Slash-and-burn management, integration, and the roller coaster
Following Chrysler has become more of a roller coaster than ever since the company was taken over, under false pretenses, by Daimler-Benz.
The massive profits of Chrysler Corporation have long disappeared along with its cash hoard – somewhere between $5 billion and $12 billion of it, more than enough to keep Chrysler Corporation afloat and happy had they remained independent, and much more than Daimler has spent on the losses caused by Daimler. Many of the customers have also gone, following insult after insult – the word Daimler always shoved in front of Chrysler; constant references to the worthlessness of Chrysler in an equity sense and in an engineering sense; the capricious dropping of the Plymouth brand coupled with the creation of Maybach; and of course the usual de-valuing of any car previously built, with the subtle insult to the owners of such cars, who must be fools for having purchased them.
We have had the regular kool-aid, which apparently most analysts and journalists drink – the idea that Chrysler can learn about quality from Mercedes, despite consistently having higher quality ratings than Mercedes; the laughable idea that Chrysler can learn about cost reduction from the world’s most wasteful large-scale automaker; and the insane idea that Chrylser has dragged down Mercedes, even though everyone must know by now that Daimler has taken Chrysler Financial, a huge moneymaker, while increasing Chrysler’s costs by making them use overpriced Mercedes parts, making them advertise the benefits of the “merger,” and making them pay for technology and components they don’t need or could have gotten more cheaply elsewhere, while Mercedes has, as far as we know, had a free hand in taking anything Chrysler has.
Now we are learning about the latest restructuring. There is nothing new here. A consulting firm with a poor track record and huge prices has been brought in, presumably to justify whatever compulsive, anti-American, ethnocentric decisions are made in Stuttgart. Costs will be cut willy-nilly and presumably with the same common sense that saw Chrysler lose its total dominance in minivans, and will see Chrysler eventually become the #2 minivan maker when Toyota or Honda builds a second mini plant; interiors will continue to be far less ornate than other brands; and loved options like the minivan wiper heater will forever be consigned to competitors. Quality problems will be inevitable as the focus will always be on the bottom line numbers, despite the advanced manufacturing systems that have helped Chrysler to keep its place in the average area of reliability (near the top for some models, like the PT Cruiser). We are told it was cost-cutting that led to the disastrous Neon head gasket and exhaust donut issues, before the takeover; and to the ball joint fiascos on the trucks, afterwards.
Yes, more plants will be closed. That is inevitable. Engineers will be laid off. The short-staffed areas of Chrysler Group will become more so, yet there will be ever-more engineering work as the new Mercedes vehicles are engineered in Auburn Hills. And that’s the strange part. We have so much to be optimistic about.
The next Mercedes V6 engines will be created in Auburn Hills, we are told. A new four cylinder may be under way; or it may be victim to cuts. New diesels will be under the hoods of many cars, increasing gas mileage and giving Chrysler an edge should fuel prices change or biodiesel become widely available. A new small car, replacing the Neon, is reportedly under way in Auburn Hills and Stuttgart both, to show up as both a Dodge and a Mercedes.
There have been some benefits to the Mercedes tie-up, too. The expensive rear suspension in the LX cars is probably better than what Chrysler would have used. The stability control system is quite good and Chrysler must have saved a few dollars by using Mercedes’ system, presuming the royalties weren’t too high. Supplier costs supposedly dropped, but that’s a matter of measurement; under SCORE, we saw that parts could be more expensive but save money, by being easier to install, longer-lasting, or more fully featured. So far we have no reason to believe costs have really dropped as a result of the takeover, especially since in some cases Chrysler had to use overpriced, underwhelming components (LX steering columns come to mind). And of course stability control systems are available from all sorts of suppliers; just about every automaker has one these days. Chrysler could have merged with other automakers – in real mergers, or with Chrysler on top – and gotten the same technologies. The same goes for the five-speed automatic; ZF could have sold (or licensed?) five or six speed automatics that would have been better overall, probably for the same or lower cost. GM and Ford went in together on a six speed automatic…overall, there have been some benefits, but not nearly as many as the analysts claimed there would be, and not nearly as many as the journalists would have us think. Unless you’re willing to give credit for the Hemi, PT, and Liberty reliability, and general quality gains to Mercedes, a company whose quality remains quite low in most surveys, and which had no hand in hemi, PT, and Liberty.
The key reason for optimism behind the implementation of the merger is that Mercedes will not be able to Fokker Chrysler – that is, shut them down – nor can they AdTranz Chrysler – that is, lie about their profitability and sell them to an insuspecting, honest company. They can however Freighliner Chrysler – that is, cheapen the product and destroy the company’s future through foolish, short-sighted cost-cutting. After all, Mercedes management knows there are many other profitable companies that can be tricked into being taken over, and then sucked dry. All they need is a senior management group that likes the looks of the hundreds of millions of dollars in personal profit they’ll get from a merger or takeover. The happy kool-aid drinking analysts and journalists will do the rest, noting Daimler’s success with Freightliner, spoiled by those dumb Americans, and their valiant efforts to keep Chrysler afload, spoiled by those dumb Americans, while ignoring any reality that might happen to show up. But the Fokker and AdTranz routes are not really open to a Mercedes that is relying on Chrysler engineers for their next generations of cars and engines – a Mercedes whose top executive has realized that the only way to compete against Lexus may be to use the innovative people at Chrysler, which started as an engineering firm and has, despite many leaders’ attempts to derail it, maintained enough of a culture and enough people to stay strong in its engineering and capabilities. Of course, if Zetsche is a figurehead, or if he loses power, all bets are off. Daimler wouldn’t be the first company to commit suicide just to prove a point.
