DETROIT - When the nation's auto reporters drive the new Dodge Ram for the first time this week, Dieter Zetsche, president of Chrysler group, won't be in his 15th floor office anxiously awaiting reports.
He will be at the press launch in Asheville, N.C., and undoubtedly asking reporters for impressions - and criticism.
It's the way Zetsche has operated since his arrival in the United States last November.
Guided by the energetic new chief, the Chrysler group has gotten through its worst pain and so far is meeting all the targets of its elaborate restructuring plan. Zetsche has been involved in nearly every detail of the turnaround plan. He even took pre-production Dodge Rams home at night to fine-tune changes in the pickup.
He has formed an inner circle of decision makers, and Zetsche's bosses in Stuttgart, Germany, have given them authority to act. He won the cooperation of Chrysler's two biggest unions - the UAW and the Canadian Auto Workers - after he announced plans to eliminate 26,000 jobs and close six assembly plants. And he has persuaded some suppliers to cut prices 15 percent in the next three years, although they are unhappy about it.
The progress has been impressive, but the turnaround is far from over.
The component cost cutting and squeeze on suppliers has a long way to go. And the 19,500 blue-collar job cuts and six plant closings won't be complete until 2003.
Zetsche also must devise a new recipe to design innovative cars and trucks. The company plans to develop many vehicles in a complex arrangement with partners Mercedes-Benz and Mitsubishi Motors Corp.
Chrysler predicts its cost-cutting measures will help the company break even next year and earn an operating profit of $2 billion in 2003. That will be a welcome improvement, given the company's $3.9 billion operating loss in the first three months of 2001. With sales down 13 percent for the year through May, this will not be a banner year for Chrysler.
Zetsche has taken a number of steps to stop the bleeding. Now he is trying to rebuild the company - fresh product is key - to the point where he no longer depends on incentives. To do so, Zetsche is prepared to take radical steps.
No more Big 3
Five years from now Chrysler no longer will be one of North America's Big 3 automakers, Zetsche says. That is, the automaker will no longer emulate Ford Motor Co. and General Motors by designing vehicles for nearly every product segment.
Chrysler makes money from trucks, and that is what Zetsche will focus on. The automaker will continue to design minivans, pickups and sport-utilities. And it will exploit the Jeep brand by expanding its lineup. But the company will rely on its ties with Mercedes-Benz and Mitsubishi to develop new cars. Mitsubishi will provide platforms for small cars, while Mercedes will design components for a new generation of large rear-wheel-drive sedans.
Chrysler plans to emphasize its 'all-American heritage and all-American brands,' Zetsche said. By doing so, Chrysler hopes to design vehicles that will sell without big discounts. That will be tricky. After all, the man in charge of this strategy is a German whose off-hours test track was the autobahn, where high speeds demand different engineering from that needed on America's 65-mph roadways.
Zetsche was an obvious choice to fix the mess at Chrysler. At Mercedes-Benz, he had considerable experience with corporate turnarounds. In 1991 he guided the comeback of Freightliner Corp., DaimlerChrysler's troubled U.S. heavy-truck manufacturer.
From 1992 through 1995 he was Mercedes-Benz's chief engineer. At the time, the company slashed 40,000 jobs and launched risky vehicles such as the small A-class car and M-class sport-utility. Juergen Hubbert, the Mercedes-Benz chief in charge of the turnaround, was Zetsche's mentor.
A confidant of DaimlerChrysler Chairman Juergen Schrempp said: 'Dieter has several strengths. He is an expert in marketing. He has repositioned the Mercedes-Benz brand. He is a very international person. And he's a real engineer. There are very few people here with that kind of experience.'
Despite Zetsche's experience with turnarounds, his inexperience in the North American market led to several early mistakes. Soon after he arrived in Michigan, he asked the UAW to renegotiate its contract with Chrysler. The union rejected his plea. Zetsche quickly cut rebates on Chrysler's cars and pickups, only to see sales plunge. And suppliers denounced his demand for a 15 percent price cut.
But Zetsche learns from his mistakes. Just two days after they arrived in Detroit in November, Zetsche and Wolfgang Bernhard, COO and the only other German in Chrysler's top management, visited UAW President Steve Yokich at Solidarity House, the union's Detroit headquarters.
They got a cold reception. The outspoken union chief gave them a combative speech and grilled the two executives about their plans. The two Germans concluded Yokich would not cooperate. As Zetsche later noted, 'Our level of expectation wasn't too high.'
But the union's leaders noticed that Zetsche insisted on sacrifices from all groups, not just hourly workers. On Feb. 26, Chrysler announced plans to eliminate 6,300 salaried jobs.
Yokich eventually endorsed DaimlerChrysler's recovery plan. Moreover, he repeated his support for the buyout, declaring that Chrysler would have found it difficult to survive on its own. Yokich's comments drew huge headlines in Detroit's newspapers. Zetsche gained an influential ally.
Yokich declined to comment for this story. But another top leader - Buzz Hargrove, president of the Canadian Auto Workers - praised Zetsche. When DaimlerChrysler announced plans to cut 2,800 of its 12,000 jobs in Canada, Zetsche and Bernhard personally conducted negotiations with the union. They agreed to make a one-time payment of $24,000 to each worker who was eligible for retirement. 'They handled what was a very difficult situation in a very professional way,' Hargrove said.
In small ways as well as large, Zetsche found friends among the unions. In February, he attended the Daytona 500 in Florida to witness Dodge's new entry in the NASCAR series. He was touring the pits when two union officials approached him.
'These two big and burly guys hugged Dieter and praised him. Some of the other UAW guys nearby didn't like it. We were surprised, and Dieter was touched,' said an executive who was with Zetsche.
Zetsche is unlikely to get a lot of hugs from suppliers. Late last year, DaimlerChrysler demanded a 5 percent price cut from suppliers, effective Jan. 1. The company also said it planned to cut purchasing costs an additional 10 percent through 2003. Without bothering to get the suppliers' approval, DaimlerChrysler simply cut payments by 5 percent.
This unilateral move provoked outrage. Several dozen suppliers threatened to halt parts shipments. One supplier says Zetsche personally called the top executives of these companies to urge them to negotiate. Eventually, 40 percent of Chrysler's suppliers accepted the price cut, while 50 percent agreed to a smaller reduction. About 10 percent refused to enact any price cut; they are likely to lose DaimlerChrysler's business.
In his role as bad cop, Bernhard alienated suppliers that once considered Chrysler their best customer. Chrysler 'felt they had an emergency that required a quick reaction,' said Neil DeKoker, managing director of the Original Equipment Suppliers Association. 'Our feeling is that they lost a relationship with their suppliers.'
It will be several years before Chrysler's next generation of products succeeds or fails. Until then, it is not possible to give Zetsche final grades. But he has stabilized Chrysler. Union leaders have allowed him to cut jobs, and suppliers have cut prices. Meanwhile, Zetsche has formed an inner circle of experienced executives to help him run the company.
Moreover, he does have one big advantage: His boss, Juergen Schrempp, negotiated the acquisition of Chrysler. And if he wants to be judged a success when he retires, Schrempp must demonstrate the wisdom of the buyout. The charismatic chairman will give Zetsche whatever he needs to revive Chrysler.
It should come as no surprise that Zetsche is one of two candidates being prepared as Schrempp's possible successor.
'Zetsche is very much the future of the company,' said a company source. 'You don't send over someone who isn't linked to Juergen Schrempp. The very success of Juergen Schrempp depends on the success of the Chrysler group.'