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EP 12 Part 1: John Stech: Did DaimlerChrysler perish from irreconcilable intercultural conflict?
43 Plays23 days ago
In today’s Auto Ethnographer episode, host John Stech dives deep into his experience at DaimlerChrysler. He worked within both halves of the merged companies for the duration of the company’s nine year existence. Did its end stem from irreconcilable intercultural differences? The Auto Ethnographer dives in to answer the question and the conclusion may surprise you.
On the day of the merger announcement in May 1998, John Stech was driving to work at Mercedes-Benz USA. He was so shocked by the news announcement that he pulled over on the side of the road to hear the report.
As head of Product Management for SUVs, John was responsible for the M-Class SUV and was involved in a Mercedes-Benz minivan project. It turns out that these two vehicles would be the only overlaps between the merging partners. Would the status quo remain or would the vehicles be cancelled as competing duplicates? John traces the story of the M-Class and Jeep Grand Cherokee overlap and the meetings that occurred to decide their fate.
After leaving Product Management at Mercedes-Benz and shifting into Strategic Volume Planning, little did he know that this move would prepare him for a transition to the Chrysler side of DaimlerChrysler at its headquarters in Auburn Hills, a suburb of Detroit, in 2002.
John’s assignment at Chrysler International, a division of the company responsible for 120 non-NAFTA markets, was to revamp the volume planning system in time for a major new product offensive. In doing so he had to gain trust with an experienced Chrysler team and get their support in building a modernized approach to sales and production planning. This effort ended up impacting not only the International markets, but also caused the American, Canadian, and Mexican markets to change their approach to forecasting and vehicle ordering.
In the closing days of the merger, John had moved to Egypt (the topic of Episode 11) where he first strove to harmonize the frayed working relationship between Mercedes-Benz and Chrysler. Later he would have to begin the sales company wind-down process to separate the companies.
This is John’s personal story through nine years of experiences at DaimlerChrysler, as seen from the front row on both sides of the merged entity. He understands that his experience was different than that of others. While some viewed the merger positively, many derided one or the other merger partner.
Please share your thoughts or opinions with The Auto Ethnographer by visiting the website at https://www.auto-ethnographer.com or by leaving comments on the social media sites at LinkedIn, Facebook, Instagram, or YouTube.
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Transcript
Introduction and Merger Announcement
00:00:00
Speaker
As I was driving, the news came on and the announcement happened. Chrysler and Daimler would combine. I was absolutely shocked. Hello and welcome to the Auto Ethnographer.
00:00:12
Speaker
I'm John Steck, your host on this journey. We travel the globe to bring you stories about culture and the global automotive industry. Fasten your seatbelt and let's get started. Hello and welcome to this episode of the Autoethnographer.
00:00:26
Speaker
This is an episode that I have been looking forward to airing for a long time, one that I've put a lot of thought into and is based on some of my personal experiences over nine years.
Anniversary and Cultural Friction
00:00:38
Speaker
The reason I'm posting it now is that just last week on the 8th of May, it was the, or would have been, the 27-year anniversary of the announcement of the formation of Daimler Chrysler.
00:00:51
Speaker
This supposed merger of equals was touted to bring all sorts of savings and efficiencies and further reach for two large companies, Daimler, namely Mercedes Benz, as well as Chrysler, a company based in the United States.
00:01:09
Speaker
Unfortunately, it failed. After nine years, the marriage broke up and it was widely regarded by many people as being just irreconcilable differences between two cultures, the Germans and the Americans.
00:01:23
Speaker
Frankly, I feel different about that. I don't think that's the case. Yes, the cultural frictions did have a role. There's no doubt about it, but ultimately,
00:01:35
Speaker
What really sank the merger was just simply there were no efficiencies, there were no savings, and there was pretty much no technology sharing between the two brands.
Personal Experience and Cultural Navigation
00:01:46
Speaker
Simply put, money talks, and this did not produce. I had pretty interesting experiences with Daimler Chrysler, given that I worked under the company for nine years.
00:01:59
Speaker
I pretty much split my time 50-50 between Mercedes-Benz side, where I started when the entire thing was launched, and then i finished at the end of the the merger on the Chrysler side, focused a little bit more on the Chrysler side.
