Daimler Chief Sees Mercedes Doing More With Less

[Zim Hosein]

FRANKFURT, Sept. 12 - The incoming chairman of DaimlerChrysler signaled on Monday that he would impose a stringent cost-cutting regimen on the company's flagship Mercedes division, which has had a collapse in profit amid evidence that its quality standards have deteriorated.

Speaking at the Frankfurt international auto show, the executive, Dieter Zetsche, said in an interview with reporters, "We have to learn to do the same with less, or even more with less."

Mr. Zetsche, who will succeed Jürgen E. Schrempp in January, did not specify how much he was seeking to save, or whether DaimlerChrysler would eliminate jobs to do so. German companies typically negotiate with their unions before announcing staff reductions.

In his last post at DaimlerChrysler, Mr. Zetsche turned around the American Chrysler unit, which was hemorrhaging money, in part by laying off 26,000 workers. Such wholesale cuts are all but inconceivable in Germany, where the unions and job-protection laws are much stronger.

Mr. Zetsche said he would not use Chrysler as a model for Mercedes, noting that a "comparison would be misleading."

But as German carmakers struggle with global competition, they are being forced to contemplate American-style cost-cutting. Volkswagen recently warned that its German factories would require deep job cuts to stay competitive with plants in Portugal and elsewhere.

Volkswagen "is a company in crisis," Wolfgang Bernhard, its No. 2 executive, said here. "People need to understand that. They have to change."

Mr. Bernhard and Mr. Zetsche, who worked together at Chrysler, are perhaps the two most closely watched auto executives in Germany these days - returning home after years in Detroit to revive two troubled industrial icons.

Mr. Zetsche, in particular, dominated the first day of this trade show. At a news conference for Mercedes-Benz, he was driven onto the stage in a new Jeep Commander. Exchanging a baseball cap and leather jacket for a suit jacket, Mr. Zetsche pronounced himself right at home.

He then introduced several new Mercedes models, including a redesigned S-class sedan, the top of the line. The S-class will be critical to restoring Mercedes's operating profit, which fell 98 percent in the second quarter, largely because of losses at the Smart minicar unit.

Some analysts have called on Mr. Zetsche to shut down Smart. But on Monday, he said it was "only fair" to give the unit's new management time to stanch the losses.

Fixing Mercedes will occupy most of Mr. Zetsche's time, even after he becomes chairman of DaimlerChrysler. A few weeks after being named to succeed Mr. Schrempp, he was given responsibility for the Mercedes-Benz car group, after its chief, Eckhard Cordes, resigned. On Monday, he said he viewed the Mercedes assignment as open-ended.

That could put pressure on Mr. Zetsche, who will also face demands to increase DaimlerChrysler's share price. Hedge funds have added to their Daimler stakes since the announcement of Mr. Schrempp's departure, and analysts said they might press for deeper changes.

Mr. Zetsche said the company had not yet determined whether its shareholder base had been significantly altered by hedge funds. But he added, "The more parties that are interested, the better for us."

DaimlerChrysler will also have to deal with the impact of higher oil prices. Mr. Zetsche said consumers had been resilient during previous oil shocks, though he conceded the one now would have a dampening effect.

Despite the variety of challenges facing Mr. Zetsche, analysts said he was right to focus on rebuilding Mercedes. "It's the underperformance of Mercedes that is holding the whole empire back," said Garel Rhys, director of the Center for Automotive Industry Research at Cardiff University in Wales. "If you get Mercedes right, you go a long way toward getting all of DaimlerChrysler right."

Mercedes ranked 27th of 37 brands in the 2005 vehicle dependability survey conducted by J. D. Power & Associates, behind Mitsubishi. The survey measures reliability after three years of ownership. It ranked fifth in the initial quality test, which measures reliability after 90 days.

"Clearly, it's our objective to be No. 1," Mr. Zetsche said. Asked whether he had a deadline for reaching that, he demurred, saying, "We will be in the very top ranks in the next three years."

Daimler Chief Sees Mercedes Doing More With Less :Q

 

[GTaudiophile]

Originally posted by: Zim Hosein

FRANKFURT, Sept. 12 - The incoming chairman of DaimlerChrysler signaled on Monday that he would impose a stringent cost-cutting regimen on the company's flagship Mercedes division, which has had a collapse in profit amid evidence that its quality standards have deteriorated.