The key reason for pessimism is the restructuring plan itself. You know what a good plan would look like, because we described it here already. Take off the constraints from Chrysler, stop insulting its employees and customers, and start trying to build it up, and you’d bet both an engineering source and a profit source. That’s not even on the table. If Chrysler is ever separated, it’ll be with the reason of incompetence and incapacity, because, they’ll say, it dragged Mercedes down.
One of the worst parts of the restructuring, other than the losses of yet more facilities and apparent across the board cuts (with some exceptions for vital but understaffed departments) in Auburn Hills, is the leadership of Rainer Schmückle, who the Detroit News fell over themselves to praise as a great savior. Let’s look at what Allpar folk had to say about him:
“Call me cynical, but I see 46-year old Shmeckel replacing LaSorda within a few months when soon as he becomes familiar with things.”
“Shmeckel is a slash and cut executive. He knows nothing other than to demand wage cuts, supplier pricing concessions and consolidated manufacturing capability. He does not have the testicular fortitude to see how a merging of Mercedes and Chrysler platforms, technology, etc is the *real* way forward for both companies. A fight with suppliers, the UAW and employees all at once will result in the demise of DCX.”
“My concern is not with the changes-Lord knows I have supported Dieter Zetche and Tom LaSorda. My concern (hell, my FEAR) is the schmuck. ESPECIALLY after he gutted FTL into the mess they are in now. Dan’s comments are reasonable-something the schmuck doesn’t understand or practice. … Blindly dictating a straight percentage of departmental headcount reductions WITHOUT understanding or CARING what a given department does is the method used at FTL. He doesn’t “have to take over” officially…that is what happened at FTL…all behind the scenes authority. That is why he is so dangerous to Chrysler. Look at the history of FTL…Deiter ran FTL when MB first took over…….”
“Schmuckle doesn’t take orders from anyone. He is kind of like a virus, only he was asked to come in a do it because someone sees greed in their eyes. Schmuckle is slash and cut efficiency person, he is being asked to slash and cut so more profit can be had. So far, prior to him being asked to squeeze the last drop of blood out of the turnip, more than 400,000 cars less are being built after nine years, and what else did the stats say, 50,000 fewer jobs for the accomplishment?
“What does the other side have to lose by simply have a merger agreement share parts, technology and ideas and let C/D/J be on their own. We have not for a single second done anything to take anything away from Mercedes Benz, they have charged us billions and taken billions, and yet they have to slash us, cut us, sell us, destroy us, for what? Greed?”
MB has back charged Chrysler for every person assigned to Auburn Hills, JTE, FREC, and various plants. All they did was drain CHRYSLER resources.
“Freightliner is bereft of cash. It squandered the last 5 years chasing low-profit sales. If the downturn is serious, it will take another make-over to save them. Of course, management rarely understands that the slash-and-burn guy is the one who positioned the company for short-term gain, but long-term failure.”
“There is and will continue to be a difference between what happens deep in the labs and offices at JTE/AuburnHills/Stuttgart and what ‘has’ to be spun publicly to maintain perception of branding. Think outside the box, and if you want the entire company to succeed you have to maybe not tell the whole truth. It’s AMC chapter 2 (with a German twist).”
On the other hand, one observer of the international auto industry wote:
“Dieter Z didn’t spend those years getting a feel for what makes Chrysler tick, without gaining empathy for this side of the biz. LaSorda wasn’t put in by DZ to be just a patsy. There’s a BIG plan a brewing, and the MB side is going to be kicking and screaming perhaps even more so than CDJ.
“Things will be different–different isn’t always bad, it’s just different. The cards aren’t all out on the table yet–and probably won’t ever all be shown, but most likely what’s happening, is DZ has had exposure to the good & bad of each side of the Corp., and is finally going to integrate this beast.
“Doesn’t mean the end of CDJ, doesn’t mean the end of MB. What is does mean is that it ain’t gonna be CG or MB anymore–everything will be DC stuff. Think GM-like and you’re probably close, plus China’s a big component in all of this.
“It won’t be fun getting there, unless one really enjoys upheavals. So, if you’re going to perform massive surgery–it’s best to get it over with quickly. It’s time to either get off the pot, or you know what…”
Decide for yourself. The plan will be revealed one week from today. I predict that Detroit News and others will portray it as yet another Mercedes rescue of ailing, incompetent, low-quality Chrysler – even though surely they know better. The real question is what the future holds – a death spiral of cost-cutting begetting lower sales and higher incentives, begetting more cost-cutting, with each slash-and-burn move sacrificing more – automated manual transmissions, home-grown diesels, new engines, new bodies, good interiors, weight reduction, and always quality and morale? Or will we see something better come from the ashes of Chrysler? Will there be any corresponding cuts at Mercedes, now that Chrysler has been kind enough to take over so much engineering work? Will Mercedes finally have to start paying consulting fees to Chrysler, for the expertise, patents, and techniques they’re using, not to mention the engineering done by Chrysler for Mercedes? (For that matter, did Mercedes ever pay for UConnect, as Chrysler reportedly did for the less-than-stellar Mercedes five-speed automatic?) It would be a surprise given the current atmosphere in Germany, but one never knows.
Oh, and for the source of those quotes – http://www.allpar.com/forums/index.php?showtopic=88305
And when you’re done, pop by AutoExtremist’s take on the subject.
All I can say is I’m starting to feel now like I felt when the takeover went down; and that ain’t good. My thought then was that Chrysler as we
knew it was pretty much finished, and IMO that’s pretty much been the case. As you mentioned, there have been “synergies” amid the raping and
pillaging, but nowhere near enough to term it a “good idea”.
By the time they’re done – if it isn’t already the case – Chrysler would be unable to survive on it’s own, so it would indeed need a partner. A
true partner. That’s if Chrysler & Dodge don’t follow Plymouth into oblivion.
Being repetitious here admittedly; but, I am concerned about Chrysler and Dodge’s longevity…………with the probable exception of the Ram pickups.