00:02:17
Speaker
So I've i've seen... Global headquarters operations with Mercedes-Benz with global roles. I had domestic roles for the US market with Mercedes and very similar on the Chrysler side. I worked in the global headquarters for four years, as well as working in one of the markets domestically.
00:02:37
Speaker
So I've seen a lot. I also participated in uncountable numbers of meetings between the two sides when when we had shared discussions ah that were between the the German side and the American side with regards to certain you know business decisions or business planning.
00:02:57
Speaker
I do understand that my experience was unique. Everybody had a unique experience during those nine years. I know that some people experienced Daimler Chrysler as something very positive, while other people had ah disdain the entire time for either the Mercedes-Benz side or for the Chrysler side.
00:03:20
Speaker
This was something that that everybody had their own you know their own personal experience. But my story, my personal story is one of trying to straddle between the two cultures, between the two companies,
00:03:34
Speaker
and to get it to work. I wanted to have success. I wanted it to be functional and workable because I knew as a German American that it is absolutely possible for these two cultures to work harmoniously together.
00:03:49
Speaker
So let's get started with the story now.
Initial Reactions and Merger Details
00:03:52
Speaker
In the beginning, it it was a ah big surprise, a really big surprise. I was driving on May 8th, 1998 on the New York State Thruway from my home at that time in upstate New York, down to the Montevail, New Jersey office of Mercedes-Benz USA, which I'll just keep calling it MBUSA from now on.
00:04:15
Speaker
I was driving and yes, back then one listened to the radio in the car or CDs. It it was certainly not the same state of technology that we have today. And as I was driving, the news came on and the announcement happened.
00:04:31
Speaker
Chrysler and Daimler would combine. I was absolutely shocked. I drive a little bit too fast anyway, and it's genetic, I think.
00:04:43
Speaker
And i just had to pull over. I couldn't. concentrate on driving and concentrate on this news announcement and and and some of the yeah quotes and so on that were coming out about this this giant merger.
00:04:57
Speaker
So I pulled over on the side of the road and listened to the whole thing and I was shocked. I couldn't believe that Mercedes-Benz and Chrysler would combine. would combine I had been working for Mercedes-Benz at this point in time for about two and a half years, starting in ah in a global role. And at that exact moment when the announcement came, I was in ah in a role responsible for product management of SUVs at Mercedes-Benz USA.
00:05:25
Speaker
Well, when the announcement was over and we went into a commercial break on the radio, I emerged back into traffic and I continued driving to the office in Montville.
00:05:36
Speaker
and And when I arrived, of course, everybody was talking about it. I think no work got done that morning because everyone was talking about the this news announcement. People were looking up articles. They were calling contacts in Stuttgart to find out what was going on trying to understand exactly you know where was this going? How did this happen?
00:05:58
Speaker
um You know, it was something that was at the beginning, ah hammered out by a very small number of executives. That's why nobody knew. They were extremely secretive about it and and meeting in a small hotel um in in Germany and and also having some meetings in the United States very secretively hammering out this this deal.
00:06:19
Speaker
It would be called in the beginning, the merger of equals. That that was how it was sold. um Jürgen Schrempf was the let's say co-CEO in the beginning with Bob Eaton, who had been the CEO at Chrysler.
00:06:33
Speaker
But very quickly, it became clear that it was not so much a merger of equals. right Schremp was the more senior CEO in the relationship. Bob Eaton would would leave very quickly after the announcement, i not not really living out as the company's co-CEO.
00:06:50
Speaker
Schlemp was really the kind of the architect of this. um He had been in a variety of different roles at Mercedes Benz before in their truck unit, I think in their aerospace unit.
00:07:01
Speaker
and And now he had this vision of ah bringing this you know giant automaker to light, something that would cover all the major automaking regions in the world. So here was a a European company now merging with an American company to cover the Americas, ah specifically North America.
00:07:19
Speaker
And later there would be a stake acquired in Mitsubishi, something that would then, of course, you know put a footprint in Asia as well. On that day, we didn't know many of these things on the first day, but I would say by the end of the day, we started getting the initial feedback, for example, from the customer call center at Mercedes-Benz, the CAC, as it was called, Customer Assistance Center.
