Letter from Europe: Is Jurgen Schrempp for the chop?

By Andrew Frankl
European Bureau Chief

In the middle of all this hiatus about dimple chads and the Florida fiasco it isn't easy to find any other news in the US media. Yet, strange as it may seem-the World does go on. Well, after a fashion. Certainly, that most famous of car makers-Daimler Benz - is, er, how can I put it nicely…in the poo. Big poo.

They have 437 thousand employed worldwide, they are the pride and joy of Germany-at least they were until recently-and now their head honcho Jurgen Schrempp might be on his way out. Why? Well, times have changed. In the past few years lots of Germans have become shareholders, something that was a new experience for most of them.

Step one: buy share in the mighty three pointed star. Terrific, except that those shares are down over 50%!

They are outraged and so is Mr Kerkorian, an American gentleman whose company owns 4% of the stock, ranking No 3 behind Deutsche Bank and the Kuwait Investment Corporation. He, for good measure is suing the company for billions of dollars in compensation. DaimlerChysler-as the outfit is now known (I wonder how much longer..) is losing an arm and a leg in the United States.

When the so-called merger took place just a couple of years ago it was supposed to be a marriage of equals. Right. That lasted about as long as the ink dried on the papers and as there was no pre-nuptial Chrysler started losing top people at a rate of knots. The Detroit boardroom was closed, the decision making process moved 100% to Stuttgart and that was that. Chrysler became just another subsidiary losing money. Tons of it. The top-selling Jeeps now have lots of rivals, both domestic and imported whilst there just isn't a bread and butter car such as Ford's Cougar or GM's Chevrolet. The one bright light on the horizon, the PT Cruiseris in short supply because it is only made in Mexico in limited numbers whilst whole production lines are standing idle in the States…Bravo. So much for strategic planning. So you have a totally demoralized management team --or what's left of it -- and a bewildered workforce expecting the worst.

A lot of Mercedes insiders openly question the wisdom of the "merger" which they reckon should never have happened. Said one "why on Earth did the best car company in the World have anything to do with a loss-making company such as Chrysler?" To be fair, Chrysler was doing well at the time of the merger although some observers reckon that things were about to turn sour.

So whether they would have been better off without Mercedes or not, we will never know. What is for certain that things chez Chrysler are pretty bad at present with no light at the end of the tunnel. German newspapers openly refer to Chrysler as the "American patient".

What Daimler bosses dread most of all is a hostile takeover bid by Ford Motor Co. Jac Nasser did say before the merger that an alliance of Daimler and Ford would be an unbeatable all-time combination in the motor industry. Well, with 78% of the shares owned by fund managers and small investors it could just happen if the price was right. Fund managers are not known for their patriotism or their sentimentality so don't bank on emotional decisions.

Could it happen? Of course it could. Furthermore it would eminent good sense, especially from Ford's point of view. Mercedes could join the Premier Group whilst Chrysler could be merged into Ford Motor Company itself. I am sure that ex-BMW boss Dr Wolfgang Reitzle would love to have Daimler under his wing and of course having a German at the top would also ease the pain. As for Chrysler, well, Ford does not have funky cars such as the PT Cruiser, their Windstar is not as good as its Chrysler equivalent and the Jeep name alone is worth a fortune in the righthands.

So what does the future hold for Jurgen Schrempp? That of course depends in the first instance on the Board of Management. I've known him for a longtime, he is a ferocious fighter, a tough guy in business and in private. He is not in the habit of taking prisoners. He would have to be pushed, Jurgen would never quit. In the meantime the storms gather. Inventories are bursting at the seams, several plants are idle. The shareholders are unhappy, as are the people at Chrysler. Schrempp sacked the last of the American bosses and appointed a former heavy truck guy by the name of Dieter Zetsche in his place. I am told that unlike most Germans the new man actually possess a sense of humor. He'll certainly need it. In the meantime, Schrempp compared Chrysler to the Titanic…the feeling is that he may just go down with the ship.

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