Jeep will live on————-DCX is merely another speed bump on the road of life.
Seriously this essay is a load of bull. This is a one sided opinion probably of a X DCX worker wingging about why he/she has been made redundant.
Look at the good side –
- Chrysler is actually becoming known in other markat mainly europe.
- Chrysler can make ties with companies that wouldn’t go near them without
Mercedes help (e.g. Volkwagen)
- They are getting the best V6 diesel by far on any market around the world.
- More then likely they would probably also get the 4ltr diesel V8 soon
- A parent company which can support them through the short term rough patch
(E.g.)take a look at Ford and GM selling their other companies just to survive)
- Better parts (etc The rear drive suspension comes from a Mercedes E-class which
happens to be one of the best cars in its class)
- Production Machinery (e.g. notice how Mercedes and Chrysler have the same
robots to produce cars. i heard they buy at the same time to get them cheaper)
- Sharing of Staright four and future V6 engines.
- The promise of more sharing in the future of between Mercedes and Chrysler of
parts you can’t see such has the locking mechanism etc.
If you actually took a bit of time to remember that DaimlerChrysler is under new management. Their first aim is to make a profit and THEY WILL DO WHAT THEY HAVE TO DO whether be it cut jobs or models.
It takes time to make changes in the auto industry. Take Wolfgang Bernard as a example. His been at Volkwagen like a couple of years and his cost cutting measures should be showing in the next year. Give Mr Zetche time.
p.s. if you calcualate the lost and profit Chrysler have made over the past nine years you can work out where the pre-merger cask amount of $8-12 billion of chrysler has gone. Plus to get everyone out of their misery they should rename the company back to Daimler-Benz and annouce it was a buyout.
OK, let’s go one by one. “Chrysler is actually becoming known in other markat mainly europe.” That was happening before the takeover. Also, of course, all of Chrysler’s European sales together account for very little.
“Chrysler can make ties with companies that wouldn’t go near them without Mercedes help (e.g. Volkwagen)” — before, they had ties with General Motors and BMW. And they did buy engines from VW long ago. Why should I care about this?
“They are getting the best V6 diesel by far on any market around the world.” No, they’re not. They’re getting the most expensive, possibly. The quality of these engines is definitely up for debate. They are quite pricey and durability is questionable. They could just as easily have bought them from Mercedes as an independent company – and they probably would have paid less.
“More then likely they would probably also get the 4ltr diesel V8 soon” Yes, that would be nice. Will they get it like they got the six-speed and seven-speed automatics? Again, couldn’t they have just bought big diesels from Cummins or Detroit Diesel?
” A parent company which can support them through the short term rough patch (E.g.)take a look at Ford and GM selling their other companies just to survive)” — have you been watching this? They had $8 billion. Daimler paid out far less than that. Indeed, were it not for Daimler, they might never have lost a penny. They had Chrysler Financial. They had loads of cash. And they had PROFITS.
” Better parts (etc The rear drive suspension comes from a Mercedes E-class which happens to be one of the best cars in its class)” I believe I acknowledged the basic suspension design. As for better parts – no. Definitely not. Unless you know something I don’t – which seems unlikely based on your arguments so far.
“- Production Machinery (e.g. notice how Mercedes and Chrysler have the same robots to produce cars. i heard they buy at the same time to get them cheaper)” — could be. However remember – there’s cheaper and there’s cheaper. Which is to say, getting a volume discount on something that costs more than what you were going to spend earlier isn’t a bargain. Likewise, this is more likely MERCEDES benefitting FROM Chrysler. Who is bigger as an automaker? Gee, it’s Chrysler! Who’s going to get volume discounts anyway? Gee, it’s Chrysler? Who wins here? Gee, it’s Mercedes!
“- Sharing of Staright four and future V6 engines.” What straight four engines are these? You mean the ones Mercedes made Chrysler buy from Hyundai? How could Chrylser not have gotten these without Mercedes? (Hint: Mitsubishi also has them.) As for the future V6 engines – were you asleep when they mentioned where these would be created? IN AUBURN HILLS. So let me get this striaght – without Mercedes, Chrysler could not have designed any engines? How did they ever get THIS far?
“- The promise of more sharing in the future of between Mercedes and Chrysler of parts you can’t see such has the locking mechanism etc.” — and this is supposed to make me happy, given Mercedes’ abysmal quality ratings and outrageously high prices? Did you even bother to read the weblog, or did you just look at the title and start typing?
“If you actually took a bit of time to remember that DaimlerChrysler is under new management. Their first aim is to make a profit and THEY WILL DO WHAT THEY HAVE TO DO whether be it cut jobs or models.”
Yes, and they’ve been cutting jobs and models for eight years. Oddly, Chrysler made a profit in 1998 – quite a big one. Oddly, since the takeover, they’ve consistently lost lots of money. Gee.
“It takes time to make changes in the auto industry. Take Wolfgang Bernard as a example. His been at Volkwagen like a couple of years and his cost cutting measures should be showing in the next year. Give Mr Zetche time.”
We’ll never know. He’s practically gone now. But we could also look at GM’s reflexive cost-cutting in the 1980s – when Chrysler was investing, despite near bankruptcy. Interesting to see who got the record profits. Hint: it was the company that wasn’t busy cutting, but was trying to find buyers for all their cars.
“p.s. if you calcualate the lost and profit Chrysler have made over the past nine years you can work out where the pre-merger cask amount of $8-12 billion of chrysler has gone. Plus to get everyone out of their misery they should rename the company back to Daimler-Benz and annouce it was a buyout.”
No, you can’t. They didn’t lose that much. Especially if you add back in the profits of Chrysler Financial, take out the costs of the takeover themselves, and put back in the huge consulting fees and royalties paid to Mercedes, but not the other way around when Mercedes got to use Chrylser patents, techniques, and people.
Dave is right about all this.
