Reports on the Merger

In this section we will look at attitudes toward the merger over time as reported in the media. As you will see, those attitudes varied.

Throughout 1998, views of the merger were generally positive even though cautionary voices spoke as well. From the beginning there was concern that the merger was not a merger of equals but a takeover of Chrysler by Daimler. There also were articles in the business press in both countries warning of major culture clashes, but most of those articles talked in general terms rather than giving specifics.

That changed fairly dramatically in 1999. Increasingly, reports were critical of the slow speed of integration. For example, it took 25 percent of 300 managers' time to work out the details of the merger, time that those managers did not spend producing and selling cars. Schrempp came under criticism as well. He was seen as tyrannical and Tag Heuer Replica dictatorial by the American public and by Chrysler employees in Detroit, where he was firing executives at Chrysler to gain complete control. The board of directors, which had started out with an almost even split between American and German members, increasingly looked German. By October 1999 the board had eight Germans and five Americans.

Critics charged that there was a war of cultures and that Schrempp was not able to build a new culture. Rather than the promised merger of equals, Chrysler was organized as an American subsidiary of Daimler. Some voices went so far as to recommend dissolving the merger.3

By fall 2000 the stock had dropped from a high of $108 to $45. Forecasts were gloomy, and Chrysler had run into serious problems. Sixty percent of the value of the stock had been wiped out since its high. Eaton had left before his three years as Co-CEO were up, and his replacement, Holden, was fired by Schrempp, who sent his own person, Zetsche, to Auburn Hills. Critics talked of a cultural drama of Shakespearean proportions and the selling of an American icon to dictatorial and power-hungry Germans.4

Morale at Chryslertook a nosedive. Suppliers were unhappy when Zetsche, in an at-tempt to cut costs, asked them to lower their prices. Gradually, there was a realization that Chrysler's problems were not all of Schrempp's making. The company had been headed for trouble before the merger. Some people felt that Eaton had known about it and was glad to get out of a potential mess. He took his money and left.

Up to that point Schrempp had been criticized for being high-handed. Now he also was criticized for not being decisive enough and not moving fast enough. The merger had been mismanaged, and the intercultural communication was disastrous. Know-it-all Germans had been greedy for Chrysler's distribution system and marketing ability. But it was clear now that there seemed to be irreconcilable differences in marketing and engineering philosophies.

The conclusion at the end of 2000 was that the merger had failed miserably, that there was no synergy, and that the cultures were too different to be able to work together.

While DaimlerChrysler was still trying to merge as one company, Schrempp bought a controlling share of 34 percent of Mitsubishi Motors, arguing that the company needed a presence in Asia if it wanted to be global player. Earlier he had toyed with the idea of buying Nissan, but Renault took that company.

In May 2001, after DaimlerChrysler had bought a controlling share of Mitsubishi, Mitsubishi, one of the smallest Japanese automakers, reported U. S. $750 million pre-tax losses on sales of U. S. $31 billion for the year 2000. Mitsubishi sales Replica Watches had dropped 17 percent in the first part of the year. Quality problems, lack of a clear production focus, and a cash crunch had contributed to the problem. Schrempp had known about the problems at Mitsubishi when he bought parts of the company. He had sent Rolf Eckrodt to Japan to reverse the fortunes of Mitsubishi Motors. Eckrodt had a tough task ahead when he arrived at Mitsubishi Motors in Japan in January 2001.