Slowly but surely, Daimler tightened its grip on the merger. In late August, senior managers from Auburn Hills, Michigan, and Stuttgart, Germany, convened to discuss post-merger plans at the luxurious Greenbrier resort in the Allegheny Mountains of West Virginia. The hottest topics were organizational. Executives on both sides of the Atlantic were maneuvering to claim several open positions on the management board. Company co-chairman Juergen Schrempp promised that the best candidate, whether from Daimler or Chrysler, would be selected for each job. But some Chrysler officers were skeptical, especially the company meeting at the Greenbrier.
Tom Stallkamp's position as president of DaimlerChrysler was under attack, specifically by Juergen Hubbert. The 59-year-old head of the Mercedes passenger-car unit considered himself the true guardian of the proud legacy of Gottlieb Daimler and Karl Benz. Dignified-looking, with wire-rimmed glasses and silvery hair swept back from his high forehead, Hubbert wielded serious power in Daimler's decentralized corporate structure. As one Chrysler officer observed: 'If Schrempp took on Hubbert, he'd lose. He had the people and the plants.' Hubbert privately complained that he would not accept a position lower than Stallkamp's on the organization chart. He was much too careful and discreet to confront the issue on a personal level. Instead, he waged battle behind the scenes with Schrempp and in roundtable discussions, arguing ceaselessly that everyone on the management board should be equal. Only Bob Eaton and Schrempp, the co-chairmen, could occupy a position above the other 16 board members. Furthermore, he pointed out that the position of 'president' doesn't exist in a German corporation. And, after all, DaimlerChrysler would be a German company.
Stallkamp didn't know what to make of it. The Germans seemed to coalesce around the idea that the board should be portrayed as one long horizontal line with all the members equal in stature. The position was difficult to argue with, particularly when DaimlerChrysler was being trumpeted publicly as a 'merger of equals.' But the fact was that Eaton and Schrempp had agreed in the negotiations to make Stallkamp president. It was part of the deal. In the original organizational box, he was president. The odd thing at the Greenbrier meeting was that Eaton went right along with Hubbert's argument. Eaton never defended, much less fought for, the agreement he had struck with Schrempp. By the end of the meeting, Stallkamp emerged as president of DaimlerChrysler Corp., which was simply the new company's U.S. corporate entity. All the Americans, with the exception of Gary Valade as worldwide purchasing chief, would report to Stallkamp. All the Germans would report directly to Eaton and Schrempp. What am I president of? Stallkamp wondered. A business unit? He was still designated as 'head of integration' but clearly had no authority over anything but the old Chrysler.
After the meeting, Schrempp asked Stallkamp to lunch in his suite. They sat on the patio. Stallkamp munched a salad and Schrempp sipped red wine. 'Here's what we're going to do,' Shrempp said. 'You stay close to me. Call me whenever you want. Don't worry about going through Bob Eaton and all that kind of stuff.' Stallkamp felt intensely uncomfortable with the idea of circumventing Eaton. It seemed disloyal, almost unethical. 'I can't do that,' he protested. 'I won't do that. I don't think it's the right thing to do. I wouldn't feel right.'
'Don't worry about it,' Schrempp asserted.
Greenbrier was a turning point. The shareholder votes loomed three weeks away, and several facts were becoming crystal clear. Schrempp ran the show. Daimler occupied the high ground. Eaton prized harmony and shunned conflict. Chrysler stood on the verge of being taken over.
Every senior DaimlerChrysler executive in the world flew into Seville, Spain, for the first 'Top Management meeting' that kicked off on Dec. 11. The Germans outnumbered the Americans by two-to-one. Seville would, Schrempp hoped, be a rallying cry, the foundation for the surging spirit he felt for DaimlerChrysler. The weekend would be his stage to set the tone of his leadership. Only a few dozen Chrysler officers had spent much time with Schrempp or seen him in action. His jut-jawed attitude and dramatic speeches impressed even seen-it-all Chrysler veterans. Schrempp was a spellbinding speaker, raising and lowering his voice and inflection, pausing for effect, taking the audience where he wanted to go.
