This is the prepared text of the speech and may not reflect the verbatim presentation
Thank you Keith for your kind introduction.
It is a great honor for me to be here on this platform once again.
January 15, 2001
You know, this is the third time I have spoken at this dinner in the last 4 years
As that great American Yogi Berra put it: "It is beginning to feel like "deja vu' all over again'.
Ladies and gentlemen,
This evening I would like to share with you my thoughts on some issues that I imagine are as much on your mind as on mine:
WHERE ARE WE NOW?
The past few years have seen a tremendous increase in the speed of consolidation in our industry.
We have seen General Motors tie up with Fiat, Renault with Nissan. Ford and Volkswagen have moved aggressively into the luxury segment. And of course, we created DaimlerChrysler and have now tied up with Mitsubishi and Hyundai.
It's been a period of revolutionary change. And it is exciting to be a part of it.
But change in and of itself is not enough. We still have our work cut out for us, because the financial markets have taken a coal view of our sector.
Why? Well, there are many reasons.
The main one is that investors are fully aware of the issues of overcapacity and competition facing us.
And they are particularly sensitive, because our industry appears to be entering a downcycle.
2000 was a tough year for all of us. Not only because of slowing sales in the U.S. market, but also because of exceptional competition - as Japanese and European competitors moved into some of our most profitable segments.
Perhaps we should have learned from the rooster who struts into the hen house one morning, calls all the chickens around him and says:
"Come with me guys, I have something to show you".
They go into the next-door coop and there is a huge ostrich egg. And the rooster says: "I just wanted to show you what the competition is doing!"
Now, however, the chickens have come home to roost - in no uncertain terms.
And the main reason is overcapacity.
Which had lead to high incentives and an overheated market - an unrealistic market, if I may say so.
Overcapacity has been with us in the past - in fact, as we all know, it's been driving consolidation.
A generation ago there were 32 passenger car manufacturers; today, there are 10 independent ones. And the number of independent commercial vehicle manufacturers has dwindled from 34 to 14 in the same period.
There's enormous downward pressure on profit margins right now and thus on the returns we can deliver to our shareholders.
We are not alone in facing this challenge.
All of us in this industry are thus facing the same pressures to streamline and restructure in the months ahead.
Over the last few years, like the rest of the industry, we had a great run.
Sales have grown strongly. The year 2000 was:
We had high profitability levels in 98 and 99, The Chrysler Group contributed to more than half of our operating profit.
But as the market changed, performance started to slip and deteriorated fast. We had to move.
And we moved decisively.
In mid November, a new senior leadership team took the helm: Dieter Zetsche as CEO and Wolfgang Bernhard as Chief Operating Officer.
They arrived and listened. They analyzed and learned.
And they are still learning.
They and their Auburn Hills team, have been working night and day.
Dieter told me the other day that the best Christmas present he got was a good cigar and 7 hours of sleep - in a row.
Together Dieter and his colleagues are reaching some tough conclusions, and are now deciding what to do.
And they are a great team.
They have great ideas, now firmly rooted in the reality of the market. They know it's going to be a long haul. But they are all committed to getting Chrysler back on track.
It's the men and women of the Chrysler Group, ladies and gentlemen, that will transform this business. With the support of the huge resources of the whole DC Group.
Or as Dieter more dramatically put it it, it is they, who will: "turn Chrysler into a dolphin - in a sea of whales and sharks... a little faster, smarter, friendlier."
And they are enormously stronger for being part of the DaimlerChrysler family.
I can't lay out the details of our repositioning and restructuring plan, yet.
But what I can do at this stage is set out the basic assumptions for this turn-around:
We are looking at everything to see how we can streamline our cost structures, and what the possibilities are to earn new revenues.
Finally, I would like to make the point that this can only be accomplished in close cooperation with our employees, with the UAW and the CAW, with our suppliers and with our dealers.
As I assured Governor Engler and Mayor Archer when we last spoke: I am totally committed to returning Chrysler to profitability.
As totally committed as we are to all the regions in which we operate - be it here in Detroit, in the wider United States or North America as a whole.
