Merging the research and development activities of the fiercely independent Daimler-Benz AG with those of the former Chrysler Corp. has been Bernard Robertson's challenge for much of the past year. Robertson, senior vice president for engineering and technology, also oversees truck platform engineering for DaimlerChrysler's North American operations, a key profit center for the global enterprise. Compared to those daunting challenges, restoring a 1950s Royal Air Force trainer, a project the 56-year-old Robertson has undertaken in his home country of England, must seem like simple diversion. He spoke this month from his office in Auburn Hills, Mich., with Staff Reporter Aaron Robinson. Edited excerpts follow:
Now that you're a global company, what are your r&d priorities?
We spent the past year or so reconciling what is done in Germany and what is done here and trying to take advantage of the enormous power of the combined company. We want to make sure that we don't duplicate effort but learn from each other. We're going to tend to play to the respective strengths that have been built up on both sides of the Atlantic. But the basic product challenges haven't changed as a result of the merger.
How are you going to invest your resources and personnel?
There is a renewed focus on safety systems. Safety has always been critically important, but it has become more of a competitive market factor than it used to be. It used to be a matter of complying with the regulations and testing to ensure that we did no harm, but that was it. Now it has become more of a competitive arena.
There is a great deal of work going on with telematics (transmission of data to and from a vehicle, or communication between a vehicle and the outside world) and e-business. We're trying to determine how much of it belongs in a vehicle and how much of it provides real value, and to make sure we have compatible systems, compatible electronic architecture and communication protocols to give people what they want. However, what it is that people want is anything but clear at this point. Our focus is on how do we provide real customer value. That's going to be an interesting area because the technology is becoming more and more capable. There is the prospect that we'll just overload people with complexity and instead of making their lives better, make them worse.
How is the r&d agenda being set for DaimlerChrysler?
There are a couple of ways. The research agenda is set jointly between Stuttgart and here. We have a couple of councils that meet here and in Stuttgart to review research projects and progress. The automotive council oversees the production r&d agenda. Tom Gale (executive vice president of product development and design) is basically the keeper of that council. With all the work that is going on around the world, obviously it is difficult for one group to have its fingers in everything, but that is the focal point. That is where decisions are made as to what should be shared - the answer to, 'Are we sharing enough? Are we making the right choices as to where we put our emphasis?'
Does the recent announcement that DaimlerChrysler's European and North American units will be somewhat autonomous affect r&d?
No. The emphasis there was and is a necessary and desirable reminder that we've got to run the business here and that this is a very large chunk of the company. We can't get so distracted that we're all in Germany learning what's going on with a hundred different projects while there's nobody back here running the store. The first order of business is to run the business, and we've got a huge chunk of the business to run effectively.
Your company has lost some key people. Is that hindering progress?
It isn't, really. We had a long period where we had almost zero attrition of any kind. Then in the past year or so - although our attrition is still tiny compared to most industrial enterprises - obviously we've lost some notable people. It really hasn't affected the r&d agenda or the r&d process. We have a pretty good process in place. We've gotten through the bulk of the historical piece of seeing where we've been and learning from all of that and putting a structure in place to move forward. The departures really haven't affected that.
How does the German way of conducting r&d differ from that used in the United States?
The German practice has been, typically, to keep very robust r&d capability in-house with a fairly rigorous procedure for deciding what the priorities are and what the project should be. Intellectual property is a precious commodity to them. After the thing has been developed and the proof of concept established and patented, the suppliers are brought in to make it.
Before the merger, our approach was almost the opposite. We joined into partnerships with people and didn't worry much about who owned the intellectual property, as long as we had nonexclusive free license to it if we helped to develop it. We would bring the supplier partners into the earlier stage, share the objective and work on the things together. We relied on speed to market to be competitive with it. The supplier would typically be at liberty - perhaps after some period after exclusivity, perhaps not - to sell the thing to other people.
Because both companies were successful and came into this merger from a position of strength, they felt their way had a lot of merit and maybe even was the reason why each respective company was successful. The position that we took is that there really is merit to both of these and we don't have to pick one or the other. There are places where the suppliers truly do have the expertise, and it would be foolish not to work with them and take advantage of their capabilities. There are other places where something is so strategic in nature that we can't afford to let it out until we're ready. We're basically using the best of both approaches. The combined r&d enterprise, which is fairly well integrated now, will jointly figure out which makes sense where.
Would the old Chrysler have been able to keep up with all the safety, environmental and fuel economy issues facing the industry had it not merged?
It is, without a doubt, getting more and more and more challenging and difficult to keep up. Many of the partnerships that we formed with the supply base were a way of deploying more expertise and more horsepower to solving problems. I would argue that we were smaller but we were better at utilizing those kinds of resources and keeping a sharp focus on what we needed to do. At the margin, it's certainly a plus for us to have the added technical capability that we now have. At the same time, we've also got a bunch of new challenges we didn't have before.
We've still got to support this whole array of vehicles at the top end of the market that we didn't have before. It's much more important than it was before to be a major player in Europe and in other parts of the world. Before, we could afford to just take an opportunistic approach to other markets around the world and export things that we had or locally manufacture what made sense. But they were always subordinate to the North American region. We don't have that luxury anymore. The challenges are greater and the scope is broader.
How do you respond to critics of the Partnership for a New Generation of Vehicles who say that the technologies you are touting for 2004 are already in production by companies that aren't even members?
We respect what the other guys have done. There's some interesting technology in the (Toyota) Prius and the (Honda) Insight, and I'm not as familiar with the (Audi) A2 yet. They're interesting technical achievements, and I don't think any of us would take anything away from what they've done. The fact is that they were not trying to achieve the PNGV objectives. The Prius and Insight are obviously much smaller and much lighter weight. They're not affordable by the criteria that we're using, and there are various different estimates of how much they're subsidizing the vehicles. But they end up being an interesting technical experiment, subsidized by the company to either learn or get positive PR or both - and I think they're doing that.
It's an interesting technical achievement to build something like that, but there isn't a market for it except for a handful of people - the same handful of people who wanted an (General Motors) EV1 or an (Chrysler) Epic minivan. The focus of PNGV was always on the segment that represents the best-selling vehicles in the United States - at that time, the Taurus.
So you won't mass-produce your PNGV car until there's a business case?
We have to be able to make a business case for essentially everything that we do. There has to be a business case for it.
DaimlerChrysler already has committed to producing a fuel-cell vehicle in 2004. How is the business case for that vehicle different than for that of the hybrid?
It will be extremely difficult in a traditional sense to make a business case for the early fuel-cell vehicles. The details still aren't worked out on what we will do. Whatever we do, there's going to be an element of technology leadership, of deploying the technology to understand how it behaves in the real world and what the receptivity to it is. On a classic business case basis, it's very difficult to make a business case for that. The fuel cell thing is somewhat different because that technology is such a reach. There are so many question marks in it, and the learning curve is so different. There are so many challenges in the cost arena there, and almost everything about the thing is nonconventional.