In May, DaimlerChrysler began building the Jeep Grand Cherokee and Mercedes-Benz M-class sport-utilities partly on the same assembly line in Graz, Austria.
It was a tangible example of how DaimlerChrysler was combining operations after the Nov. 17, 1998, merger.
Jim Holden, president of DaimlerChrysler's North American operations, now promises more big integration projects, even on the scale of the Graz plant.
'There will be more major projects,' Holden said in an interview, but he would not elaborate. 'Now that the honeymoon is over, the discussions are both open and frank.'
The integration teams, established to unite Daimler-Benz AG and Chrysler Corp., did their job. Now it is up to DaimlerChrysler employees working in the trenches to find meaningful ways to integrate the company further, Holden said.
'My goal is to make this work, and it must be done within operations, to find the beef, the meat,' Holden said. 'A synergy team of 10, 20, even 200 people won't get the leverage of the whole organization.'
DaimlerChrysler said it would obtain its 1999 goal of saving $1.4 billion by combining operations. But the company will not create 'an accounting monster' to track savings on a line-by-line basis, he said.
DaimlerChrysler is not required to report what effect synergies have on the company's financial performance, said David Strickler, a mergers and acquisitions analyst at First Union Securities Inc. in Charlotte, N.C.
An analysis by the investment firm reveals that DaimlerChrysler is achieving cost savings from its early integration efforts, Strickler said.
Strickler studied DaimlerChrysler's cost of goods sold. Achieving synergies generally will result in an overall decrease in a company's cost of goods sold, or the cost of making its cars and trucks.
Since the merger was finalized, DaimlerChrysler has maintained a cost-of-goods-sold margin under 80 percent of manufacturing revenues, indicating that synergies are being achieved and the company is becoming more efficient, Strickler said. Chrysler Corp. before the merger had a slightly higher cost-of-goods-sold margin at 81 percent, he said.