Chrysler's new boss faces same merger problems as old boss

Journal Record, The (Oklahoma City), Nov 17, 2000

DETROIT (AP) -- After two years of trying to make its trans- Atlantic merger work, DaimlerChrysler is still two companies divided by an ocean of troubles.

With Chrysler President Jim Holden due to be replaced today by Dieter Zetsche from Germany, the vaunted merger of equals enters another time of doubt. U.S. workers are uncertain what the new regime will bring, with distrust stirred by statements from DaimlerChrysler's chairman that he never intended a merger of equals. Chrysler's performance hasn't met Stuttgart-based DaimlerChrysler's expectations, with sales incentives erasing profits and production of the hot new PT Cruiser falling short of demand. Daimler and Chrysler also have been reluctant to share parts to cut costs, which might change with a new emphasis on saving money.

Zetsche's first job "is to galvanize morale," said former DaimlerChrysler President Thomas Stallkamp, whom Holden replaced. "How he does that I have no idea."

With the purchase of a third of Mitsubishi and 10 percent of Hyundai, DaimlerChrysler Chairman Juergen Schrempp now controls a business empire that stretches from Brazil to China, and builds vehicles from the tiny two-seat Smart car to 20-ton Freightliner trucks. But Chrysler has been the moneymaker, supplying half the company's revenues and, until recently, half its profits. When Daimler-Benz and Chrysler came together in 1998, Schrempp and Chrysler Chairman Robert J. Eaton billed the deal as a "merger of equals," and promised to create a new, transcontinental corporate culture.

It soon became clear that the new culture was only the two old cultures that looked at each other warily, with the German side in a position of power. Since the merger, several top Chrysler executives have left -- including Stallkamp, who was rebuffed in attempts to bring Daimler and Chrysler closer together -- and the company's board of supervisors has tilted more toward the Daimler side.