Daily Edition: Jan. 25, 2006

January 25, 2006

DC Cutting Jobs at Home; Chrysler, Benz to Grow Closer

Some European reporters still refer to the German-American automaker as "Daimler-Chrysler." But in a press conference this morning, CEO Dieter Zetsche told reporters and analysts, "Today, you can eliminate that hyphen."

Zetsche says that with the restructuring announced this morning, his management team is taking steps to integrate DaimlerChrysler even further-committing to a "new management model" with streamlined processes to unleash DaimlerChrysler's potential and profitable growth. Consolidation will occur at all levels, from Zetsche on down, as his title of head of the Mercedes Car Group is officially combined with his CEO duties. Along with similar moves with other roles, DaimlerChrysler's board will officially shrink from twelve to nine members.

To cast the management revamp in stone, Zetsche says the DC Board of Management will move its headquarters in May of 2006 to Untertuerkheim from Moehringen, though some support functions will stay in Moehringen. With the move, the company's official headquarters will be in Untertuerkeim, the spiritual home of Mercedes-Benz and Auburn Hills, home of the Chrysler Group. "We want the board to be where the action is," Zetsche said.

In describing the changes he hopes to make on the notorious infighting corporate culture at Mercedes-Benz, Zetsche was blunt. By moving the board into the factory, Zetsche says the new company is all automotive. "We all drive the cars at night and see what kind of progress we are making," he said. "This is the kind of culture we want to have - no bullshit, no politics."

Much of the reductions will involve head count at Mercedes as well as realignments in its truck and bus divisions, which will be split into a truck group, while vans will be put under the Mercedes Car Group aegis. DC hopes to effect a net savings of $1 billion annually from the combination of cuts and merging the back offices of the car and truck groups. However, the cuts will be painful at home, where DaimlerChrysler says it will eliminate 6000 jobs, reducing its management ranks by 30 percent. The personnel cuts will take three years and two billion Euros to complete.

The cuts will mean one thing for Chrysler Group: bringing it "markedly closer" to its German sister company. For example, research for all DC car divisions will be merged into Mercedes Car Group. Zetsche hinted that the lessons of companies likeToyota had influence in streamlining his business, but "ultimately it's a change we need ourself." -Marty Padgett

Zetsche Era Begins at DC by Joseph Szczesny (1/2/2006)
Cordes, Schrempp, even Hubbert are history as Germany watches carefully.


Zetsche Determined to Finish Merger

Dieter Zetsche, DaimlerChrysler's chief executive officer, seems bound and determined to finish off the job started by Juergen Schrempp and turn the German-American automaker into one big car company.

His plan to revamp the company's management team calls for concentrating all of the company's far-flung research and development activities under the Mercedes-Benz Car Group. Thus, the Chrysler Group's vestigial advanced research and development unit will now be absorbed in the new Mercedes unit. More significantly, perhaps, the extensive research capability that DaimlerChrysler has maintained outside the car groups also will be absorbed into Mercedes-Benz.

Zetsche said cooperation between the Mercedes Car Group and the Chrysler Group will become markedly closer. However, he stressed that he isn't about to sacrifice Mercedes' hard-won reputation as one of the world's top luxury brands in an effort to reduce costs. "A clear priority within this effort will continue to further strengthen brand identity," he said.

The DaimlerChrysler CEO also said the old idea of platform-sharing is already fading in the industry. The new model is more like Legos, where certain modules or building blocks can be shared, he said. If the block doesn't change the perception of the vehicle, it might be found on both Chrysler and Mercedes vehicles. But if the module means something to the customer then it will be differentiated, Zetsche said.  "We want to turn scale into profitability," he said. "You can expect to see more examples of collaboration, especially when we can transfer knowledge between the groups, such as when the Chrysler Group tapped the rear-wheel-drive expertise of Mercedes-Benz in the development of the Chrysler 300C," he said.

Zetsche also stressed the flexible development system should allow DaimlerChrysler to produce more unique vehicles.

In addition, instead of just having departments devoted to certain kinds of research, DaimlerChrysler plans to use "project houses," Zetsche suggested.

"You will also see more examples of clearly defined 'project houses' where engineers from different divisions work together for the benefit of the whole company," he said.

The joint venture in Troy, Mich., that is working on hybrids is a good example that the collaborative model can work, he said. In Troy, Mercedes-Benz and Chrysler engineers are working side-by-side with General Motors and BMW specialists to develop hybrids. A second example inside Chrysler is the collaboration on the world's cleanest diesel technology, called BlueTec; that joint effort is being undertaken by Commercial Vehicles, Mercedes Car Group, and Chrysler Group. More project houses are in the works, he added. -Joe Szczesny


Ford Continues Way Forward Without Lyons

Steve Lyons - FORD

Steve Lyons - FORD

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Ford Motor Company is taking more steps this week to execute the Way Forward plan it announced on Monday morning. Chief among them is a round of executive changes that will remove Steve Lyons as the vice president of Ford marketing, sales and service for North America, a move TheCarConnection reported last week. Lyons will retire and will become a Ford dealer in Arizona. His replacement is Cisco Codina, who had served as Ford's customer service vice president. Codina reports directly to Mark Fields, President of the Americas and one of the architects of the Way Forward plan. Darryl Hazel, late of Ford marketing and Lincoln Mercury, will take over Codina's former duties and will report to him in the new management lineup. And replacing Hazel in his marketing slot will be Al Giombetti in a new role which will combine marketing and sales for all three Ford domestic brands. As a result of the changes, Ford says it will reduce the number of corporate officers by four.
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