00:07:45
Speaker
And it was very interesting, the the feedback that we got. So the Mercedes Benz customers were calling in and and essentially saying, oh, my God, this is this is really, ah this can't happen.
00:07:58
Speaker
This is going to spoil the brand. If you start to build Mercedes Benz cars at Chrysler factories, what's going to happen with the quality? What's going to happen with the prestige of the brand?
00:08:09
Speaker
We don't like this. We may have to consider not buying another Mercedes Benz. So that was the reaction of the the Mercedes customers on on day one of the announcement. And then you had the Chrysler Jeep and Dodge customers surprisingly were calling the Mercedes Benz CAC and also, you know, giving a message that their message was vastly different. It was welcome to the family.
00:08:33
Speaker
ah This was ah really a ah contrast and and ultimately I have to say, you know this was a little bit of ah a foreshadowing of what would happen with the merger in the future from the perspective of Mercedes Benz behaving in one way and Chrysler behaving in a different way, really a foreshadowing of the future.
Opportunities and Early Challenges
00:08:56
Speaker
But for me, i was excited. I was a German American. i speak both languages fluently. I'm fluid with both cultures, understanding them both very well and and able to work within both cultures very effectively.
00:09:12
Speaker
So for me, this this was an incredible announcement. I could only imagine what kind of opportunities would lay ahead for for me being a bit selfish at the at that particular moment in time.
00:09:23
Speaker
but yeah Over time, I would be able to experience having ah career opportunities on both sides of of this giant new company.
00:09:34
Speaker
The next months leading up to the actual merger were we're pretty busy from a corporate perspective. So there were about six months between the announcements that the company would form and the actual listing on the New York Stock Exchange, would which happened in November 1998.
00:09:52
Speaker
ninety ninety eight
00:09:55
Speaker
Being at Mercedes-Benz USA, we were in a sales company. We were a little bit removed from the PMI, the post-merger integration activities.
00:10:06
Speaker
And those were primarily occurring at the headquarters level. The only big stir that we had at Mercedes-Benz USA was when the company sold a piece of land on Blue Hill in Pearl River, New York.
00:10:21
Speaker
This was a piece of land that had been meant to build a new headquarters just across the line, state line from Montfail, New Jersey in Pearl River, New York, to relocate the headquarters into another state, but but still to stay local and to retain the local employees.
00:10:38
Speaker
Well, when that land was sold, not too long after the announcement of the merger, of course, this stirred up a lot of conversation and rumors in the grapevine. that the company was going to you know move all of the Mercedes-Benz personnel and and the sales company and merge it in some way over to Auburn Hills, Michigan, where Chrysler was located in a way to get some sort of savings, right? With distribution and planning and logistics and and back office and finance and human resources and so on and so forth.
00:11:10
Speaker
But those fears didn't last very long because the German upper management in Stuttgart, they quickly tamped this down and assured everybody that Mercedes-Benz USA would stay in its New Jersey seat.
00:11:24
Speaker
On a parallel side, um now we get right into the product, something which I love to talk about and and ah and love to to deal with. even, even to this day, there was an exchange of cars.
00:11:36
Speaker
So Mercedes-Benz USA shipped two trailer fulls of cars, Mercedes-Benz's over to Auburn Hills. And at the same time, Chrysler shipped two trailer fulls of cars over to New Jersey.
00:11:52
Speaker
So while Auburn Hills received SLKs and SLs and S classes and E classes and so on, including the M class SUV,
00:12:03
Speaker
there was a receipt of Jeeps, the Grand Cherokee, the Cherokee ah Chrysler 300, I think Dodge Intrepid um and and a couple of other you know models. i like think there was a Dodge Ram pickup truck now, of course, known by the Ram brand.
00:12:22
Speaker
But I think very interestingly, what happened, what mesmerized the the the the staff at Mercedes-Benz USA was the Viper. Yeah, yep, that's right. Chrysler sent a Dodge Viper over to Montvale and it was a manual transmission car. So this limited a little bit who was able to drive it, knowing that not many people are manual transmission drivers.
00:12:47
Speaker
But this car made its rounds through the executive management and ultimately through the product management, which which I was a part of, everybody was more than happy to sign up and and drive the Viper and and and, you know, experience this, the very raw power of of the Viper, which is, of course, on the opposite end of the spectrum of the very refined Mercedes Benz passenger cars.