'I have never worked for a company,' Schrempp preached. 'A company is not human. Only the people are human.'
The officers ate, drank, mixed and matched for two days. After the work sessions and dinner, the hotel turned into a giant, free-form cocktail party of, in most cases, total strangers. Spanish wine and German beer flowed as Americans mingled with Germans and crossed the cultural divide. More than a few jet-lagged Chrysler officers left for their rooms shortly after dinner, and more boisterous German voices filled the air as the night wore on. A small but hardy crew of Americans matched their new colleagues drink for drink, as things got festive. A Chrysler finance exec, Tom Gilman, began playing piano in the bar, and Americans and Germans alike joined in to sing along to everything from 'Jingle Bells' to show tunes to Sinatra. Marketing chief Bud Liebler and the Chrysler guys had done this piano-bar routine before and joined in with gusto. But nobody sang louder, longer and more exuberantly than Schrempp. He was leading the company and the chorus, raising the rafters in song. 'This is the guy that you always wanted in your fraternity in college,' laughed Tony Cervone, head of Chrysler's internal communications.
Schrempp got rowdier and funnier as the night progressed, raising his glass in a litany of toasts, calling out for another favorite tune, slapping backs and roaring with laughter. By 2 a.m., the bar was rocking. There comes a point in a night of hearty drinking when the party cranks up a notch, the alcohol goes down faster, the jokes get more hysterical and the guys let loose. Saturday night in Seville was the release, the blowout after months of waiting from the engagement to the marriage of Daimler and Chrysler. Ties and coats were shed and shirtsleeves rolled up. The room got hotter and louder as Gilman hammered the piano keys. Schrempp and the group bellowed song after song until the wee hours. After one final chorus of 'Bye, Bye, Miss American Pie,' Schrempp was done. Then, with a wild gleam in his eye, he grabbed his ever-present assistant, Lydia Deininger, picked her up, and threw her over his shoulder. The room exploded in laughter as Schrempp snatched a bottle of champagne in his free hand, raised it in the air and yelled out with a grin, 'See you later, boys!' Then he carried her off, not to be seen for the rest of the night.
Eaton wasn't there for Schrempp's departure. He went to bed early.
The 17-member management board proved cumbersome from the start. The former Chrysler executives were used to freewheeling meetings with Chrysler Vice Chairman Bob Lutz controlling an agenda devoted to specific cars and trucks. The new board emphasized presentations, structure and broad discussions about global business units. The Germans came armed with thick binders prepared by their staffs. The Americans worked off notes and distilled memos. The Germans wielded detailed reports on cars, heavy trucks, military aircraft and financial services. The Americans sensed that Chrysler's North American car-and-truck business was simply a piece of a much larger, more complicated operation. Schrempp had an opinion on everything. Eaton let Stallkamp do most of the talking.
The Chrysler executives were outnumbered and outprepared. Dennis Pawley - Chrysler's burly manufacturing chief - had retired, leaving seven Americans on the board to 10 Germans. He would never be replaced, even though Schrempp had agreed to it late in the merger negotiations. Beyond that, the dynamic of Chrysler's team had changed - no Lutz, no Pawley, no Francois Castaing and no Tom Denomme. Eaton mostly listened. Tom Gale, the company's executive vice president of design, was by nature rather quiet. But the Germans paid close attention to his opinions on vehicle design and development. Stallkamp spoke up on integration, pointing out the hazards of choosing between Daimler and Chrysler practices going forward. 'We can't pick between one way and the other,' he said. 'We have to choose the best way or a new way.'
Integration provoked endless discussions, but the concepts seemed abstract and rhetorical. The very structure of the management board worked against it - too many business-unit leaders intent on protecting the turf of their own operations. The Americans weren't timid, just out of their element.
