EXCLUSIVE: GERMANY - DaimlerChrysler yield on capital: - approximately minus 12 billion dollars per year
As he considers the problems facing his emergency rescue team, he must be thinking: how did my boss get into this mess? While we wait for the interview, we'll tell you how it happened.
The story goes something like this: Juergen Schrempp was the successful Number One of Europe's Number One industrial group. He happened to find $US 36 billion lying around and… he went shopping!
It was 1998, a vintage year for Chryslers - whether you like the "Viper" look or not, you must admit it's snappy, and it was doing well at the races; the Voyager was the world's best selling minivan.
Schrempp probably felt cosmopolitan, rich and smart, but a visit to Detroit put him in perspective: this was the real big time. He must have noticed that the American press wasn't very interested in him, he probably wondered about how to get his picture on the front page of the Detroit News. Maybe he just wanted to take a peek at the infamous Lee Iacocca's office and/or get a few tips on good restaurants.
Anyway, he rang up then-Chrysler chairman Bob Eaton (the American press always seems to call him "Bob"; Schrempp must have said something like "Dear Colleague…")
The rest of the story has been over-reported to the point of confusion. In a bout of inspiration, someone at the German newspaper Die Welt (probably dizzy after reading contradictory reports from analysts) did a simple calculation. The Berlin newspaper ran it under a six-column, front page headline, announcing a "radical cure" at Daimler Chrysler.
According to their arithmetic, D-C today is worth approximately the same as Daimler-Benz in 1996.
Conclusion: Schrempp bought a lemon! As analysts claim that shares are undervalued (they're probably right), the UAW prepares to negotiate massive layoffs with D-C and investors move away from automotive shares, 1998 press releases acquire a surreal tinge.
"The merger creates the world's third-largest automobile manufacturer after General Motors and Ford, with combined 1997 revenues totalling DM229 billion and about 420,000 employees. By the year 2000, the partners intend to reach a combined operating profit of DM20.6 billion before taxes. And that doesn't include synergy effects amounting to DM2.5 billion in the first year and DM5.4 billion after three to five years."
Time to reconsider the meaning of the much abused 'synergy' concept? Schrempp may be thinking of its theological meaning these days: "regeneration effected by a combination of human will and divine grace".
Zetsche is young (46), strong-willed and outspoken. If he manages to put Chrysler back on track he's sure to continue to the top. And Juergen Schrempp may already have an offer from one of the many financial analysts he seems to spend so much time with. After all, it's just $US36 billion. Sometimes you win, sometimes you lose!
|Author: Andres Unger Salazar (AUSautomas@aol.com ) |
is a freelance auto industry journalist based in Frankfurt, Germany