Tom Stallkamp discovered that blending cultures would not be easy

Tom Stallkamp is a legend, a Chrysler legend.

As a purchasing boss and later president of the company, he operated so effectively with suppliers, colleagues and employees that his name is still revered nearly two decades after his departure.

The now 71-year-old Stallkamp was a firsthand witness to the 1998 grouping of Daimler-Benz and Chrysler — and was the first victim of the "merger of equals." Today, he says DaimlerChrysler was neither a merger nor equitable.

Stallkamp says his role in the history that was made in 1998 began in November 1997, when he saw DaimlerChrysler boss Juergen Schrempp pop into Chrysler CEO Bob Eaton's office.

"I was standing outside my office — my office was right next to [Chrysler President Bob] Lutz's on the top floor [of Chrysler's Auburn Hills headquarters]. I was talking with Lutz, when Schrempp walked in to talk to Eaton," Stallkamp recalled.

Stallkamp, now a member of three corporate boards and head of a supply chain consulting firm, Collaborative Management, remembers what happened like it was yesterday. He said he and Lutz didn't know why Schrempp was visiting, but they had an idea. After Schrempp departed, Stallkamp and Lutz went to see Eaton.

"That's really strange. Why was Juergen here? You guys were talking for a long time," they asked the CEO.

Eaton made his two fellow executives sign nondisclosure agreements on the spot, then admitted that Chrysler and Daimler were entering talks.

Initially, Stallkamp says, he was one of just five people within Chrysler who knew, including Lutz, who was barred from participating because of his ongoing "not feud, but rivalry" with Eaton, Stallkamp said.

"We were all told, under penalty of whatever, you couldn't tell anybody — even your wife. So, it was really a pretty well kept secret for a while," Stallkamp said.

The need for Chrysler to have a partner had become orthodoxy in the company's executive ranks.

But there was not agreement about which partner it should be. "Initially, Lutz wasn't in favor of it and thought we should do something with BMW, because we had done [an engine] joint venture with BMW in Brazil," said Stallkamp. "He was probably right — the cultural fit of BMW would have been better than Daimler, since Lutz was pretty familiar with all the companies at that time.

"But because he had already announced his retirement, for the good of keeping everything quiet, he was not involved in the negotiations as such. He knew what was going on, but he didn't know what the details were."

Stallkamp said that as negotiations began, and progressed, the talks remained secret, even from key executives.

"There were a lot of back-and-forth visits, just with this small team," he said. "Eventually, it got to be an army of people that were working on it. But it was still kept fairly quiet."

Pressure mounted to bring more key players into the inner circle, "but you couldn't, because it would get out and screw up negotiations."

Stallkamp did, however, violate one code of silence: He told his wife.

"She asked me, 'Why are you going to Germany all of a sudden? Why are you flying all over the world for this stuff?' So I said, 'Well, here's what we're doing, but you can't tell anybody.' And she's pretty good about that. We've been married for 45 years, so she's kept a lot of secrets," Stallkamp admitted. "And I'm sure I'll get sued by somebody about that."

Daimler-Benz had been a multifaceted conglomerate before its merger with Chrysler, with 22 business units doing everything from finance to aerospace. The American executives were under the impression that their highly profitable operation would be first among equals after the merger.

Instead, Chrysler became one of 23, a point driven home on the day of the announcement, when Daimler brought products from each of its units to Wall Street to highlight its wares.

"We looked outside and see all this stuff that had nothing to do with cars," Stallkamp said. "We were the largest single component, but we were the 23rd business unit, and that's when I began to realize that we were going to be treated, not as a merger, but as just another one of the units, even though we were pretty big."

Stallkamp was placed in charge of integration, a job he thought would be a dead end for his career. But it gave him early insight of what was about to happen to Chrysler.

"The big telling thing was, when the management board would meet, the Daimler side of the management board would have pre-meetings to get their act together, and we would just kind of show up. So then we decided we would have pre-meetings to get our act together, but we got accused of block voting, and that's when it all fell apart, at least to me."

Within a few months of the merger announcement, the top management of Daimler-Benz and Chrysler visited each other's headquarters to get to know one another's operations. They exchanged token gifts from the visits, and even those simple gifts signified the irreconcilable differences between the two automakers, Stallkamp said.

"They kept reminding us that we were just this upstart company that Walter P. [Chrysler] had started back in the 1920s, and they started back in 1898, I think it was," he said. "We kept being reminded that they invented the car. Gottlieb Daimler and Karl Benz simultaneously — in the same town, coincidentally — invented the car individually, by themselves. And they told that story with a straight face.

"We gave each other little gifts. Everybody from Daimler on the management board got a red Viper when they came for the first visit to Auburn Hills," he said. "And the next week, we flew to Stuttgart for a reciprocal visit, and we were given, instead of a sports car like that, we were given a sterling silver set of the two original cars of Gottlieb and Karl."

Stallkamp said he still has both gifts.

"That just really showed the difference," he said. "Here, we were really proud of this Viper, it was a great thing, and they give us these little sterling silver quadricycles."

But Stallkamp says he learned valuable lessons from the experience of merging Chrysler and Daimler-Benz. The most important thing? Communication.

"My job was to sell it to the employees and the union, so I went around and explained to them what we were doing. The chairman — and Bob [Eaton]'s a good guy — but he didn't participate in that. I got a lot of feedback from workers who really wanted to know what was going on, and we were telling them. That communication worked because they were all scared about what it meant to become a German company."

But Stallkamp said that communication has to be accurate if it's going to be believed.

"We were communicating that it was going to be a merger. We really believed that — eventually, there was a whole trial about that — but we did go in thinking that. But then we figured out that it wasn't going to be [a merger]."

"I learned that company cultures [are important]," he said, "and it wasn't so much national cultures; a lot of people said it's Americans versus Germans, and it wasn't. It was the culture of the companies that were different, and it was really tough to blend those cultures."