Each day, the Americans learned more about their new German CEO, and how Schrempp always seemed to be a step ahead, planning his next move while everyone was still trying to figure out his last one. And the Chrysler execs soon realized that Lydia Deininger was far more than Schrempp's secretary and companion. The petite brunette sat in on every high-level meeting, taking notes, producing documents and putting a Marlboro cigarette in Schrempp's hand when he waved it a certain way. Deininger kept Schrempp's schedule and fielded all his phone calls. When Stallkamp wanted to speak to Schrempp, he called Deininger. Her influence on Schrempp could not be underestimated, although their intimacy made some of the Americans uncomfortable. Executives in Auburn Hills just weren't accustomed to a married German chief executive openly carrying on a relationship with his attractive female assistant. 'It's odd,' Stallkamp said, 'Some people say it's continental, but it's not appropriate business behavior.'
It was only the tip of the cultural iceberg. The Germans and Americans simply did business differently. The six-hour time difference didn't help. By the time the Americans started their day, the Germans had already had lunch. Stuttgart always seemed to have a head start on Auburn Hills. German management board members had executive assistants who prepared detailed position papers on any number of issues. The Americans didn't have assigned aides and formulated their decisions by talking directly to engineers or other specialists. A German decision worked its way through the bureaucracy for final approval at the top. Then it was set in stone. The Americans allowed mid-level employees to proceed on their own initiative, sometimes without waiting for executive-level approval. The platform teams epitomized Chrysler's amoeba-like structure, and each top executive had responsibility for one. Jim Holden, for example, oversaw the minivan platform in addition to running sales and marketing. The Germans smoked, drank wine with lunch and worked late hours, sending out for pizza and beer at their desks. The old Chrysler banned smoking and alcohol in its facilities. The Americans worked around the clock on deadlines but didn't stay late as a routine.
The sniping had already started. 'You might work late, but you don't work smart,' Chrysler's Cervone snapped at Christoph Walther, his counterpart in Stuttgart. The two communications departments were on the front lines of the culture wars. Cervone and his boss, Steve Harris, squared off with Walther.
The Chrysler side lost nearly every battle. Corporate press releases were written in German and translated into English. The releases went out in the morning, German time. Cervone protested when Walther wanted to release year-end earnings at 2 a.m. Detroit time. The earnings information included the size of union workers' profit-sharing checks. 'We can't even tell our own employees about profit-sharing if we do it at 2 a.m.,' Cervone moaned. 'It's like the universe revolves around Germany.' Walther's assistant, Roland Klein, said the Americans complained too much and were obsessed with pay raises and shorter working hours. Harris and Cervone couldn't endure the Germans' obsession with image. The Mercedes car executives wanted any product recall to be associated only with the vehicle brand, such as Dodge or Plymouth, and not the corporate name, DaimlerChrysler. 'You can't say Dodge is recalling cars,' Cervone scoffed. 'The company is recalling cars.' The Germans also didn't understand that some public relations issues were beyond their control. Klein went ballistic one day when a personal-injury lawyer called a press conference to publicize a lawsuit against DaimlerChrysler. 'We can't allow these people to have press conferences!' Klein stormed. The outburst amused Cervone. 'You can't predict when some scumbag lawyer is going to call a press conference,' he snapped.
FEAR BECOMES REALITY
A dynamic developed quickly on the DaimlerChrysler management board. The meetings were formal and structured. Schrempp stated his positions forcefully and in a way that left little room for debate. Hubbert carried elder-statesman status among the Germans as the reigning 'Mr. Mercedes.' Dieter Zetsche, the tall, mustachioed sales chief for Mercedes, spoke incessantly on every topic. Manfred Bischoff, the chief executive of Daimler-Benz Aerospace AG, was clearly the closest board member personally to Schrempp and freely offered his opinions. Among the Americans, Stallkamp did most of the talking, with Valade and Gale participating intermittently. Eaton primarily listened, speaking up only when a controversy brewed. He seemed passive and distinctly uncomfortable with conflict, particularly if it involved Schrempp. If an issue got contentious, Eaton wanted to move on, get it out of the way. When the synergies of the business were discussed, Eaton simply said the projects should be allocated down the middle, half on the Chrysler side and half on the Daimler side. But how, Stallkamp pressed, would they do that? What methods would they use? Eaton wouldn't, or couldn't, say.