00:13:10
Speaker
I guess it was probably the manual transmission and somebody who wasn't a particularly adept at driving it, but eventually the the Viper was sidelined ah because something wasn't working on it in the end.
00:13:23
Speaker
hit on ah On a funny note, um There were there was word that even the German executives from Stuttgart were always asking about the wiper, which interestingly enough, is is the way that they would pronounce the American V. And clearly, this this vehicle stimulated the imaginations and the curiosity of the of the Mercedes Benz world, again, because of the juxtaposition to the refined vehicles from Mercedes Benz.
00:13:52
Speaker
Daimler Chrysler officially came into existence on what they called day one. This was the listing day on the New York Stock Exchange, and it happened on November 1998.
00:14:06
Speaker
The company pulled out all stops, all stops, and they filled Wall Street with a huge complement of its products you know from across the globe.
00:14:18
Speaker
Parked out on the street, there were Jeeps, there were Mercedes-Benz passenger cars, ah there were Freightliner heavy trucks, there was even a Eurocopter because at that time we had Daimler Aerospace as one of the subsidiaries of Daimler-Benz.
00:14:38
Speaker
I had the opportunity to stand out there on Wall Street and actually even to get out onto the floor of the stock exchange. and because as a product manager, I had the responsibility to stand with an M-Class out on Wall Street and to talk to journalists about the M-Class SUV or even just passers-by, people who were going to work who would see you know this big spectacle going on on the on the street.
00:15:05
Speaker
It was a ah very exciting day. Everybody you know participated in one way or another across the globe on day one. I was very lucky to be able to be on Wall Street when the big event happened.
00:15:19
Speaker
Globally, one of the things that did happen for every employee on the planet was they received a day one welcome kit. And the day one welcome kit had brochures in it. It was a kind of a plastic binder um box made out of a corrugated, semi-transparent plastic material.
00:15:38
Speaker
you You opened it up, you had a brochure inside, multiple brochures that showed all of the different products that the company produced, regardless of brand. It showed the employees from around the planet. It gave an introduction on the the vision and the goals of Daimler Chrysler. It showed who was in the executive management, showed that there were representatives from from both sides of the family at the upper echelons of the company.
00:16:07
Speaker
I think the most famous piece from the welcome kit, from the day one welcome kit, was the custom made Swatch watch. ah Every kit, every employee on the planet received this this Swatch watch.
00:16:20
Speaker
It had the word Daimler Chrysler written on to the watch on the watch band. And you know many people, frankly, still own them today. I have mine. I've never worn the watch and all of the brochures are still in my kit.
00:16:35
Speaker
I don't know if this thing will ever have any kind of you know historical value one day. But it's it's there and and ready you know anytime that I want to part with it. Those were exciting times, um those early days.
00:16:51
Speaker
They were very heady, but soon the challenges would begin. And for me, they would begin a little bit sooner than for some of the other areas in the company.
00:17:03
Speaker
One of the first things that two companies in a similar field have to look at is whether they have overlapping products and whether those overlapping products are are an issue and going after the same customer and whether it's efficient to continue to produce both of those overlapping products.
00:17:23
Speaker
So of of all the products in the lineups of Mercedes-Benz and Chrysler, there were essentially only two overlapping products. And amazingly, both of them were under my purview as a product manager for the US market.
00:17:38
Speaker
One was the Mercedes-Benz M-Class, which overlapped with the Jeep Grand Cherokee. And the other was an overlap between the Chrysler Town & Country you know premium or even luxury minivan,
00:17:54
Speaker
and a planned Mercedes-Benz model code name BR251 minivan, which was planned to occur sometime in the early 2000s.
00:18:06
Speaker
ah It was in the planning phase when the merger was announced. There was a lot of discussion um about the minivan. And frankly, it was a very quick decision that the Mercedes-Benz version, the BR251, would be dropped and that only the the Chrysler, the town and country, and as well as some of the the Dodge branded models would would be the company's minivan product offering. It didn't make any sense for Mercedes-Benz to engineer something in in parallel.