And I want to point out: Chrysler would have become a player in Europe without Daimler-Benz (300M, Jeeps, minivans were being sold, or intended to be sold there, before the hookup). They didn’t need the Daimler-Benz suspension to do the 300, they could have had the 300 two years earlier without waiting to incorporate M-B parts. (The 300M sure didn’t need the E-class suspension–it was world-class when it came out). Chrysler could have worked with VW without M-B tutelage–Chrysler builds the best minivans, and would have made a good partner for the new VW minivan regardless.
Chrysler could have got diesels from VW, or Cummins and VM Motori as it does now; and (with VW or a supplier’s help) it could have developed its own turbocharged / supercharged direct injection gas engines that would be just as good as (or better than) Mercedes diesels for small or mid-sized cars. It is still unclear if Americans will buy diesels, and they are still not marketable in all 50 states.
You pare down a tree so it can grow back stronger, but if you cut too much it will die. I don’t hate Mercedes: I wish Chrysler were independent. It’s not. So I can only hope it will be managed as well as possible. I have not forgotten Chrysler’s history, its contribution to this country in times of war, and the fine cars they’ve made in the past, and I hope they will be around in future decades. I do not wish to own a Honda or Toyota, or have my car made in China. Kia and Hyundai have taken baby steps, going from nothing to become a huge player in the US–they had a plan. I don’t see that DCX has a plan for Chrysler to grow or to have any kind of future. The plan should be expanding marketshare, not surrendering and giving up in the name of short term expediency.
If M-B would play its cards right and keep the Jeep brand pure, keep the core products strong (Ram, minivan), and let Chrysler have a strong, unique identity, they could make alot of money with their American arm. BMW seems to be able to manage Mini and Rolls well: they have their niche, while BMW’s has its own identity that is kept sacred; Ford seems to be doing a good job with Land Rover. M-B needs to stop viewing Chrysler as a threat. Fine, don’t let Chrysler have an expensive luxury car: but let them have the resources to thrive in their niche, building cars like the 300C or PT, drawing from Chrysler’s own, American heritage. Let them have the resources (styling, interior materials) to compete with the Camry, which is not a market Mercedes is in anyway. Chrysler should not be the junior also-ran to Mercedes (that’s what ran Plymouth into the ground). Customers who aspire to a Mercedes won’t want the Chrysler. And people who buy Mercedes’ won’t like having $20,000 Chryslers that look like their $50,000 cars (and have the same engine). If Daimler has already fired all the Chrysler stylists, and are unsure what a Chrysler actually looks like, I’d reccomend a crash course in the work of Virgil Exner. If they don’t understand why we Americans are so concerned about all this, maybe they should sit down and talk to someone that owns a 71 Valiant or a 69 Charger, or someone that grew up seeing nothing but pentastars on the fender and has the sound of reduction gear starters indelibly etched in his memory.
But all this would require Stuttgart respect the American side of the operation and view it as something more than an R&D center. A strong Chrysler is infintely more valuable to DCX than Maybach or Smart, yet it DCX has lavished money on those pet projects while cutting back Chrysler.
So Dave your point is that it is Mercedes to blame for all Chrysler problem and not the people (who may I point out comes from North America). The same people you say Chrysler should be investing in are the reason why Chrysler is in deep *** in the first place. If Chrysler didn’t have the burden of the UAW on it (thats ford and GM included as well) then where would it be right now?
Quite easy to answer – in a profit. The reason why the american auto industry is in trouble in because they have too many workers that are really not needed as shown by the layoffs by gm and ford as well as chrysler. Sure you can blame some things on Mercedes but whatever way you look at it, chrysler has always had a truck dependent market and thats goes for all american makes.
At the end of the day both of us can go around blaming Mercedes or UAW or any other thing that comes into our minds. Who is to say, who is correct unless you are Mr Zetche or Lasorda. We just won’t know what goes on in behind closed doors. Still at the end of the day Chrysler is still in need of some attension and I hope they get it so they can come out with more cars like the patriot and 300C to hopefully maybe one day even top the other domestics. I just hope Mercedes sticks with them rather then dump them.
Ask yourself would you prefer being dumped by Mercedes or still have the partnership no matter what state its in.
When I say people I mean management of Chrysler (First sentence first paragraph)
Your comments show complete and total ignorance of the industry, and your profanity is not appreciated. (Removed.) Toyota does just fine in their union plants. Chrysler did just fine before being taken over. Mercedes can be blamed because of what they did, and other than saying waa waa the unions make us lose money and Americans are at fault, you have not said a single thing to refute any of my arguments. I can easily blame Mercedes for delaying all Chrylser product launches by three years, for raising the costs of producing Chrysler vehicles, for taking away Chrysler’s sources of revenue while inflicting unnecessary expenses on Chrysler, for sending in incompetent executives and hatchet men, for forcing “Germans know best” advertising on Chrysler – using up the ad budget while depressing sales – and for constantly and consistently in their statements telling everyone that Chrysler is a burden, Chrysler makes low quality vehicles, and Chrysler can’t design their way out of a paper bag. Would YOU buy a car from a company whose owners think it’s a basket case?
So perhaps when you find some actual facts to argue with, you’ll come back. Or, more likely, you’ll throw more mud around hoping to hide the argument under dirt.
PS> Perhaps if you were more familiar with Chrylser in America, it would make a difference. If you only know Chrylser from Europe, where they were at most a bit player, I can see how you’d have the same attitude as the people from Mercedes, which is strong in Europe.
Coming from a dealership background, I don’t know that much about upper level management in Auburn Hills or Stuttgart. I was just on the front line and saw what kind of products Chrysler was producing and their reliability. To me the reliability and quality issue continues to hold Chrysler back along with poor resale value. It seems like every car forum I visit, they are constantly putting the new Chrysler vehicles down for their styling and the old “it won’t have any resale value like all the Chryslers”.
