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Schrempp: DaimlerChrysler no merger of equals

By Daniel Howes / The Detroit News

    FRANKFURT, Germany--You know history is being rewritten when the boss says today's mess always was part of yesterday's plan.
   Now we have DaimlerChrysler AG Chairman Juergen Schrempp confirming that his "merger of equals" with Chrysler Corp. never was intended to be any such thing. Chrysler, it turns out, always was to become the North American business unit of a reformed and renamed Daimler-Benz AG, answerable to Stuttgart.
   "Me being a chess player, I don't normally talk about the second or third move," Schrempp said in an interview published in Monday's Financial Times of London and confirmed by a DaimlerChrysler spokeswoman. "The structure we have now with Chrysler was always the structure I wanted.

"The structure we have now with Chrysler was always the structure I wanted," says DaimlerChrysler's Juergen Schrempp, right, with Robert Eaton in the early days of the merger.

   "We had to go a round-about way, but it had to be done for psychological reasons. If I had gone and said Chrysler would be a division, everybody on their side would have said: 'There is no way we'll do a deal.' But it's precisely what I wanted to do."
   It takes a lot of guts -- and a perplexing lack of tact -- to admit that you deceived 125,000 future employees to get a deal done. Such an admission is even more surprising considering that those employees are being asked by Schrempp and Auburn Hills-based President James P. Holden to make sacrifices to return Chrysler to profitability.
   Schrempp's comments may not inspire much loyalty in Auburn Hills because they shouldn't. The German owners of Chrysler continue to show an appalling lack of understanding for the symbolism of their actions. They also fail to appreciate the respect Americans have for executives who tell the truth in the beginning -- not more than two years later.
   Chrysler's troubles -- illustrated most recently by last week's $512-million third-quarter operating loss, plans to idle seven plants to reduce excess inventory and an expected slowdown in October sales -- underscore the challenges facing Holden and his people. Yet Schrempp and his management board, in a stunning display of ham-handedness, are pressing ahead with a $5-million plan to renovate some three floors of New York's Chrysler Building.

During the first days, DaimlerChrysler executives Juergen Schrempp, left, and Robert Eaton often appeared together. Now Schrempp says Chrysler always was to become DCX's American unit.

   Of course, $5 million is not much money for a $151-billion global company like DaimlerChrysler. But the management board just spent another $5 million to renovate old Daimler-Benz treasury offices in the Seagram's Building to accommodate the management board's bi-monthly meetings. Now word is that DaimlerChrysler will keep both offices and push to make Manhattan the "virtual headquarters," meaning many key policy decisions will be made far from legal headquarters in Stuttgart and Auburn Hills.
   It's not the money, stupid, it's the symbolism. Last week, Holden said he would "not entirely preclude anything" in the accelerating austerity campaign -- including layoffs -- even as the management board is planning new Chrysler Building digs that include renovations of Walter P. Chrysler's elite Cloud Club.
   Holden is setting the right tone, but his boss isn't. While analysts continue to downgrade their outlooks for DaimlerChrysler, based on far more than the deteriorating Chrysler business, Schrempp continues to tout a strategy that has failed to deliver any big bangs with investors. Shares in DaimlerChrysler have lost more $60 billion in value since their high of $108 in January 1999. Was that part of the plan, too?