DETROIT - The most prominent example of partnership in the automotive industry today isn't finished writing its lessons for other players in the alliance game.
Though the 1998 merger of Daimler-Benz and Chrysler Corp. has hit some significant stumbling blocks, the execution of the deal has yet to be played out, said automotive industry executives speaking at the SAE World Congress.
'I'm sure the principals had a vision, and may-be that will play out,' said Bill Carroll, president of Dana Corp.'s automotive systems group. 'It's not over.'
The new DaimlerChrysler AG has no doubt run into manycomplications that weren't anticipated when the U.S. and German automakers agreed to join nearly three years ago.
The Chrysler side of the business is losing money and has launched a cost-cutting campaign that is squeezing suppliers on parts prices and costing thousands of salaried and hourly employees their jobs. It's possible the merger still could succeed, panelists said.
Still, the DaimlerChrysler merger troubles demonstrate the difficulties of forging a successful alliance, pointed out J Ferron, partner of management consulting services at PricewaterhouseCoopers.
'The data suggests in hard-asset mergers, four out of five mergers fail to get the synergies that the parties thought,' Ferron said. 'What does that mean?
It means that smart people somehow or another have underestimated the execution risk. That's how hard mergers are.'