At the time of the takeover I was hoping to see a great improvement in the product but it never happened. In fact they seem to have gotten worse if that’s possible. Jeep being at the bottom of the quality ratings just solidifies that reality. It’s no wonder with how many Grand Cherokee transmissions we rebuilt or replaced. Some with under 100 miles on them.
As far as the earlier comment about the LX suspension being the best in the world, no way. Those cars are sometimes so badly out of alignment from the factory that they are chewing up tires very quickly. More than a few of them have had to have their engine cradles completely reinstalled to get rid of pulling issues.
They have got to start producing vehicles that are desirable as well as reliable. The one car that was desirable was the 300, only half way reliable but at least it produced a decent buzz amongst the car buying public. The next one is going to be the Challenger but after that???
PT Cruiser was at the top of the reliability charts for a while. Not sure about now. Guess we shouldn’t be thanking Mercedes for those LX suspensions? Liberty was also at the top of the cahrts for a while.
BTW I am now simply deleting comments from Stuart that contain profanity instead of editing them.
“If you look at Chrysler past, you would (sic) exactly say the have the best track record in the first place”
I’d say Chrysler was doing allright before the merger. Number one in minivans, first profitable, domestic small car ever(Neon), tripling sales in full-size trucks (Ram), a big part of the full-size van market, critically acclaimed midsize (JA) and full-size cars (LH), and SUV’s (Grand Cherokee). And the Chrysler brand had a better styling theme with the 98 Concorde, ’00 PT and ’01 Sebring (all designed pre-merger) than they do now, the one really great design being the 300, and nothing else being anywhere near as good.
I agree with the comments about reliability: There is hope when Chrysler is left alone to develop its own stuff. For example, the new 6-speed automatic, which M-B had nothing to do with, should be very reliable. If Mercedes can stay out of the design process, Chrysler can again build the sort of bulletproof, overengineered stuff that made us Mopar fans to begin with (i.e., Fire Power, Torqueflite, Valiant). That needs to go along with a 100,000 mile warranty.
It will cost money, short term, and that is why, unfortunately, Daimler won’t allow it. But, long term, those changes would put Chrysler way out in front. It would be something to boost the level of trust with the consumer. Chrysler could really steal sales from Toyota when people finally see how bad Toyota has cut corners on their products (more cars recalled last year than the number sold) That would be a plan for the future, wouldn’t it? GM seems to understand all this, likely due to Bob Lutz. I don’t think DCX has a game plan. Cutting corners is what hurt Mercedes quality, and they are doing the same thing to Chrysler, ironically using Chrysler expertise to improve M-B products.
You know what I actually hope to see mercedes drop Chrysler just see if they can survive by themselves. If they don’t survive then it will be nice to see you all eat your words.
Let’s see. If they separate from Chrysler, taking away Chrysler’s $8 billion of reserves, leaving them with a dismal market share, and causing the loss of nearly all the top talent of the company, and Chrylser fails, I’ll eat my words, huh?
OK. That’s a deal. But I’d bet that Mercedes drops first without another company to suck the blood out of. Or are you planning to ignore Fokker, AdTranz, Freightliner, Detroit Diesel, etc?
Stu,
“Quite easy to answer – in a profit. The reason why the american auto industry is in trouble in because they have too many workers that are really not needed as shown by the layoffs by gm and ford as well as chrysler. Sure you can blame some things on Mercedes but whatever way you look at it, chrysler has always had a truck dependent market and thats goes for all american makes.”
Always? How old are you, 15?
Hey, maybe it’s Schmeckel passing by to have a little fun before the ol’ slash & burn is announced….
Doesn’t matter where DAIMLERCHRYLER gets their profits from, at the end of the day those companies belong to DC and that includes Mercedes so all their profits go to DC as does all the profit from DC go to all shareholders.
Its business get used to it. You could say the same about Ford and GM. Where does profit from Volvo, Holden or Opel/Vauxhall go?
I don’t think that Ford and GM and trying to kill off Volvo, Holden, or Opel/Vauxhall. There’s a difference between “buying, sucking dry, and discarding, while calling it a merger of equals” and “taking over, investing, and maintaining a long term profit.”
Okay, my 2 cents. Chrysler has always been truck dependent? Ioccacca[sp?] closed the HD truck plants in the 70′s [or sometime close]. It seems I recall reading in one of his autobiographies that he considered taking Chrysler {Dodge] out of the PU truck business because of Dodge’s small share of the mkt., that is until the redesign to the current big rig look plus adding the Cummins engine.
As to reliability, I currently own and drive an ’03 Dakota with 126K mi., that has had a water pump replaced under warranty, front brake pads at 110K mi., otherwise, nothing except being on the third set of tires [Contentials'sp' 80k mi tires]. Just gas and go. Oh and I use Castrol oil. I wish it got better milage[17.9 mpg] on V-6. I have lost count but it is close to 30 mopars within 45 yrs and the most troublesome was a Reliant w/2.6L Mitsu. I don’t abuse my vehicles but I don’t baby them. IMHO Chrysler Corp has always built the best vehicles on the road, that is until greedy investers [Wall Street] and mgmt [Eaton,Schrempt etc] got their hands on the handlebars of the runaway bicycle. CG may have to hit the bottom and rebuild as a result of shortsighted mgmt policies and greed. It is time for America to take pride in the companies that originated here and that helped build the industries and products that set the benchmarks for the rest of the world to follow. Our stupid business and govt. leaders do not recoginize that the rest of the world learned that they could not win againest our military might so they declared war on our industries and we SIT BY AND LET IT HAPPEN! IT’S TIME TO GET BEHIND OUR COUNTRY AND IT’S INDUSTRIES, otherwise we’ll all be operating tourist traps for our FOREIGN OWNERS
Dodge are Jeep are making more models now then ever before. Chrysler also slowly getting there. How is that killing a brand. For once you can actually tell the difference between a Chrysler and Dodge.