The Americans, to their dismay, saw their worst fear become reality. Eaton slowly but surely withdrew, grew detached and didn't contribute. He isolated himself in his office for days at a time. He rarely talked to Schrempp, often using Cordes or Daimler CFO Manfred Gentz as a conduit to his co-chairman. The Chrysler executives thought Eaton appeared intimidated by Schrempp. Their public appearances together had taken on a set character. Eaton spoke first, generally on broad topics like the economy or global consolidation. Schrempp tackled the hard business issues, laying out DaimlerChrysler's agenda, promising that profits would grow faster than revenues. But more than the substance differed. Schrempp was a natural-born speaker, entertaining and assertive, his confidence palpable in every word. The contrast with Eaton was too obvious to ignore. Except for the rare, emotion-drenched occasions when he opened up, Eaton wasn't engaged. He didn't project passion and willpower. Schrempp exuded authority. He was a man used to getting his way. Schrempp didn't exactly intimidate Eaton. He overwhelmed him. Eaton didn't cower. He abdicated.
Every Monday morning a group of managers in Auburn Hills piled into a small fleet of minivans and headed to the DaimlerChrysler terminal at the Oakland County airport. There, they boarded a customized Airbus A320, its usual complement of 180 coach-class seats replaced by 52 plush, business-class seats equipped with foldout desks for laptop computers and in-flight work. The new DaimlerChrysler shuttle made four weekly round trips between the United States and Germany, ferrying employees on transatlantic trips and sparing them the hassle of flying commercial. The shuttle was the lifeline of the integration process, a convenient, comfortable, foreign-exchange tool allowing easy access between the company's two headquarters an ocean apart.
The Americans attended classes on German meeting protocol and personal instruction. The Germans took a course on the meaning of sexual harassment in the U.S. work environment. ('A German male should always keep the door open when meeting with an American female.')
The cultural divide extended beyond attitudes and customs. The yawning gap in pay scales fueled an undercurrent of tension. The Americans earned two, three, and, in some cases, four times as much as their German counterparts. But the expenses of U.S. workers were tightly controlled compared with the German system. Daimler-side employees thought nothing of flying to Paris or New York for a half-day meeting, then capping the visit with a fancy dinner and a night in an expensive hotel. The Americans blanched at the extravagance and resisted quick trips overseas simply to meet face-to-face.
But beyond the cultural peculiarities lay a more difficult division. Americans did not want to move to Stuttgart, while plenty of Germans volunteered to relocate to Auburn Hills. Early on, a goal was set to exchange 30 executives from each side, but that quickly shrunk to a target of 10. With very few exceptions, Chrysler managers had worked their entire lives in the United States and had little desire to move abroad. Daimler's managers, by contrast, were used to postings around Europe, as well as in the United States, South America, Africa and Asia. The idea of uprooting a family from a spacious home in suburban Detroit and moving to a small apartment in Stuttgart unnerved American managers. By contrast, the Germans were awed by the size of the houses in the leafy subdivisions around Chrysler's headquarters tower and hungry for the experience of a foreign assignment.
'We have plenty of people who want to transfer to Auburn Hills,' Roland Klein, the German public relations executive, boasted. 'But the Americans aren't willing to move.' By April 1999, exactly one senior Chrysler executive, Jim Donlon, had packed up and settled in Stuttgart. In his 50s, Donlon had a grown family and was thinking about retirement in a few years; he didn't realize he was a pioneer. 'When I raised my hand, I thought I'd be one of 10,' Donlon said. 'How was I to know I'd be the only one?'
