Zetsche's first cuts may not be the most painful as
DC
moves to trim swelling inventories.
by Joseph Szczesny
AUBURN HILLS - DaimlerChrysler Corp. has
temporarily closed three
assembly plants, including two plants making Jeep
Cherokees and Jeep
Grand Cherokees, in an effort to cut the
inventories of unsold vehicles that
have piled up on dealer lots in recent months.
The shutdown of the Jeep Grand Cherokee plant in
Detroit is emblematic of
the problems facing the Chrysler Group. Until this
year, the Grand Cherokee
plant had been one of the most profitable in the
industry. But this year, the
ubiquitous Grand Cherokee seems to have gone out of
fashion with buyers
shopping for new vehicles. Grand Cherokee sales
were down 27 percent in
October. The residual values of Grand Cherokees
leased to consumers
also have plummeted, leaving DaimlerChrysler with
huge write-offs. The
Chrysler Group has tried to turn the situation
around by boosting incentives
but the rebates and cut-rate financing deals have
only exacerbated the
financial losses, according to outside analysts.
More temporary shutdowns are expected over the next
several weeks.
Dieter Zetsche, who replaced James P. Holden as the
Chrysler Group's top
executive, also told a small group of dealers that
he was interested in
seeing the incentives trimmed. Dealers and some
independent observers
are skeptical about whether the company can cut
incentives without losing
market share.
No more cars?
Meanwhile, some analysts are urging Zetsche and
Juergen Schrempp,
DaimlerChrysler's chairman, to eliminate the
Chrysler Group's
money-losing passenger car lines. "The challenge
for DaimlerChrysler
management, after the clear strategic error of
buying Chrysler, is to devise
a strategy which recognizes this now (and) avoids
the damage to its quality
businesses which would result from years of pouring
resources into an
endless attempt to fix the unfixable," one analyst
said.
Extended plant closings or an effort to kill the
passenger-car
business would inevitably trigger a confrontation
with the United Auto
Workers, which has been warily observing the latest
management
changes at DaimlerChrysler. So far, union officials
have declined to
comment on DaimlerChrysler's problems but officials
did note the
union currently has a four-year contract with the
automaker, which
bars any kind of permanent layoffs.
During a two-hour meeting with more than 400 top
managers from
the Chrysler Group, Schrempp said he expected to
have a
turnaround plan in place during the first quarter.
He also made a point
of apologizing for any "pain" his comments to the
Financial Times
has caused. In the Financial Times interview,
Schrempp had said the
1998 Chrysler-Daimler-Benz deal was never a merger
of equals but
an outright takeover from the beginning. The
remarks had led many
Chrysler Group employees to conclude they had been
lied to from the
very beginning about the deal.
Zetsche also sent out an e-mail to employees in
which he noted the
Chrysler Group faced "far-reaching structural
problems."
"For a lot of people who have been at Chrysler for
a long time, it must
be very painful to see this turn of events. It
hurts me, too, I can tell
you. I do recognize that there are a lot of
unanswered questions, and
we plan to address them as soon as possible.
"But I want you to know today that we are
determined to change
things for the better, so we can all take pride in
Chrysler," noted
Zetsche, who now has to find a way to boost morale.
"I have only one
goal. Along with Wolfgang Bernhard, Chrysler
Group's new chief
operating officer, and the other members of your
leadership team, we
will do everything to get Chrysler back on the road
to prosperity. We
want to restore the company's strength, spirit and
dynamism, and
ensure its future. The only thing that counts is
Chrysler's success,"
Zetsche said in the e-mail note.
It won't be easy, but history has shown that
Chrysler people never
back away from a challenge. That's why I am very
excited to join you
in this task," Zetsche said.
In the wake of the departure of Holden and three
other senior
executives - CAO Kathy Oswald, sales VP Theodore
Cunningham
and PR VP Antonio Cervone - DaimlerChrysler
officials went out of
their way to try and defuse speculation more
American managers
and executives will get the ax. Much of the
speculation centered on
Gary Valade and Tom Sidlik, the two remaining
executives from the
Chrysler Corp. with seats on the DaimlerChrysler
Board of
Management. There is no truth to the rumors, which
have been
widely circulated in recent days, a spokeswoman
insisted.
Denny Pawley, a former Chrysler Corp. executive
vice president who
is now a consultant, said Zetsche is perhaps the
best candidate to
get DaimlerChrysler's American arm moving again.
"It's easy to
complain about the Germans but it adds nothing of
value. Dieter
Zetsche is a good guy and he's got a lot of talent.
The company has
got to move forward," Pawley said.
"People ...recognize that something has to be
done," added a
Chrysler Group manager who asked not to be
identified after the
group meeting with Schrempp.
-------------------------------------------
Steven St.Laurent
Test Engineer
Test Branch, GSD, MCTSSA
MARCORSYSCOM, USMC
760-725-2506 (DSN 365-2506)
Work:mailto:stlaurents@mctssa.usmc.mil
Home:mailto:saint1958@home.com
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