I have always admired the company and its people for their creativity and ability to face up to realities with a spirit that is most unusual.
I will not rest until this company - this American icon - is back where it belongs - at the top of the industry!
Chrysler enjoys equal status with its sister Mercedes-Benz division as a key pillar of our global strategy!
So we will be announcing our complete restructuring program at the end of February, when we will set out a clear timeframe for the recovery process with a series of concrete and tangible milestones.
THE CHALLENGE OF THE NEXT DECADE
Looking out over the next ten years, we see megatrends that will shape our world and more particularly our industry. Trends that will affect all of us here in this room:
Delivering this kind of future will make huge demands on how we run our businesses.
That is why every major company is now in uncharted waters as we search for a whole new business model.
This raises critical questions:
I think we should all be honest: No one in this room has a perfect answer yet.
But let me now give you a sense of how we are approaching the challenges.
OUR STRATEGY IN ACTION
Our strategy is straight-forward. It's about achieving sustainable profitability. And it calls for:
Let's take them one by one.
Challenge No. 1: Successful automotive companies have to be truly global.
Challenge No. 1: Companies have to be truly global.
No automotive manufacturer can afford to deliver revolutionary products at competitive prices unless it has the size and the global reach to achieve vital economies of scale.
Also, a company with strong operations in all major global regions is less vulnerable to major downcycles in any one region. A phenomenon which we can observe today.
I believe our global reach should soon provide us with a real hedge against weakness in any one market. And provide shareholders and potential investors with a much greater level of comfort as a result.
Over the last 5 years, we at DaimlerChrysler have concentrated on what we know best: developing, building, selling and servicing cars, trucks and buses.
We now generate more than 90% (83% Automotive, 74% related Services) of our revenues in the automotive sector and in vehicle-related services.
Today, ours is a truly global company, manufacturing in 37 nations and operating in over 200 countries. Now, DaimlerChrysler has moved decisively into Asia, the fast big market in which we had to considerably strengthen our position.
Because Asia will make up 35% of global GDP 10 years from now. Yet today, we derive only between 2 and 3% of our revenues from this region, where automarkets are growing by more than 10% per year.
That is why we are investing in Asia.
That is why we seized this short window of opportunity when Mitsubishi was in trouble to acquire a major stake in a leading Asian player - at a most reasonable price.
Our alliance with Mitsubishi in Japan and our equity stake in Hyundai in Korea give us a share and access in key Asian markets. As well as the opportunity to jointly develop new products.
We are particulary excited by the commercial vehicle market which will account for more than half of growth in Asia's automotive sector.
And this brings me to Challenge No. 2.
Challenge No. 2: Successful companies have to have a full Product and brand portfolio.
Successful Companies have to have a full product and brand portfolio.
Ladies and gentlemen, today, customers are much more demanding.
They want innovative technology, the highest safety standards, the best fuel economy, the most advanced design and of course the best service they can get - all at the best possible price.
To satisfy this demand, we have to offer the right products and brands for every market segment at the right prices.
Because success in our business will be about becoming the benchmark in customer loyalty. We want people to buy our products. And buy again and again and again.
And we want to support them through the life of their vehicle.
Today, few would question that DaimlerChrysler has one of the strongest brand and product portfolios in the industry. We cover the global market horizontally and vertically, across Asia, North America, Western Europe and Latin America.
Now the real task is to leverage the huge competitive advantage we can achieve across this range. So we will define a "market by market"-product strategy.
Different brands will develop different models for different regions. And - where appropriate - they will share components and systems. They will do this across our total brand-range:
Mercedes-Benz, Smart, Chrysler, Dodge, leap, Setra, Freightliner, Sterling, Thomas Built, Western Star, and American LaFrance.
We all know development and production cycles in our business are measured in years and not months.
So it's going to take time to harmonize these cycles right across the company and to realize it's full potential, without taking our eyes off the ball of short- and medium- term results.
This ties in with Challenge No. 3.
Challenge No. 3: Successful automotive companies have to be leaders in innovation.
