Chrysler Corp. and Daimler-Benz AG have spotted some modest synergies, such as Ram pickup truck sales in developing countries and perhaps a shared minivan.
But the big synergies - in engineering and manufacturing - will come about only after much work, and probably culture clashes.
In the short term, the result of the merger of Chrysler and Daimler-Benz mainly will be a bigger company, not necessarily a hugely better one.
The companies are working hard on synergies and have identified some:
Mercedes-Benz truck dealers will sell Dodge Ram pickup trucks in South America.
Daimler-Benz is shelving its own minivan development plans for the United States. That opens the door for a joint minivan project.
Daimler-Benz is spending millions of dollars to develop fuel cells, an alternative power system. Chrysler gets all that research without the hefty investment.
'All of the (Wall Street analysts) believe we have very much understated our synergies, and in fact, I suspect we have,' said Chrysler Chairman Robert Eaton. 'Once we get all of our people thinking about all of the synergies and things that can happen, I have every belief that those synergies will go up.'
DaimlerChrysler expects to save $1.4 billion in 1999, the first full year of combined operations. Within three to five years, the savings will be $3 billion annually.
In some areas, such as marketing, there is limited opportunity for synergy. An ad executive whose agency works for one of the companies said preparations had already started for media consolidation.
Chrysler uses BBDO and Bozell in the Omnicom group, and Daimler-Benz uses Lowe and Ammirati Luris Lintas (Milan) in the Interpublic Group of Companies.
But DaimlerChrysler AG will bend over backward to keep Mercedes-Benz brands separate from Chrysler brands in North America and Europe.
In some areas, finding synergy will be difficult. Take engineering, for example. Chrysler and Daimler-Benz have radically different engineering philosophies.
At Chrysler, the vehicle platform is key, while Daimler-Benz focuses on meticulous, specialty engineering, said Ralph Miller, president of MSX International Inc., an engineering and technical services company in Auburn Hills, Mich.
There is no right or wrong, but dissimilar engineering may take years to merge completely, he said.
'I've heard Mercedes people say that Chrysler has quality problems because they don't rely on engineering specialists, and I've heard Chrysler people say that Mercedes doesn't have exciting products because of its reliance on specialists,' Miller said.
In fact, both sides can learn from each other, he said.
'Mercedes can be more holistic, looking more at the entire vehicle, instead of each individual part being the best it can be,' Miller said.
Chrysler is a benchmark for product-development speed, said George Kubicke, president of Modern Engineering Inc., a contract engineering firm in Warren, Mich.
'Just imagine what will happen when they combine that with Mercedes' engineering capabilities,' Kubicke said.
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Other synergies are surfacing:
Daimler-Benz spends about $5.6 billion a year on research, Eaton said. That includes spending on the continuously variable transmission, or CVT, which uses the entire range of ratios between low and high gears, and fuel cells, which Daimler-Benz is developing jointly with Ballard Power Systems of Vancouver, British Columbia, for mass-market vehicles.
'All of that will be available to us immediately upon consummation' of the deal, Eaton said.
Mercedes-Benz of North America needs a new headquarters. The U.S. marketing arm dropped plans in April to relocate from Montvale, N.J., to Orangetown, N.Y.
'There is some possibility that it will be here' at Chrysler's headquarters,' Eaton said.
Chrysler will share operations with Mercedes-Benz dealers in Europe, and possibly in the United States.
'It is very possible we can share back rooms, we can share infrastructure, including service shops and so forth,' Eaton said.
Chrysler vehicles may get Mercedes-Benz diesel engines.
DC will have greater purchasing power. For example, Daimler-Benz worked with Robert Bosch GmbH to develop an airbag module. When Chrysler started using that same module, Daimler-Benz's cost dropped 40 percent, Eaton said.
A Mercedes-Benz minivan may be DC's first joint project. Mini-vans are Chrysler's crown jewels. Daimler-Benz had hinted that it would build a minivan at its new sport-utility factory in Vance, Ala.
'Clearly, they have said it will be canceled,' Eaton said. But any Mercedes-Benz minivan 'would have to be a very substantially different vehicle' from Chrysler's existing minivans, Eaton said.
Both automakers say they are operating most of their plants at or near full capacity.
Finding manufacturing synergies will fall on Dennis Pawley's shoulders. Chrysler's executive vice president of manufacturing says he is keeping an open mind.
'I can learn from anybody, and I'm sure anyone can learn from me,' Pawley said last week.
Says Ronald Harbour, president of Harbour and Associates, an automotive consultant in Troy, Mich.: 'The Germans see both Pawley and his approach as an asset.'
It is no accident that Pawley is the only manufacturing executive selected to sit on the 18-member DC board of management, Harbour said.
Mercedes-Benz has high-quality vehicles but at a high cost, he said.
'They won't beat anybody on labor productivity,' Harbour said. 'So Mercedes has a huge opportunity here.'
Chrysler has been tapping the best manufacturing techniques, whether from Japanese, Ger-man or Ameri-can automak-ers, and crafting them into a
manufacturing blueprint that Pawley calls the Chrysler Op-erating System. Pawley says it will reduce waste and increase productivity.
Daimler-Benz has been heading in the same direction. Its sport-utility plant in Vance, Ala., is designed like a Toyota factory.