Back at the Brink, Chrysler Finds Fewer Friends March 3, 2007
Back then, it was Lee Iacocca and the federal government bailing out Chrysler. Today the German owners must figure out how to fix the company.
Correction Appended
AUBURN HILLS, Mich.
DAIMLERCHRYSLER always seems to outdo itself at the Detroit auto show, and this year was no exception. The company showcased celebrities like the chef Bobby Flay, and then generated a fresh round of buzz via an artificial ice rink (its surface carefully scuffed to keep visitors from slipping) that it built to show off its legendary Mercedes-Benz line.
For DaimlerChrysler itself, however, the corporate mood was just as cold as the ice. Although the German auto giant’s chief executive, Dieter Zetsche, shook hands warmly with each of about two dozen journalists who came to a press briefing at last month’s car fest, he grew unusually frosty when asked about the future of Chrysler, its struggling American brand. “We are in recovery mode again,” he acknowledged.
Less than six weeks later, on Valentine’s Day, Mr. Zetsche announced that DaimlerChrysler was keeping all options open as it tries to tackle its Chrysler problems. At least one of those options involves a possible sale: the company recently retained JPMorgan Chase to scout for a buyer willing to take Chrysler off its hands, most likely at a bargain-basement price. Suddenly, it seems like 1979 all over again: Chrysler is in crisis, with sales falling, costs rising and cars piling up on dealer lots. But this time, there is one big difference: No one is talking about a government-financed bailout to give Chrysler another chance - in part because it is no longer an American icon.
Chrysler is not “too big to fail,” as it was described then, its tens of thousands of well-paying union jobs too vital to lose. It is now a vestigial part of a sector of the economy - manufacturing - that does not loom as large in the nation’s consciousness. “It is a new world,” said Ron Pinelli, the president of Autodata in Woodcliff Lake, N.J., which tracks industry statistics. “If Chrysler disappeared, would anyone’s life change, except for the people that work for the company?”
Chrysler’s rebound from its near-death experience of the late ’70s is the stuff of legend. It survived back then by closing plants and persuading its remaining workers to accept pay cuts, among other things; then it repaid the government aid, with interest, well ahead of schedule. As recently as two years ago, the company was the money-spinning master of hot cars like the 300C and the PT Cruiser.
But now, Chrysler is fighting for its survival again, a situation that lays bare the failure of previous generations of managers to resolve, or even fully address, its many fundamental problems. Rather than using crises as opportunities to remake Chrysler in the model of its Japanese competitors, say analysts conversant with the company’s trajectory, a revolving cast of corporate stewards repeatedly relied on silver bullets to revive the automaker. Over and over, they introduced a single hot-selling model here or tightened the screws on suppliers there, instead of doing the tougher work that real transformation required.
Many in Detroit say they feel as if they have been sucker-punched. Overnight, Mr. Zetsche has gone from the jovial “Dr. Z,” who gamely starred in several hokey television commercials last summer in an effort to bolster Chrysler’s sales, to someone whom some employees regard as a symbol of betrayal by their German parent.
“It really did seem as if it came out of nowhere,” said Kevin Boyle, a history professor at Ohio State University who was raised in Detroit and has written extensively about the auto industry. “People thought that this was the trade-off: they would give up being a hometown company for the security that the takeover was going to bring.
“It was absolutely a false sense of security,” he added. “But you see what you want to see.”
EVEN if the public spectacle of the last 10 days - Is Chrysler for sale? Who wants it? Who is a serious suitor and who is just flirting? - has been nothing more than an exercise in determining the company’s value on the open market, analysts say it is abundantly clear that the powers in Stuttgart have no special sentiment for Chrysler. Mr. Zetsche is already struggling with sagging popularity in Germany. A number of officials inside DaimlerChrysler blame him for failing to fix Chrysler when he served as its chief executive from 2000 to 2005, say people who advise the automaker but didn’t want to be named because of their ties to the company.
In particular, some of these officials have questioned why Mr. Zetsche allowed the company to keep developing big gas-guzzling S.U.V.’s and pickups when it became clear that gas prices were headed higher. Moreover, he left Chrysler in a virtual product drought for the better part of last year, after the company had gained sales and market share during 2005.
Next Page »
Correction: March 4, 2007
An article last Sunday about the problems facing the Chrysler Group misidentified a celebrity who performed at a company party during the Detroit auto show in January. It was Emmitt Smith, the “Dancing With the Stars” winner and former football star - not the pop singer Seal, who performed at a different event.
- Posted in : Uncategorized, DaimlerChrysler
- Author : arnold
Comments»
no comments yet - be the first?