00:18:37
Speaker
So that was a very very quick decision, the relatively painless because the Mercedes-Benz version was still very early in the conversation. But then there was the Grand Cherokee and the Mercedes M-Class.
00:18:49
Speaker
As I said, both both of the the ah products were very
Dealer Meetings and Cultural Differences
00:18:54
Speaker
familiar to me. I had been working on the M class for the previous, really two and a half years, three years.
00:19:00
Speaker
And I was very familiar with the product, both from a global perspective and and also from the domestic US perspective. In June 1998, Chrysler had just revealed shortly after the announcement of the merger, a new Grand Cherokee, the 1999 model year Grand Cherokee, which was codenamed the WJ-74.
00:19:21
Speaker
This was revealed to the press in Detroit and the product was the second generation to the Grand Cherokee. The first one was quite wildly successful with hundreds of thousands sold per year.
00:19:34
Speaker
So very successful product. The second generation promised to actually be more successful. It was a ah better engineered product, more off-road capability, ah more luxurious than the the first generation.
00:19:48
Speaker
It was revealed to the dealers specifically where they had the first you know direct view and access to the to the vehicle in September 1998. This was when Chrysler organized, or the Jeep brand, organized a dealer meeting in Vail, Colorado.
00:20:07
Speaker
And they wanted to launch the the model and show it to the retailers at an event in Vail. Colorado, both in terms of the product information, but also to actually drive the car and have some experience with it.
00:20:23
Speaker
The company planned this dealer meeting in Colorado at the the Dobson Ice Arena in the center of Vale. They had the this large dealer meeting. you know They squeezed in a lot of people into this arena um and they had presentation on on the product and on some of the other you know strategic issues that were facing Chrysler at that particular moment in time.
00:20:45
Speaker
But the focus was, of course, heavily on on the Grand Cherokee. It was a perfect location. Because again, it it fits very naturally to to the Jeep brand.
00:20:57
Speaker
This also was accompanied by a second location, not too far from ah Vail. And this is Camp Hale, an old military training camp from the U.S. military.
00:21:10
Speaker
It's slightly to the south and to the west of Vail. Here, they had an official camp Jeep planned. The camp Jeep, where consumers would also be able to come bring their Jeeps ah to have kind of a Jeep Jamboree, as as some of them are called, and and see some of the products, see some of the concept vehicles, as well as new products that the brand would have.
00:21:32
Speaker
But at this moment in time, that that Camp Jeep area was reserved specifically for the dealer meeting, where they would have the chance to ah look at the car, drive the car, feel the car, experience the car for the first time.
00:21:46
Speaker
This was a huge breakthrough for me to attend this event. I was responsible for the only product that overlapped in the US market with a Jeep product.
00:22:00
Speaker
And so I was nominated to be the representative from MBUSA to go out to Colorado and to attend this dealer meeting and and to to finally meet some of the people from the Chrysler side of the family.
00:22:11
Speaker
So this is September. It's ah about four months, five months after the announcement of the the merger. And finally, I would come face to face with some of the people from the Chrysler side.
00:22:23
Speaker
It was interesting because... I had the opportunity to meet some of the highest level executives at the company. People like Jim Holden, who who would be president of Chrysler for a period of time after the merger.
00:22:37
Speaker
Jim Donland, the CFO, Ray Fisher in charge of fleet, Bud Liebler in charge of marketing and communications, as as well as many more, including Christine Cortez, who would end up later running the service and parts across the globe for all of them at Chrysler.
00:22:56
Speaker
It struck me that these executives were so approachable, um personable, very easygoing. And I have to be very honest, they were very different from the more starched personalities that I knew at that executive level in Stuttgart.
00:23:14
Speaker
They invited me on a Jeep Wrangler drive where we drove up to the top of a 13,000 foot mountain in, you know, open top Wranglers. And quite an adventure, I have to admit, um something that i that I love doing, having been an off road enthusiast in the in the past.
00:23:34
Speaker
You know this was definitely a relationship icebreaker to to meet these people and to talk about our overlapping products. ah Just as as I was curious about about them and about Chrysler and asking lots of questions about the company and the Jeep brand and and so on, they were just as curious about me.
