Dr. Z’s plan for Chrysler
Not that Dr. Z. This one. Yes, I have a Ph.D. - in organizational psychology, the study of people in organizations. Like DaimlerChrysler. And my last name starts with a Z.
In my opinion, the biggest problem faced by DaimlerChrysler in a volatile climate where most people believe the Japanese make the best cars, fuel crises may or may not arrive, cut-throat competition is coming from Korea and soon from China, and technology and government demands relentless move forward… the biggest problem faced by DaimlerChrylser is internal.
Look at the past year and see how decision making has been influenced by the fatal compulsion to prove to the world that the acquisition of Chrysler was necessary and beneficial even to Chrysler, and to prop up Mercedes’ reputation as the world’s greatest automaker. This result in the waste of huge sums of money, from insane advertising campaigns touting German engineering to the siphoning of funds out of Chrysler, which desperately needs them - and which would use the money to invest in the future, which would in the long run deliver much higher profits - and into Mercedes.
It seems at times as though all decisions at DCX are made with two objectives: to make Mercedes look good, and to make the acquisition look good. Saving face is primary. Brown-nosing seems rampant, and people willing to tell the emperor about the state of his wardrobe are dismissed. The state of affairs should have been obvious the moment Bob Lutz, the only Chrysler executive really capable of dealing with the “merger,” was left out of the talks. The apparent absence of Schrempp has only made matters quieter, not better.
Once again, I make my humble proposal to end this state of affairs and return Daimler-Benz to a position where it can make decisions that are best for its long-term survival, as well as Chrysler’s. This means taking Chrysler Group public as Chrysler Corporation (or using a less confusing name, such as American Motors, so the Chrysler brand and the corporate entity would clearly be different). The new corporation would be incorporated in Auburn Hills, Michigan, and DaimlerChrysler, AG, would retain 49% of the stock.
In the short run, this would give Daimler an instant cash boost - American indexed funds would have to buy the stock, giving a huge capital influx to Daimler-Benz, as the seller of the stock. It would also raise the overall capitalization of Daimler-Benz. The German stock buyers who hate Chrysler Group would start valuing Daimler more highly as well, as an added bonus. Once the US company was indexed and its stock had gone up, DCX could sell off more Chrysler stock while still remaining majority shareholder and retaining effective control. This could be an excellent way to raise capital and pretend to be earning money.
Mercedes would still be able to siphon off billions of dollars from Chrysler in the form of mandatory consulting fees and royalties, while benefitting from Chrysler’s low-cost (compared to Mercedes) engineering excellence, economies of scale, and expertise in flexible manufacturing and larger vehicles.
The new corporation could validly claim to be an American company, which would help in the heartland and if we ran into a new patriotism somehow. The German-engineering campaign has failed, with sales dropping every time the ads run. Unfortunately, for this to work, the brown-nosers in the executive suites would have to get some pride in their own country and not be such incredible suckups. Calling the new corporation DaimlerChrysler, Inc. would sink the plan instantly.
There would be a morale boost among most of the Chrysler owners and employees. I know there are some people who really believe Mercedes has been great for Chrysler, even among those who realize the Hemi came from Auburn Hills, not Stuttgart. But as far as I can tell, the vast majority of people do want Chrysler to be independent; they just don’t want it to be tossed out on the street with no assets, and they would like to be able to tap into Mercedes’ parts bins when needed. This is likely with a spinoff that is still majority Mercedes owned. On the lighter side, bad decisions - like using Mercedes diesels when VM or Cummins engines are available - could be avoided, and Chrylser could do what is best for Chrysler. This would make more money from Mercedes even if it didn’t provide quite the same ego boost.
This would not change how the vehicles are engineered or built. We would not lose ESP, the five-speed rear-drive car automatic, VVT, or any of the other post-acquisition technologies. However, we would gain credibility, pride, and money. The Daimler would be gone from outside the factories; the Chrysler media web site would not require a trip to DaimlerChrysler’s Mercedes-obsessed site; and journalists would no longer continually point out that Dodge is German.
