Zetsche: "Complete the Merger" - Benz/Chrysler to get closer

[nadepalma]

Source: http://www.detnews.com/apps/pbcs.dll...0396/1121/AUTO

Maximizing the merger - DaimlerChrysler to centralize key corporate units, cut 6,000 jobs
by Christine Tierney and Josee Valcourt / The Detroit News




"Consolidation will occur at all levels, starting with me," says DaimlerChrysler CEO Dieter Zetsche, who heads Mercedes as well as being group chief executive.

DaimlerChrysler CEO Dieter Zetsche is seeking to raise the 1998 merger of Daimler-Benz and Chrysler to the next level by more closely integrating functions across the global automaker to speed up decision-making and cut costs by $1.8 billion a year.

In a reorganization announced Tuesday in Stuttgart, Germany, Zetsche said finance, human resources and other administrative areas would be centralized to save money and standardize processes.

The moves will eliminate 6,000 jobs, more than half of them in Germany. A quarter of the cuts will occur in North America, but the Chrysler Group is expected to suffer proportionately fewer job losses than other divisions in the region, such as Mercedes-Benz USA.

"Our objective in taking these actions is to create a lean, agile structure, with streamlined and stable processes that will unleash DaimlerChrysler's full potential," said Zetsche, who became CEO of DaimlerChrysler AG on Jan. 1.

All corporate functions will be consolidated and will report to a central head.

In addition to streamlining the company's functions, the moves "will also enable us to systematically facilitate know-how transfer between our divisions," he said.

In a conference call, he said the moves would accelerate the kind of cooperation that took place in the development of the popular Chrysler 300 sedan, which borrowed rear-wheel-drive technology from luxury carmaker Mercedes-Benz.

While Zetsche still holds the view that brands must not suffer from blatant parts-sharing, he said Chrysler and Mercedes vehicles would use more common underpinnings.

"The industry altogether is basically unifying platforms," he said, citing Nissan Motor Co.'s use of the same underpinnings for the Nissan Titan truck and premium Infiniti QX56 sport utility vehicle.

Under the new structure, Mercedes will absorb the research and development function, which will be combined with its product development operations. Board member Thomas Weber will head the combined operations, as he did when they were separate.

As roles are combined, the number of DaimlerChrysler board members will shrink to nine from 12 under former CEO Juergen Schrempp.

"Consolidation will occur at all levels, starting with me," said Zetsche, who heads Mercedes as well as being group chief executive.

"In this ultra-competitive global vehicle market, anything DaimlerChrysler as a complete entity can do to streamline administrative functions is going to be a benefit to their competitiveness," said Michael Robinet, vice president of auto forecasting firm CSM Worldwide in Farmington Hills.

Under assault from Asian automakers in their home market, Ford Motor Co. and General Motors Corp. have announced sweeping restructuring plans entailing plant closures and up to 60,000 job cuts.

Chrysler completed a deep restructuring under Zetsche that led to the elimination of 40,000 jobs, but the Auburn Hills automaker is not standing still.

Zetsche said he and Chrysler CEO Tom LaSorda will assess its competitiveness in the market "and how this will define future strategies." He did not elaborate.

As part of the reorganization, DaimlerChrysler will shift its corporate headquarters from the Moehringen suburb of Stuttgart to Untertuerkheim, another suburb where Mercedes has its main engineering operations. Board members are expected to make the move in May.

"There's no politics, it's very straightforward," Zetsche said. "This is the kind of culture we want to have … no politics -- just working together to improve this company as fast as we can."

The reorganization will cost DaimlerChrysler $2.4 billion over three years.

Company shares gained 3.8 percent Tuesday, the biggest gain since Sept. 28, when Zetsche announced plans to cut 8,500 jobs at Mercedes.

"DaimlerChrysler has probably had too many layers of fat in the past," said Stephen Pope, head of equity research at Cantor Fitzgerald in London. "It seems Zetsche is really going to try and slim down this organization."

[nadepalma]

This seems like a good idea from a business perspective. In all honesty, Zetsche says that he'll always be a "Chrysler Man" no matter where he goes. And now that he's in charge in Stuttgart, perhaps Chrysler really lucked out in having an advocate in the driver's seat. When the merger first happend, it seemed to me (just my opinion) that Chrysler was treated like the red-headed stepchild. The Germans were probably wondering what was going on with those cowboys in America and why they couldn't get their acts together. Now that Zetsche has experienced it all for themselve, I'd wager he will treat Chrysler like more of an equal in the corporate structure and give them their due. This "further cooperation" between Benz and Chrysler might be the beginning of that.

[Cortazzo]

I can't believe they are moving out of Stuttgart! I've seen pictures, and the STuttgart headquarters are pretty sprawling. In any case, it's always good to see that the American side of the company is leading for a change. As far as most of the job losses coming at mercedes-benz USA, i almost got an internship with them a few years ago, but i didn't realize of what little emportance they are. All product decisions are made in Germany, from financing to volume, they pretty much have to do exactly what Germany tells them with very little input to the parent. I can certainly see why many jobs would be cut there.