Dave do you actually even try to take other opinions into account. Try actually reading other blogs (Leftlanenews.com, Autoblog.com and the other blogs) and you will see the people that make a difference to the sales of the company (general public) only have bad things to say about any american domestic companies and their products.
Ever wondered why? because of their past experience with the domestic maker including Chrysler
The perception of the japanese cars being superior has come around because the domestics made inferior products for so long that they (not anyone else) have turned the customers away. Chrysler is still a little lucky not to be in such a bad state as GM or Ford. At least give DC credit on trying to get them back on track.
Is DCX really trying to get CG back on track? It seems that DCX has done almost as well as the RR’s of yesteryear. As far as German engineering being superior, you have to realize that Germany as a country and as a people date almost back to Christ, therfore their industrial experience predates America by several hundred years. Also, after WW11 many of the experienced craftsmen came to America and not all of those were from Germany. Back on track [lol], you have to have a plan, and you need to work that plan. What worries me is that the plans for C-J-D are not focused on making CG a stronger car mfg but one that satisfies the stockholders. Japan has a plan, look where it got them.
Sure, Stuart, I listen to opinions. I also reject them if they’re based on nonsense or illogic, and don’t match any facts.
You can listen to the ramblings of the uninformed and the analysts if you like. I see Chrysler has had some problems – so has Honda. Chrysler quality is still consistently rated far above Mercedes, and it has been increasing at a high rate, DESPITE all the Mercedes people showing up, treating Chrylser people like dirt, slashing supplier payments so that they can’t afford to provide quality parts, and ending successful quality programs so they can be “saviors.”
PS:
“Dodge are Jeep are making more models now then ever before. Chrysler also slowly getting there. How is that killing a brand. For once you can actually tell the difference between a Chrysler and Dodge.”
1) No, they aren’t, and your saying that proves you know nothing about Chrysler.
2) How is that killing a brand? Well, look at the cars’ interiors, then look at what Chrysler used to be. To be fair, Chrysler Corp was killing the Chrysler brand long before Mercedes showed up.
3) “For once you can actually tell the difference between a Chrysler and Dodge.” How? It’s the same car under slightly different sheet metal, just as it was before Mercedes arrived. Should I be more impressed by the 300C/Charger than I was by the LHS/Intrepid?
Have you ever been in an LHS? Driven a 300M? Driven an Intrepid or a manual-transmission Neon? Driven a 1999 minivan? Driven a B-body in good condition? A 1960s A-body? A 300 letter car? An Imperial? A Reliant in good condition (e.g. new or well maintained)? What right do you have, if I may ask, to be judging? What is your own experience? Is it only cars made in Austria, or by SIMCA and Rootes Group with Chrysler labels attached?
In my opinion Chrysler definitely has too many models. Compass, Commander, and Magnum need to go. I think I heard Commander is possibly going to be dropped around 2009.
Sems like you have deleted my argument about Chrysler still being a company and profit coming first (I sent last night). Chrysler not making a profit is why they have to cut back on spending like doing the interior better and so on. Mecedes had the same problem last year when they made a loss and they had to cut costs by layoffs and other dramatic measures.
Like it or not DC bought Chrysler to save money and make even more money. They will do what they have to stay alive even if it mean getting up people’s noses (mainly the enthusiasts). ITS A AGGRESIVE BUSINESS and its how companies like Toyota have come so far in so little time
Yes, you’re right. I did that. I got tired and frustrated because you NEVER ONCE acknowledged ANY of my arguments, just came back with some drivel about pointless cost cutting and how you run a store and so know about business.
You cut costs where the customer can’t see it, not where it’s obvious. You cut costs by doing things intelligently and by doing it right the first time, if you want to stay in business. You don’t cut costs by screaming and cursing at employees, by firing people who are essential to the business, by driving out anyone who disagrees with you no matter how important they are to your success, by slashing customer service, or by making obvious cuts that make your products uncompetitive.
Stuart, you have proven yourself in this discussion to be incapable of argument. You are fine at raising questions and doubts, but you will never be convinced of anything because when you lose a point, you ignore your loss, and move on to the next round. Sooner or later your opponents get sick of it, and give up, because there’s really no winning if you argue with someone whose mind is a solid block of granite, unable to change.
Mercedes did not take dramatic measures; they made a small round of token cuts. Chrysler was making far more money before Mercedes came and started making their cuts. What’s more, back in the late 1980s and early 1990s, when it looked as though Chrysler would not survive, they ended up flourishing precisely because they did NOT cut back in the wrong places. They dumped a ton of money into engineering and the CTC, and the result was unprecedented profit at a time when those who HAD blindly cut were losing tons of money.
If I had any belief that the current or past cuts were motivated by any sense of good business practice, it would be another story, but all evidence points to simply milking all the profit out of a company before closing it down and blaming its failure on bad local management. Never mind that local management has no real power, and that the major decisions hail from Stuttgart. Or that the real losers like Joe Eberhardt were sent in by Stuttgart. The real problem is the UAW, isn’t it? (I guess that’s the same UAW that doomed Toyota’s efforts in the US to failure when they opened NUMMI.
Companies like Toyota have come so far because they’ve consistently invested in the business and when times get bad, they haven’t slashed and burned ruthlessly and senselessly; and because brown-nosing isn’t the path to promotion. Oh, yes, and when they take over a company, they try to keep it going; they don’t ramble on about how the company they just acquired made total rubbish and has to be slashed and burned into profit.
You don’t grow a tree by cutting the roots.