Let’s hope that’s what the Zetsche is considering now - and that they go whole hog and do it right. Unfortunately, I suspect what they are really planning is more of the same death spiral - cutting, cutting, cutting, and hoping that by cutting Chrysler’s roots, the group will somehow grow. Trying something that hasn’t ever worked before, and hoping for success, is insanity. I’m hoping Zetsche and the Stuttgart crowd are ready to try something new.
Postscript:
In reality, I expect the plan unveiled next month to be more like this:
1) Tighten control
2) Send over quality teams from Germany
3) Send over cost-cutting teams from Mercedes, known for its ruthless financial discipline and efficiency. Oops, it’s the opposite, isn’t it?
4) Early retirement for engineers and other valuable people who can be snapped up by competitors
5) Shut down Delaware
6) Eliminate some models and engines
7) Outsource something that isn’t already gone
8) Shut down and/or sell more parts plants, forging plants, etc.
9) New “German cars are better” ad campaign
10) Get the head of Willy the Mail-Boy
Bravo Dr. Z.
I like this Dr. Z then the fake Dr. Z!
I think you are right, we’ll see more cuts. The adverse consequence is to scare off customers. Remember, the customer doesn’t give a damn about your problem. He only cares about his own problem. For example, why take a risk on a Chrysler Sebring when one can buy an Accord or Camry; both sure bets. Why can’t Chrysler match Honda?
Consider resale vaues. By dumping its excess production into rental fleets, Chrysler killed resale on its minivans. A 3 year old Chrysler minivan is worth about one-half that of a three year old Toyota. That doesn’t inspire confidence; it’s just a gread deal for used car buyers.
Seems to me that Chrysler has gotten itself into a death spiral. The 300C is not enough to save it.
Bye, Bye
2.7L
3.7L
or 4.7L
?
[...] Customer Caring: A One-way Street I saw a comment today that reminded me that for every internal problem an organization is experiencing, it has exactly zero customers who want to hear about it. Its shareholders might want to know what the issue is and what the excuses are, but not its customers. From a post on Allpar Weblogs discussing DaimlerChrysler’s dismal performance of late: Remember, the customer doesn’t give a damn about your problem. He only cares about his own problem. [...]
I worked for DCX for 34 years. The problems did not start with Mercedes, they were there long before. They are the same as those a Ford and GM. Poor product, poor quality, poor consumer acceptance. Those that spoke out during my time there got shot as the messenger. This is a never ending spiral and when Toyota really starts taking market share in the truck market its all over.
The sad truth is that the elimination of a seperate identity of powertrain and engineering responsibility in general will be the death of Chrysler, and the possibility of causing extensive damage to Mercedes exists as well.
Corporate Identity of a luxury line of vehicles is a wholely percieved concept. The metal that makes the parts is the same. To differentiate Chrysler as a poorer brother with the same engineering as the Benz will demand changes from both target markets. Neither Benz nor Chrysler loyal patrons will be happy. The two companies that formed the perfect merger, not-competing with one another will now offer equal product for sale at different price levels.
Cheap manufacturing, price and repair which was Chryslers explicit zone at the time of the merger will no longer exist, likewise the superiority complex of Benz will be dashed and the loyal Benz customer will feel doublecrossed and may consider a Chrysler but more likely a switch to Lexus. Talk of the lost profts will consume M/B.
Setting Chrysler Free is the best way to go, Chrysler Engeneering is greate, the cost cutting campaigns are so severe that all that costumers see are cheap trims, bad gaskets, bad painting, a greate design is worth nothing if when mass produced, is made with the cheapest materials or lack of them, (take the hood of the new sebring base model) i could have done a cleaner job to install secondary tail lights at a customized car, and that`s factory cuality? built with pride? (like the stiker says) build the cars where ever its necesary to make greate looking feeling, driveing, and long lasting cars, for a reazonable price, and competitive, Chrysler vehicles would lagh at what toyota calls high cuality if they would built their greate engeneering matched with quality trims, and cero defects accepted by their suplyers, not components that look refurbished.
do i need any more to say?