[T-Type]

It's good to see them move closer to the original 'merger of equals' ideal. Better late than never. Of course we'll have to see what actually happens.

[kenman923]

I would be interested to see how much of Mercedes technology will be incorporated into future Chrysler products. It could only help give Chrysler a much needed boost in quality.

[cfch3399]

Sounds good. Except in all these cost-cutting measures/ parts-sharing, quality always seems to suffer.
Speaking of Nissan, as smart as Ghosn may be, he sure has annihilated Nissan quality. I'm not sure DCX would want to emulate that, but just as Nissan, DCX is still a darling of the media while the quality of their cars is questionable and something the media mysteriously doesn't mention.
All of this is good for GM as it is the only car maker that is focusing on quality and reliability.

[fuhrwb]

Originally Posted by kenman923

I would be interested to see how much of Mercedes technology will be incorporated into future Chrysler products. It could only help give Chrysler a much needed boost in quality.

........except, Mercedes quality is nothing to write home about.

[69Firebird400]

Originally Posted by kenman923

I would be interested to see how much of Mercedes technology will be incorporated into future Chrysler products. It could only help give Chrysler a much needed boost in quality.

A boost in technology for Chrysler, but I'm not sure about a boost in quality. Mercedes-Benz has not exactly been lighting the JD Power charts on fire for the past few years with their over-engineered cars. I have confidence in Zetsche's abilities to crack the whip and get everyone on board, though. I think he's one of the better auto industry CEOs, even though he's not a media darling like Ghosn.

[KLRMNKY]

Originally Posted by 69Firebird400

A boost in technology for Chrysler, but I'm not sure about a boost in quality. Mercedes-Benz has not exactly been lighting the JD Power charts on fire for the past few years with their over-engineered cars. I have confidence in Zetsche's abilities to crack the whip and get everyone on board, though. I think he's one of the better auto industry CEOs, even though he's not a media darling like Ghosn.

True, Mercedes has really suffered from two things since the reign Emperor Shremph...

Too many electronic goodies that unfortunatly proved to be more trouble then they are worth and proved to be a real pain for the mechanics as well as the owners.

Turning Mercedes into a all things to all people. Porsche is just the latest to fall for this horrible idea. Mercedes used to be the standard of the world in terms of quality and perception. They have gone to far into the under 30K price field and they are really suffering for it. Everyone in the industry agrees that the first thing that mercedes needs to do is to cut out the lower priced models and move back up into the 30K and up field. That's where it made it's reputation as the amker of high class cars that not everyone could afford but everyone wanted.

Just like if Lamborghini made a under 30K car.... just doesn't work.

Zetches is one of the best auto guys and I trust him a whole heck of a lot more than than Jurgen. At least he had respect for Chrysler and it's owners.

[atomicshark]

Originally Posted by Cortazzo

I can't believe they are moving out of Stuttgart! I've seen pictures, and the STuttgart headquarters are pretty sprawling. In any case, it's always good to see that the American side of the company is leading for a change. As far as most of the job losses coming at mercedes-benz USA, i almost got an internship with them a few years ago, but i didn't realize of what little emportance they are. All product decisions are made in Germany, from financing to volume, they pretty much have to do exactly what Germany tells them with very little input to the parent. I can certainly see why many jobs would be cut there.

They are moving from one suburb of Stuttgart to another, so technically they are still near Stuttgart.

[DuSpinnst]

Originally Posted by atomicshark

They are moving from one suburb of Stuttgart to another, so technically they are still near Stuttgart.

I think it's actually another district within the city. Germans really don't have suburbs like we do.

[importedtuna]

DCX is a great merged company. Some people thought that with the German "takeover" we'd get a bunch of rebadged Mercedes stuff, but cars like the Charger prove otherwise and the new Dodge Caliber looks great and has a much more modern powertrain than what Chrysler would have given it on its own id bet.

On the other hand I wouldn't expect a Toyota-GM merger to produce much more than restyled Toyota stuff like the Vibe. Toyota is arrogant about its engineering being the best.

[gmwsag]

This is a merge I would not like to see happen. This is why I opposed the Chrysler-Benz merger in the first place. By imbedding some Chrysler and Benz lines, Chrysler will look more upscale and Benz will not be able to properly compete with BMW and Audi, its german rivals. I understand this now because it is an only choice. When America is losing revenue and sales, it's time to cut jobs, close plants, and revise product strategies. This is nothing new. Chrysler did this to avoid bankruptcy during the 1980s. GM and Ford are also doing it right now.

[chevydlrmn]

ooh das is good

[Bravada]

I was hoping they will finally go ahead with the "merger", because until now they rather act as "conjoined companies". I only can't imagine how they want to share platforms if Mercedes keeps RWD and Chrysler (except for LX) FWD. Well, let's hope Dieter will find a way and cut some redundant Mercedes models.