00:23:53
Speaker
And they were curious about my activities as the head of the M-Class and what that product meant to the Mercedes-Benz brand. They also asked a lot of questions about working with Germans in Stuttgart.
00:24:07
Speaker
You know, they they looked at me and saw an American and and asked me a lot of questions about how, you know, how did I get along with with Stuttgart? How was it to work with them?
00:24:17
Speaker
They already had, of course, at the highest executive level, lots of exposure to Stuttgart, but um you They still had a lot of questions. When I confessed to them about being a German-American, they had even more questions because they realized that I would have some insights you know working on on both sides from both perspectives as ah as a German and an American.
00:24:41
Speaker
But this really s stoked their questions and and we had some pretty in-depth discussions about the the two cultures and and whether I thought that that they could that they could work together, that they could function harmoniously and exist within one large corporate structure.
00:24:59
Speaker
but the fun only can happen for so long ah being out in Vail Colorado and and doing my you know research and and understanding the Grand Cherokee the new one you know taking a look even at the owner's manual and and driving it and and just exploring the car from one end to the other there has to come a time when you have to have the discussion about the overlapping products and how do we how do we manage that So following the the listing of the company on the New York Stock Exchange in November 1998, it was really time to get down to business and to you know for the company overall to look for efficiencies and savings and to deal with any or of the product overlaps that we had. Again, in in my case, it was really only one.
00:25:47
Speaker
Under a ah German boss in Tuscaloosa, Alabama area, where Mercedes-Benz had established its manufacturing footholds for SUVs, you know, starting production in 1997, I had spent three years ah working on the product management, the pricing strategy, the product lifecycle strategy of the M-Class, you know, going through the strategy period into the launch period, and then ultimately into the sales stage.
00:26:16
Speaker
ah first globally in from the Tuscaloosa seat I had, and then moving to MBUSA, which was more focused on the US s market. ah The M-Class discussion would ultimately, for me, be be a challenging one in in you know juxtaposition to the Grand Cherokee.
00:26:33
Speaker
We heard Mercedes-Benz that Mercedes-Benz that right after the post-merger integration team had started its work in the summer of 1998, that the Jeep truck engineering team located in Detroit, as well as the um product planning team up in Auburn Hills,
00:26:56
Speaker
that they questioned the need for an M-Class. They thought that the vehicle could be dropped. The initial target of that vehicle was actually aimed at the Grand Cherokee, as well as high-level trims of the Ford Explorer.
00:27:13
Speaker
Because at that moment in time, there were no luxury brands on the market with luxury SUVs. It was traditional brands that built upscale level models, again, like like the Grand Cherokee, the Ford Explorer.
00:27:27
Speaker
But that positioning was really only theoretical in 1996 when we were getting ready to launch, but because in reality, In 1997, Toyota launched with its Lexus RX 320. That one came first.
00:27:46
Speaker
Next, about a year and a half later would come the BMW X5, a direct and German branded Challenger to the M-Class. So the world had already changed significantly by the time we were sitting together in January of 1999, when we would ultimately meet to have that hard discussion about whether or not an M-Class would be necessary.
00:28:13
Speaker
The Grand Cherokee was selling on the order of three to one in terms of the volume of globally between the two vehicles. So while the M class was selling less, it it certainly was not a small number of sales either.
00:28:27
Speaker
the The factory had been planned for about 80,000 sales, 80,000 production, I should say, um in Tuscaloosa. In fact, in the early days, they even established production in Graz, Austria, just to make up for the capacity that Tuscaloosa did not have for the demand that was occurring in Europe.
SUV Summit and Strategic Planning
00:28:48
Speaker
It was decided to have a big SUV summit at the Jeep truck engineering facility, which was at the time located in the historic, but unfortunately now demolished, Kelvinator headquarters building in the city of Detroit.
00:29:07
Speaker
Very historic location and actually really beautiful building with a nice clock tower out front, very notable architecture. We were planning to meet and discuss the two SUVs immediately on the heels of the Detroit Motor Show of 1999, which at that time was still called the North American International Auto Show, as many international you know reveals were still held at the show at that time.
00:29:35
Speaker
This has changed significantly now in the current time where really nearly no global reveals are are done at Detroit anymore. I would fly in with a couple of my colleagues from MBUSA, and we would meet up then with some colleagues flying in from Stuttgart, who were responsible for the global product management of the M-Class, the team that I used to be a part of.