Has anyone heard anything about the St. Louis Dodge Truck plant? My mom is hearing next month when the new plan is announced, that the STL Truck plant is going to be shutdown. Let’s hope not since she moved here in 05 because the Huntsville, AL plant was sold to Siemens.
JW, I heard the same rumor about the St. Louis truck as you and your mom did. I don’t know how true the rumor is about the plant being shut down, but it would not surprise me anymore.
I guess we’ll find out once the gang in Stuttgart makes a decision on LaSorda’s plan next month. To think, your mom’s future hangs in the balance of what a bunch of Germans decide in Stuttgart.
To add to post 9, it can not be a good feeling to be wondering about job security. I’ve gone through it with my family, and it is tough. Hopefully, everything works out.
Get rid of there ad agency. The tv ads are stupic & do not showcase the product & thus does not sell cars!!!
They need an entry level product now! Also better looking & feeling quality interiors!! Do not shut doen platns that
just looks bad & gives the company bad pr . I agree bring in some cost cutting from germany but not at the expence of
the cars!!!!
All the a–holes in the upper level of management only think of cutting jobs. Just eliminate the “buying power” and that will solve everything. What BS. Chrysler has had it’s up’s and downs, but so have the other companies. All this s–t started when the ” Great” Mercedes Benz took over the reins at Chrysler. Why can’t Chrysler hang a 100,000 mi warranty on their cars? That would be better than a phony $1000 rebate . I retired from Chrysler in 2004 with 40 yrs service. Before I hired in at Chrysler I was a Ford guy, but when I had my 90 days completed it was Chrysler products there after. What I’m getting to is I have put over 100,000 miles on almost everyone with no or minimal repairs. The most mileage was a 1990 Jeep Cherokee with 236,000 miles and didn’t use any oil. The only treason the car isn’t running now is it was totaled a couple years ago.
I guess my whole point is we make the best product that’s available, it’s just not promoted that way. many of the magazines fine fualt with things that aren’t important and people read only the negative. How many Consumer Reports have good things to say about Any American product. These comments are my own and I never deviate.
Your right Bill. I have driven Chrysler products for over30 years. I have put on over 2,000,000 miles on my cars and have have very problems other than routine, normal wear, situations. These are the things that need to be touted. Chrysler needs to promote Chrysler engineering and design. The commonality of unseen parts don’t need to be talked about. People don’t care about parts they don’t see, do promote Chrysler as an all American car company.
I work for Newark Assembly, and get to see what goes on a daily basis. We DO build some of the best cars in the industry (Durango,Aspen). But yet again as told in a previous post, its all about the numbers, SCREW QUALITY let the american industry and it’s people suffer greatly. They will most likey shut down NEWARK ASSEMBLY, and leave all of my brothers and sisters out of jobs, just so the primary stock holders can keep those “meek million dollar bonuses”. KEEP UP THE GOOD WORK DAIMLER!!!
I feel WE should all hang together, And If anyone has any good ideas as to how we can get Our Chrysler Corp. back from those M B Leaches, we should do every thing we can , I have never worked for Chrysler , But I,ve had Chrysler products since I was a kid. Chrysler has Always had the Best ebgineers in the world, Look at all the Firsts Chrysler developed , the Hemi in a mass produced automobile , Electronic ignition , Torsion bar suspension just to name a few. The prototype Imperial is a perfect example of what a True Automobile should be. The new top of the line Beemers, Rolls, Bentlys, Maybachs, looks as if their designers forgot what a True Automobile Should look like. The Imperial makes them look pathetic. I think we should reach out to anyone that has Any idea as to how we can make Chryler beholden to NO foreign company or conglomerate., First and foremost Chrysler and America
Henry Mack 9005 Fishook Lane, Picayune, Ms 36466
the