COMMENT: Acting now can avert future trouble

COMMENT
Franz W. Rother is Editor-in-Chief of Automobilwoche

DaimlerChrysler should apply the brakes now. Big is not always beautiful.

Eight years ago Juergen Schrempp faced a similar choice to the one he has now: Either pump in more cash or wield the ax.

Then it was all about the Dutch airplane manufacturer Fokker and realizing Schrempp's dream of turning it into Europe's largest aviation corporation.

Today the center of Schrempp's attention is Mitsubishi Motors and his dream of transforming DaimlerChrysler into a world corporation.

The decision on whether DaimlerChrysler should invest a further 700 million US dollars in Mitsubishi has not yet been made -- but the tension the debate is causing inside the company is all too obvious.

No wonder: This is probably the most dramatic dilemma in DaimlerChrysler's history. The extension of Schrempp's contract to 2008 has not done anything to alter that fact. Indeed the extension will probably be questioned at the imminent stockholder's general meeting.

There will likely be questions on why Schrempp and his 68-year-old chief supervisor Hilmar Kopper were in such a hurry to extend their contracts.

All the important key roles at DaimlerChrysler's are now filled by Schrempp's faithful followers, so some observers might come to the conclusion that the much-vaunted "World Inc." is slowly turning into the "Me, Myself and I Corp." where a board meeting resembles a reunion of ex-soldiers.

Schrempp is not the only decision maker on the board of directors, a member of the supervisory board said. He pointed out that even after the personnel changes there are still two DaimlerChrysler board members with a lot of independence -- Juergen Hubbert and Dieter Zetsche.

But Hubbert will soon retire. And Zetsche is so busy revitalizing Chrysler and looking after his own career that he wouldn't dare cause Schrempp any trouble.

DaimlerChrysler stockholders cannot expect any help from those two executives. Nor from the supervisory board, where Kopper has been backing his friend Schrempp for the past eight years -- with terrible consequences for DaimlerChrysler profits and the company's reputation.

What about these questions?

What did Schrempp and Kopper actually do to prevent the Toll Collect disaster?

And how could two experienced executives get it so wrong when assessing Mitsubishi and Chrysler's problems?

Who failed and who will put a stop to the financial hemorrhaging?

"We want to become the biggest," is Schrempp's credo. But why? Size is not always synonymous with strength -- and a large variety of brands is no guarantee of success in the market place.

BMW was brave enough as to apply the brakes a few years ago. It cost the then CEO his job but saved the company from acquisition. Stuttgart should consider doing the same. It's best to get unpleasant things over and done with.

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