UPDATE: See http://www.thetruthaboutcars.com/?p=3092 for a similar discussion
So you think I don’t basically take other people’s opinions into account. May be true but at this moment of time the only opinion pointed out to me is your opinion, a opinion which I believe is biased towards only the Chrysler group. At least I can admit that I am thinking of the company as a whole where you just have a fatasy of seeing chrysler way up in the sky somewhere. Maybe you are also stuck on your ways and don’t want to believe that chrysler has new rules that it must go by to be in the company. You just want to believe the worst in Chrysler because you want DC to not do a better job of running Chrysler then Chrysler has done in the past. No matter what anyone else says you just wanna believe what you want and anything anyone else says won’t change your mind (Even if Tom Lasorda says it) like a selfish child.
You believe that throwing money at the problem that chrysler have will solve all the worries and make Chrysler somehow untouchable. Somehow I don’t think so. True you don’t grow a tree myy cutting its root but sometimes the tree (Like chrysler) becomes to big that you have to cut branches or leaves to make it more suitable for the surroundings. By triming the size of Chrysler to be more eeficient they have a better chance of survival.
Here’s a question for you Dave. Say chrysler was a drug addick, would you solve the problem by giving addick more drugs or cut their supply slowly?
Another question – Intrigue me on how you would run DaimlerChrysler as a company
and not just chrysler group? How would you change the companyies so they don’t compete against each other and still make a profit.
OK, so you take other people’s opinions into account when you agree with them. You know absolutely nothing about Chrysler, if your opinions here are evidence. You do not know the current situation, you’ve said many things that were simply wrong, and you have not acknowledged any facts thrown your way. I have never suggested throwing money at Chrylser. I have suggested ending the suction of cash out of Chrysler. If you had read anything in this column, maybe you would have noticed that.
How would I run DCX? Well, frankly, I’d keep the merger in place. I’d split off Chrysler on paper, retaining a 49% share, for reasons explained in past weblog entries. I’d institute a new policy of patent and technology sharing where BOTH sides were required to pay development fees (at a substantial discount over what outsiders would be charged, rather than at a premium) when they used technology from the other side. I’d end the practice of sending Germans to Chrylser to learn how Chrysler does things, and billing Chrysler for the priviledge. I’d stop demanding that Chrysler pay both for technology it develops and gives to Mercedes, and for technology it is forced to get from Mercedes. I’d stop pushing around suppliers and re-institute the money-saving practice of working with them to lower overall costs. I’d take down Diamler from all those DaimlerChrylser signs around the factories and rename the American division. I’d also demand of my execs that they tell me when I’m wrong; that they allow others to tell them when they’re wrong; and that people get promoted based on merit, now whether they drink enough Kool-Aid. I’d invest more in quality, and use the proceeds from lower warranty costs (and lower production costs from not forcing people to use inferior or far-too-pricey Mercedes components when better options exist) and higher revenues (and the increase in stock price, and the proceeds from the sale of 51% of Chrysler Group) to make the cars good enough to make people WANT to buy them, without incentives.
The real way to save $1,000 per car is not to do yet more short-term budget cuts that only result in a death spiral; it’s to make people want the cars. They won’t do that if people like you are constantly slashing and burning your way to profit; because then you make a profit in one quarter, but you end up losing it the next when sales slacken. Of course your other solution is no doubt to end all retiree benefits and fire all the union men, which is sleazy, un-Christian (assuming you are Christian; un-Jewish or un-Islamic or un-Hindu etc if not), and, in the long run, also ineffective. All of your roads lead to bankruptcy.
So far, I have not entered the fray because I am on the side of the angels. That is with Dave simply because he is right, has been so for a very long time, has his facts logically arranged in a row, conceptualizes how things must be to correct the so far downward spiral of Chrysler through the ignorant overbearing management from Stuttgart, grasps how profits are really derived, offers the perfect solution for both companies, is not blinded by slash, cut and burn tactics offered up by people who have run other DCX companies into the ground (think Freightliner) as the end all for Chrysler, calls stupidity as stupidity, while pointing out the base points to arrive at factual conclusions. DAVE: Arguing with this Stuart is akin to dueling with an unarmed man. Stuart, you have no weapons to duel with. Even if you did have a pistol it couldn’t fire due to a bent firing pin! Drug addicts? Please….!
(Insult to Curtis deleted)
(Insult to me deleted)
(Insinuation this person works at Chrysler deleted since he lives in Amsterdam)
OH….. Amsterdam. That explains the drug addict comment. As well responding with insults are typical of someone without any ability to debate intellectually and no factual basis to form a response in any case.
Nice interchange!
One comment. If M-B is planning on replacing all engines and relevant technology of CG and MB (DCX) with a single line of origin, what will be the reason for either MB or CG loyalists to purchase the brand they have SUPPORTED? MB fans will feel cheapened and CG fans will go to something cheaper. The diversity of non-competing product that made DCX make sense will no longer exist and MB should be the name over it all. Chrysler simply will no longer exist. It is almost there now.
It is a terrible shame that US companies can be stripped of value by Companies from countries who would never allow this to happen to thier industries. Blame the members of Congress for accepting cash in thier pockets and approving this and the future mergers and exportation of industry and jobs that will eventually lead to the demise of US wealth. Ask any economist how you create wealth. It is by creating value adding manufacturing industry. Or by conquering other countries industries. This used to mean political WAR but today it means something more subtle, Industrial complex competition and consumption. The US public has not complained about the price of an average car that has gone from two months pay to almost a years pay, wait till its several years pay – like 2 or 3. Then maybe we will wake up. Or will we become a purely two tier economic society like Mexico with the reins in the hands of the few rich?
Sure seems to be going that way (I say that with regard to both points). There are some components that can be shared, to be fair. And some basic architectures. At some point it does become more GM or Toyota-Lexus. However even at GM, there were major problems when Chevy and Caddy were integrated; they ended up with Cadillacs that could no longer compete against the “best of the rest” and Chevys that were too expensive to make a good profit! I fear it’s the same at DCX.