Successful automotive companies have to be leaders in innovation.
This challenge relates directly to the theme of this conference: How technology and innovation are going to shape the future of our industry.
We at DaimlerChrysler like to say that we are working on "answers for questions to come."
I don't think anyone here would question our heritage as a leader in innovation as we demonstrated at the Auto Show, with the "Jeep Liberty", the new C-Class Estate and Viper.
Because, quite simply, innovation was and is our greatest competitive advantage.
And we are not about to surrender that leadership.
The need for continuous innovation - to keep ahead of the pack - requires a tireless committment to think out of the box. And to back that thinking with hard cash.
Today, when I visit our research and development people - be it in Palo Alto, Sindelfingen, Auburn Hills, Tokyo or Bangalore - I see remarkable ideas and products:
We are also leading in one of the most important areas: the development of tomorrow's zero emission cars and trucks.
Together with our partners Ford and Ballard, we are leading in Fuel Cell technology, having only recently fitted both the A-Class and the Jeep Commander with this technology of the 21st Century.
At the same time, we will e-enable our whole organization, transforming the way we operate.
I do want to emphasize here a point that is hard to bring across in a speech, because you really have to see, touch and feel it.
That innovation is the creative "engine" that powers DaimlerChrysler.
For me, what sums all it up: Is the thrill of driving an Mercedes-Benz S-Class or the PT Cruiser, just voted "North American Car of the Year".
Which brings me to Challenge No. 4.
Challenge No. 4: Successful automotive companies today have to be culturally diversified and socially responsible.
Successful automotive companies today have to be culturally diversified and socially responsible.
This fourth challenge is all about building a truly global team.
It is about fielding managers who not only handle the technical aspects of their jobs, but are also sensitive to different cultures across the globe.
Any multicultural global company, today, has to respect diversity, but at the same time build a common loyalty to the company.
Whether American, Japanese, German or French in origin: If we want to succeed in this new global marketplace.
All of us have to fundamentally change the way our people work and relate to each other - in fact we need a new mindset.
Moreover, at DaimlerChrysler we believe that being a good corporate citizen is a fundamental part of being a global company. It colors everything we do.
It is one of the reasons we have driven the development of the fuel cell.
It has driven our long history of leadership in the safety area and it has driven our environmental achievements.
But the most fundamental commitment we make to society is to ensure that our employees and their communities have a bright future.
Because of the investments we continue to make in new products and facilities.
An example: Although many companies have deserted America's inner cities, I am extremely proud that the Chrysler Group has maintained a commitment like no other American company.
We have reinvested more than $10 billion in recent years in facilities within the communities where we have our roots.
$6 billion alone has been invested in the area of Detroit.
I could be here all night talking about what we do in this field. We have programs all over the world - in culture, sport, the environment, economic development.
For me, personally, this commitment and the benefit that it brings, is summed up in what I saw three months ago, at a school in a small village in South Africa, near the birthplace of Nelson Mandela.
We built this school.
We built it near our factory in the Cape, because Mr. Mandela asked me to.
We opened it together.
I am not going to talk to you about the children. No words are necessary about our children.
But you should have seen their parents. People who built that school with their own hands. Using the resources we were able to provide.
Such pride, and such hope.
That, my friends, is what we depend on in everything we do.
And it's one of the true joys of doing my job.
WHY WE WILL SUCCEED
To conclude, as I said earlier, we are working towards a whole new business model.
And we are getting there:
Here in the United States, we were the first into the valley.
But perhaps we will be the first ones out.
We have been here before. And we have a track record of turning around troubled businesses.
And we all know the men and women of Chrysler's capacity for recovery.
So we do know how to fix a problem.
We learned some tough lessons.
We're not where we want to be.
But the pieces of our company orchestra, the key instruments in our strategy, are now assembled.
You might be hearing some discordant sounds - here and there.
But that's because we are tuning up: For the real performance.
And we are now becoming better at bringing to life the cultural diversity of our people - all around the world - and in getting them to play from the same score.
Ladies and gentlemen, we will make great music.
Thank you very much.