Speaking at the Frankfurt international auto show, the executive, Dieter Zetsche, said in an interview with reporters, "We have to learn to do the same with less, or even more with less."

Mr. Zetsche, who will succeed Jürgen E. Schrempp in January, did not specify how much he was seeking to save, or whether DaimlerChrysler would eliminate jobs to do so. German companies typically negotiate with their unions before announcing staff reductions.

In his last post at DaimlerChrysler, Mr. Zetsche turned around the American Chrysler unit, which was hemorrhaging money, in part by laying off 26,000 workers. Such wholesale cuts are all but inconceivable in Germany, where the unions and job-protection laws are much stronger.

Mr. Zetsche said he would not use Chrysler as a model for Mercedes, noting that a "comparison would be misleading."

But as German carmakers struggle with global competition, they are being forced to contemplate American-style cost-cutting. Volkswagen recently warned that its German factories would require deep job cuts to stay competitive with plants in Portugal and elsewhere.

Volkswagen "is a company in crisis," Wolfgang Bernhard, its No. 2 executive, said here. "People need to understand that. They have to change."

Mr. Bernhard and Mr. Zetsche, who worked together at Chrysler, are perhaps the two most closely watched auto executives in Germany these days - returning home after years in Detroit to revive two troubled industrial icons.

Mr. Zetsche, in particular, dominated the first day of this trade show. At a news conference for Mercedes-Benz, he was driven onto the stage in a new Jeep Commander. Exchanging a baseball cap and leather jacket for a suit jacket, Mr. Zetsche pronounced himself right at home.

He then introduced several new Mercedes models, including a redesigned S-class sedan, the top of the line. The S-class will be critical to restoring Mercedes's operating profit, which fell 98 percent in the second quarter, largely because of losses at the Smart minicar unit.

Some analysts have called on Mr. Zetsche to shut down Smart. But on Monday, he said it was "only fair" to give the unit's new management time to stanch the losses.

Fixing Mercedes will occupy most of Mr. Zetsche's time, even after he becomes chairman of DaimlerChrysler. A few weeks after being named to succeed Mr. Schrempp, he was given responsibility for the Mercedes-Benz car group, after its chief, Eckhard Cordes, resigned. On Monday, he said he viewed the Mercedes assignment as open-ended.

That could put pressure on Mr. Zetsche, who will also face demands to increase DaimlerChrysler's share price. Hedge funds have added to their Daimler stakes since the announcement of Mr. Schrempp's departure, and analysts said they might press for deeper changes.

Mr. Zetsche said the company had not yet determined whether its shareholder base had been significantly altered by hedge funds. But he added, "The more parties that are interested, the better for us."

DaimlerChrysler will also have to deal with the impact of higher oil prices. Mr. Zetsche said consumers had been resilient during previous oil shocks, though he conceded the one now would have a dampening effect.

Despite the variety of challenges facing Mr. Zetsche, analysts said he was right to focus on rebuilding Mercedes. "It's the underperformance of Mercedes that is holding the whole empire back," said Garel Rhys, director of the Center for Automotive Industry Research at Cardiff University in Wales. "If you get Mercedes right, you go a long way toward getting all of DaimlerChrysler right."

Mercedes ranked 27th of 37 brands in the 2005 vehicle dependability survey conducted by J. D. Power & Associates, behind Mitsubishi. The survey measures reliability after three years of ownership. It ranked fifth in the initial quality test, which measures reliability after 90 days.

"Clearly, it's our objective to be No. 1," Mr. Zetsche said. Asked whether he had a deadline for reaching that, he demurred, saying, "We will be in the very top ranks in the next three years."

Daimler Chief Sees Mercedes Doing More With Less :Q

Today's election of CDU/CSU candidate, Angela Merkel, was SUPPOSED to be the beginning of change. But now it looks like 4 more years of the same. The same inability to cut costs, inability to respond to competition, inability to profit. Four more years of economic stagnation and high unemployment from the European Union's engine of productivity.

 

[Wahsapa]

i like how you quoted the whole first post even tho you were the second post :thumbsup: