Daimler-Benz AG's acquisition of Chrysler Corp. now ranks as one of the all-time great industrial catastrophes. In two short years, the purchase has erased tens of billions of dollars in shareholder value. More important, it has effectively destroyed a great American company that was enjoying its Golden Age of success in both financial performance and marketplace sales.
Chrysler's employees, dealers, suppliers and retail customers now fear the future. And in viewing this American unit of DaimlerChrysler AG, the people from the Daimler side of the business have contempt or bewilderment.
Talk about a merger gone wrong.
Well, we can't even say for sure that it went wrong, at least in the eyes of its creator. Sure, it's pure fiasco, judged by the standards that Daimler-Benz Chairman Juergen Schrempp laid out in 1998: a 'merger of equals,' combining Mercedes' upscale precision with Chrysler's nimble organization to create a global powerhouse that sends shareholder value through the roof.
Now, DCX Chairman Schrempp says that plan was a ruse, and this is what he intended: a segregated company with an American division that didn't share power.
Did Schrempp also calculate that the new structure would poison the Chrysler well, that he would drive away all the Chrysler executives who were responsible for making Chrysler the most profitable automaker of the 1990s? Did he imagine that the rudderless Chrysler would be unable to control its costs and would lose its way in an incentive-infested marketplace?
The Daimler people made no attempt to leverage Chrysler's strengths. The cultural wall was too great. They didn't understand.
As Schrempp sends in a Daimler lieutenant to take over management of this American icon, the job is huge. As this is written, the new chief in Auburn Hills is Dieter Zetsche, a brilliant and forceful Daimler leader. Zetsche will have to rebuild Chrysler, just as Renault's Carlos Ghosn was sent to rebuild Nissan. Of course, it wasn't Renault that caused Nissan's problems.
The old Chrysler culture is history, with the old leaders retired (Bob Lutz, Dennis Pawley, soon Tom Gale) or driven out (ex-DCX presidents Tom Stallkamp and Jim Holden).
If Schrempp doesn't like the Chrysler culture that he bought, he now has a chance to make it more to his liking - for as long as DCX's suffering shareholders are willing to give him. But so far, the Daimler executives' understanding of Chrysler and America creates only faint hope that this disastrous merger can be salvaged anytime soon.