Taken Over by Surprise

Two years after the formation of DaimlerChrysler AG through a trans-Atlantic “merger of equals,” grim U.S. profit statistics and a major reshuffling of top management in favor of German executives has left American employees angry and demoralized and has exposed a secretly planned takeover by the German auto company.

When Chrysler merged with Daimler-Benz on November 17, 1998, to create the world’s fifth-largest automaker, the companies took pains to show they regarded each other as equals. But cultural clashes soon erupted in the drive to integrate Chrysler with Daimler-Benz, prompting the steady defection of a number of high-ranking U.S. executives. The past two years have twice seen the American Chrysler Group chief forced out of office by a German-dominated board, with the position most recently being filled by a German executive. There have been significant cuts made in the number of Americans on the company’s management board, leaving Chrysler’s top management to be dominated by German executives who take orders from Stuttgart.

Chrysler also reported a loss of $512 million in the quarter that ended in Septem-ber, its first loss since 1991.

The demoralized American subsidiary now sees not only that its takeover has been completed, but that its “equal partner” had secretly planned this all along! In late October, Daimler chairman Juergen Schrempp said in an interview with the Financial Times that he always intended Chrysler to become a North American unit of Daimler-Benz. He said, “Me being a chess player, I don’t normally talk about the second or third move. If I had gone and said Chrysler would be a division, everybody on their side would have said: ‘There’s no way we’ll do a deal.’ But it’s precisely what I wanted to do” (Reuter, Nov. 14).