`YOU CAN NO LONGER LEAD'
The Germans take off most of August for summer break. The management board scattered and wouldn't meet again until September. Schrempp flew to Cape Town, South Africa, and wouldn't re-emerge for two weeks. The executives in Auburn Hills took off for their big vacation homes on the gorgeous lakes of northern Michigan. Stallkamp arrived on August 10 at the house he had just built in the exclusive Bay Harbor development overlooking Lake Michigan. On the first day, Eaton's secretary, Mary Ann Demski, called him. 'Mr. Eaton is going up north to check on his new home, and he'd like to see you,' she said. 'OK, sure,' Stallkamp said. He drove over to Eaton's place on Walloon Lake, thinking in the car that Eaton probably wanted to talk about the management board restructuring under review. Schrempp wanted the board whittled down, and Stallkamp agreed it was about time to stop putting 17 executives around the table to run the business. A smaller board would at least cut down on costs and definitely speed things up.
Eaton let Stallkamp in the front door, and they sat down in the living room. Then Eaton pulled out a handwritten piece of paper and began reading the reasons why Stallkamp had to leave DaimlerChrysler. Eaton would never publicly discuss what was said next. Stallkamp, for his part, would keep detailed notes of their conversation.
'You've been too negative,' Eaton said, reading word for word off the paper. 'You've been too negative, and as a result your staff, your direct reports, also think you're too negative and too critical. Because of it, you can no longer lead.'
What? Stallkamp was stunned.
'You're not happy,' Eaton said, his voice shaky. 'You've become negative.'
'Who have you talked to?' Stallkamp asked. 'What do you mean, my direct reports?'
Eaton said he had talked to the other American executive vice presidents, which would include Valade, Gale, Holden, Tom Sidlik and Theodor Cunningham. He admitted he couldn't reach 'all of them' because of vacations.
'I have personally determined that you have lost their support and can no longer lead,' Eaton said stiffly. 'Performance is not an issue, and your communications inside, they were excellent. But you should consider other alternatives.'
Stallkamp couldn't fathom what Eaton was saying. What alternatives? Did he mean other jobs in the company? 'Am I,' Stallkamp said, 'being fired?'
'No,' Eaton said. 'If I wanted you to leave I'd ask you to leave now. You come back with some other alternatives of what you want to do.'
Stallkamp's mind raced. If he was being removed as president, there was a lot at stake. If he was demoted or fired without specific cause, his contract triggered a $45.4 million severance package. It was in the merger agreement. 'You've triggered me,' Stallkamp declared. 'You trigger my agreement if you kick me out of my job or you change my job.'
'Talk to O'Brien,' Eaton blurted out.
Talk to the company lawyer? Stallkamp erupted. 'What the hell is going on?' he said, too loud. Eaton's hands were shaking, and he choked on his words. Stallkamp thought Eaton was about to start crying. This is strange, Stallkamp said to himself. I should be emotional. He's firing me and he's crying.
Stallkamp would remain as vice chairman of DaimlerChrysler until the end of 1999. Stallkamp stayed in the background over the next few weeks, attending to details on the new contract with the United Auto Workers, cleaning up unfinished business and responding to the 900 e-mails that employees sent him after the management shake-up. He was invited to, but didn't attend, the second annual top management meeting for DaimlerChrysler executives from around the world, the successor to the Seville event. Instead of traveling to a Spanish resort, the 300 officers gathered at the Sheraton Premiere Hotel at Tyson's Corner, near a huge suburban shopping mall outside Washington, D.C. Eaton spoke about the cultural integration, Schrempp on the financial and production targets for the coming months. The euphoria and camaraderie of Seville seemed a distant memory. The meetings bored in on specific business topics. The piano bar was as quiet as a tomb.