Keep on keeping on Dave, you are bang on the buck. Chrysler needs to build a great vehicle and stop short changing itself. Case and point who designed the new sebring. The car went from a sleek looking auto, to a confused mess, the front of a crossfire the doors of a calibre,the butt of a corolla. Not to mention the old worn out 4-speed auto, on the models that the avg. Joe is going to buy. Chrysler needs to once again LEAP FROG the competition not meet them with products that are 10 years behind in technologies. I agree that there is no vision at the top and to quote a verse from the Bible without a vision the people will perish. So lets pray for a proper long term vision or Chrysler will crash. Slashing and burning isn’t it. As for Stuart i feel for him. He must drive a Toyota.
In addition how many people realise that the cost of the employee is far less than the raw materials even needed to produce a vehicle. Companies every where need to understand that the worker not the CEO is the heart of the company. We pay exec’s 200+ million in salary and bonuses, but a worker makes 100 thousand and he’s a leach on the company. Yet these workers should buy what they build it almost makes you want to cry.(LOL)
Stuart,
For one thing, I wouldn’t diss Curtis so easily. The guy knows more about MoPar and Chrysler then you will ever know in your life-time.
Second, there is this thing called analysis. This is what Dave and others are doing on this site. I was involved with it at one time too, but I’ve decided to let my talking go on in private. We have been following the Daimler takeover of Chrysler ever since the very beginning, so we have seen this downward spiral coming for many years. All you are doing is hanging on a prayer and hoping things turn around because, well….. it just has to right? Of course, all of you Daimler and “merger” supporters have been saying this crap since the very beginning. You would think by now you would see the light, but you don’t. CG is a fraction of itself in which its size, its independence, profits, and market share are shrinking at a good clip. It wasn’t always Chrysler’s fault for this; a good deal of blame has to go to the Germans in Stuttgart since they practically run the place and put their CHOSEN LEADERS in place to run it. The information is out there if you choose to really research the issue. Something tells me you are too enamored by the so-called “potential” some people still think resides in DCX, to really think objectively on the issue. Unfortunately for you, it seems that boat sailed 6 years ago. The following link questions the purpose of this project X in the first place, and I must say I believe he is right on with his analysis: http://www.autoextremist.com/page2.shtml#Rant
You can base your opinions on products like the 300C, or you can really dig deeper and see that things are not well for CG under Daimler’s control. “
I ave tried to stay out of this as several people were not giving all the facts on both sides. Things like:
1. Chrysler was in trouble at the time of the merger due to Eaton’s handling of cost reductions in the manner of Lopez of GM at the time.
2. Middle management at Chrysler grew almost twice the levels it was under Bob Lutz in Eaton’s term in “the front office”.
3. This business is cyclical for more than one reason….meaning that engineering and styling staff (THANK YOU to Jeremy Mutz for using the correct terms!) has a usefull work life of an average of 20 years at most (for real productivity-I am deleting the years spent learning this business) so you have a turnover of staff that is continous, HOWEVER, in the Chrysler case-the groups have actually been like classes in high school and colledge-meaning the numbers of people that start at Chrysler enerally STAY there, as opposed to moving around as at GM, Ford, International, Freightliner, PACCAR, Toyota (!), etc. As a result, thse groups of people tend to be closely matched in age and instead of spreading out retirements, tend to stick together as a class.
4. DBAG is ALSO suffering from this “class” affectation. In the mid 1980′s the biggest “class” of staff retired and they were replaced by those of lesser ability. This is the real reason MB quality falls so low today, compared to the best car ever built by DBAG-the mid 1980′s S class. Which leads to…
5. Loss of corporate history and continuity. All manufacturers of any product (not just cars, in other words) have become more attentive to the financial markets since the early 1970′s and as a consequence, have taken their corporate focus away from the product, and moved onto the (in)famous “quarterly report”. Rightly or wrongly, this lack of attention has allowed vehicles such as the GM “X” car, the Maybach, the Mustang II, the EEK limo, etc. to come to market, when the market responded “Huh?”. Without concentrating on the core competencies of the corporation, ANY corporation will fail.
—-
I DO have faith in Dieter and Tom to understand what is needed to make DCX survive as a company (notice I mentioned the integrated company, NOT DBAG or Chrysler). It is going to be painful. It is going to be horrific. It can get out of control EASILY.
Fact is, it is going to happen in some form. I only hope it is not too late and too far gone to work out. I never approved of the “merger” BUT it happened, so we have to deal with it and make the best out of the situation as best we can. Certainly, Dieter and Tom are not suicidal.
Best regards…..
Dave, Curtis, Bob thank you for your insite into the “Chrysler situation”. You are CJD enthusiest that also seems to recognize that good, well built, realiable American products are desirable and important to the well being of this great country. Could our nation get along without the CG, yes, but a lot of the character of America would be lost.When I read about the contributions of W P Chrysler and his company to this nation, I stand up and salute a great man and a great company with tears in my eyes for a company that it’s own nation would stand by and let a company based on foreign and once hostile soils come in and rape and pillage a company CG] and its people [employes] and carry the ‘booty’ home to Germany or any other counrty called home. People that sit at a desk and crunch impersonal numbers looking for the next gold star on their resume’ and the next job offer it brings them cannot see beyond their impersonal numbers to the consquenses of their “expert” decisions. Stuart, I wouldn’t know you from Adam’s housecat and I don’t know what lies behind your thinking as expressed by your comments. You appear to be Pro M-B and nationalistic with the German superiority complex as your mantra, to which I say HOGWASH! Could the world exist without M-B and Diemler? NO DOUBT!
I know the theories of ‘free trade’ and I acknowledge some of the benefits, but if our leaders don’t wake up to security issues that are looming just ahead and limit and control foreign investments we are in trouble. Chrysler Corp is just the tip of the iceberg.