Dieter Zetsche knows it will take more than cost cutting to save Chrysler.
Last month, the Chrysler group CEO announced or executed plans to squeeze suppliers for $2 billion in price cuts, to idle production, to lay off workers and to end dealer subsidies that could save $600 million. The moves are part of a massive restructuring being crafted to turn the tide on nearly $2 billion in operating losses Chrysler posted in the second half of 2000.
But Zetsche sees Chrysler's ultimate salvation in innovative, high-quality products. So while the rest of the company faces a 20 percent job cut, product engineering staff will be cut by just 10 percent. And experts have been hired in all functional areas to tackle what has been a Chrysler weakness: uneven product quality.
'What we are doing here should send a clear message that we are 100 percent focused on the market, on our customer, and we want to serve them better in the future than we could in the past,' Zetsche said last week during a press conference to announce the elimination of 26,000 hourly and salaried jobs.
Gary Henson, Chrysler's executive vice president of manufacturing, said the company has added 'half a dozen' quality professionals who are reviewing all Chrysler operations.
Zetsche said the company is so confident about the quality initiative, that Chrysler's restructuring plan assumes greater savings on quality costs than originally planned.
He said Chrysler is saddled with a poor reputation for quality 'from long years ago' but has made significant improvements that have not yet shifted consumer perceptions.