) dollars in case
of his early leave.
End of article - translation by MBEP webmaster
Responsible DER SPIEGEL editor: Armin Mahler
As usual remarks in ((blabla)) but (blabla) belongs to
the original text. |
The merger of Daimler-Benz AG, Germany and Chrysler Corp.,
USA has been signed in London,
UK today.
The name of the new group will be DaimlerChrysler.
Capital stock is DM 166 billion (=~USD 92 billion assumed
USD 1 = DM 1.80). 57 per cent of the capital stock are held by Daimler-Benz
and 43 per cent by Chrysler. The new group has 421.000 employees world-wide
and expects to save DM 2.5 billion
(USD 1.4 billion) in purchasing in the first year alone
due to higher purchase volume. For three years DaimlerChrysler will be
led by the two top managers Schrempp and Eaton. DaimlerChrysler will be
registered in Germany and will be the third-biggest car maker in the world
behind General Motors and Ford.
Source: German TV ARD May 7th 1998 14:00 local time GMT
+200
What people are leading the two merging companies?
Here's what the world-renowned Reuters news agency has
to say:
.
Schrempp and Eaton, strong but complementary egos
LONDON (Reuters) via NewsEdge Corporation - The personalities
and skills of the two men at the top of the newly merged car group DaimlerChrysler
will be key to the success of the enterprise.
Both Daimler's Juergen Schrempp and Chrysler's Robert
Eaton have a strong track record at the helms of their respective firms,
and initial fears of a battle of egos were assuaged when it was announced
Thursday that Eaton would retire from the DaimlerChrysler board after three
years.
Following are pen portraits of the two leaders.
SCHREMPP, "RUTHLESS" CHAMPION OF SHAREHOLDER VALUE
As Chrysler Corp. gets down to brass tacks in merging
with Daimler-Benz AG, the U.S. carmaker will be dealing with one of the
toughest captains of Germany industry in Daimler Chairman Juergen Schrempp.
Schrempp, recently accused by his predecessor Edzard
Reuter of "ruthless brutality", took over Daimler in 1995 and in his drive
to rid the group of unprofitable business he has often clashed with his
own top management.
The methods may have been controversial, but there is
no question that Daimler has prospered under Schrempp's leadership. He
is credited for almost single-handedly introducing the concept of "shareholder
value" to Germany.
Schrempp steered Daimler back toward its transportation
roots and away from Reuter's dream of turning it into an diversified technology
company.
First on Schrempp's chopping block was Dutch aircraft
maker Fokker, acquired in 1993. Schrempp cut off life-support funds for
the money-losing company, sending it into bankruptcy and costing hundreds
of Dutch jobs.
Schrempp then turned his attention to streamlining Daimler's
top-heavy management structure.
The Daimler chairman won wide praise for cutting away
layers of middle management, but the restructuring also led to internal
wrangles over the future of Mercedes-Benz, resulting in the eventual resignation
of highly respected Mercedes boss Helmut Werner.
Schrempp's reputation as a cold-hearted executive was
reinforced earlier this year when former Daimler boss Reuter published
memoirs that included a stinging attack on Schrempp.
Reuter accused Schrempp of "ruthless brutality" and questioned
his successor's willingness to rack up what was record loss of 7.2 billion
marks in 1995 as part of restructuring and write-off costs.
EATON, THE PRAGMATIC HANDS-ON ENGINEER
As soon as news broke of the merger of the two automotive
giants, questions were asked as to whether Chrysler chairman Robert Eaton
could share power or even function as the number two man in a newly formed
company.
But Eaton, 58, is described as a "hands-on engineer"
who will have no problem adjusting to - and ultimately relinquishing -
his position as co-CEO.
"He's a pragmatist above all else", said Automobile magazine
editor David Davis, who got to know Eaton during the executive's years
at General Motors Corp. "If it worked out that he was number two in a new
company, he probably would be perfectly comfortable with that", Davis said.
Eaton joined Chrysler in 1992 as vice chairman and chief
operating officer, replacing Lee Iacocca as chairman and CEO in 1993.
He had been president of GM's European operations since
June 1988, cutting costs, driving up sales and helping lead GM into a dominant
position in that region. The Colorado native earned a mechanical engineering
degree from the University of Kansas in 1963 and joined GM's Chevrolet
division as a college graduate-in-training.
Under Eaton's stewardship, Chrysler has seen sales and
profits surge, reaching in 1996 a record $61.4 billion and $6.1 billion
pretax, respectively.
The automaker has become one of the most profitable per
vehicle in the world as Eaton has pushed to build teams at the company,
spin off nonautomotive operations and cut costs.
He also has pushed to improve Chrysler's product quality
and broaden operations overseas.
Former co-workers said Eaton, an avid outdoorsman who
loves to ride motorcycles off-road, would thrive at Daimler, where engineering
excellence is stressed.
GM colleagues say Eaton is a tough, hands-on leader,
not afraid to make decisions but modest enough not to let his ego interfere
with the job.
David Cole, director of the University of Michigan's
Office for the Study of Automotive Transportation,
compared the potential of Eaton being number two in a
new company to the situation Robert Lutz faced when Eaton took over at
Chrysler.
Lutz, who was president and chief operating officer under
Iacocca, had hoped to lead the company but stayed on and worked well with
Eaton.
"What Eaton brings is a team mentality", Cole said. "He
is not someone that has to be king. He can accept strong-willed people
in his own company".
He added that Eaton is like GM's Jack Smith in many ways,
putting the interests of the company ahead of his. Eaton would step aside
if that was best for the combined Chrysler-Daimler, Cole said. "These guys
are not egoless people, but they're not going to let their egos get in
the way of making the right decision", Cole said.
Source: Reuters Business Report London UK Thursday May
7 1998 7:11AM
Last revised technically: Jan. 25th 2000
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