00:30:01
Speaker
I just want to note that in episode three of the auto ethnographer, had been joined by Helmut Gröser. He mentioned this meeting and I'm going to talk about it again, but I'm going to inject a little bit more color and a little bit more detail into the conversation here, because I think this meeting really exemplified some of the, let's say cultural differences between the American side of the family and the German side.
00:30:27
Speaker
This really would be very indicative of the future. And we were only ah few months into the into the merger. You have a real juxtaposition between the more structured, planning, disciplined,
00:30:42
Speaker
German side of the family. and And then you can compare that a little bit to the more, let's say, freewheeling and flexible way that American managers tend to work.
00:30:53
Speaker
It's a bit different, and it certainly came to light in this conversation. So the room filled with about 15 to 20 people. I don't remember the exact count.
00:31:04
Speaker
It's been a long time ago. About five or six of those people were from Mercedes-Benz, ah representatives, like I mentioned, from Stuttgart plus from MBUSA. And as I looked around the room at the beginning of the meeting, in here was a ah classic old style conference room and this in this old historic building, ah U-shaped table leading up to a screen, overhead projector. Yes, I'm aging myself. There were still overheads being used, overhead slides ah that we could use throughout the meeting.
00:31:38
Speaker
And as I looked around, I saw that the ah American colleagues from the Jeep team, both the product management folks from Auburn Hills, as well as from the Jeep truck engineering, they came in with a notepad and a pencil or a pen.
00:31:53
Speaker
And it struck me. I didn't see any other kind of material on the desk or on the table in front of them. Meanwhile, um as I would say is is probably typical for for the Mercedes-Benz or from a German perspective, we opened up our briefcases on the table.
00:32:12
Speaker
Each of us, I think, pulled out a three ring binder and each binder was full of, I would say, anywhere from two centimeters to seven centimeters thick of overhead slides.
00:32:25
Speaker
I think each of us had 100 slides minimum with all sorts of data that we had you know plucked from syndicated studies looking at consumer behavior, looking at consumer demographics, looking at the pricing, the positioning of the M class, looking at the Grand Cherokee.
00:32:48
Speaker
Looking at the product, you know the specifications of the product, everything, every possible point you can imagine, we had a slide. There were hundreds of those slides. While the Grand Cherokee had been launched in the early 90s and had you know almost a decade of data, yeah lots, hundreds of thousands of customers, probably almost a million customers by that point in time, there were so many vehicles on the road, they they really knew their customer.
00:33:15
Speaker
With the Mercedes M class, we had just launched about a year and a half before. So we we didn't have as much data, but we focused um on you know the global markets. We also focused very heavily on the US market, which was the largest market at the time, selling probably two thirds to three quarters of the M classes on the planet and and tried very hard to understand who is the customer. And that knowledge would help us very much in this conversation.
00:33:44
Speaker
the colleagues from Jeep truck engineering, they were speaking at a higher level. they They certainly knew their information. They certainly knew the customer, they understood the pricing and the positioning of the product, but it was all taken you know from their from their head. It was not taken from any kind of data sheets or overhead slides, just ah just a kind of open general conversation.
00:34:12
Speaker
And I think In this particular case, it truly helped on our side, the Mercedes-Benz side at that time, to have that conversation about the M class because we really did go into the detail and we proved ah to use ah a legal term, we proved beyond a reasonable doubt that the customers between the M class and the Grand Cherokee were completely different in terms of education, in terms of income, in terms of hobbies, in terms of travel.
00:34:43
Speaker
On almost every comparison, the customers were different. The usage of the vehicles was different. The Jeep clearly positioned much more off-road.
00:34:53
Speaker
The M-Class had initially been positioned a bit off-road, but frankly, Mercedes-Benz customers were not taking them off-road. The car was really used as a Mercedes-Benz would be, you would think, as an on-road highway type driver or for the daily driving.
00:35:10
Speaker
so It was felt during that meeting by the end that yes, the minds had been changed and the two vehicles could exist harmoniously on the market together without you know poaching customers between the one and the other.
00:35:27
Speaker
There would be several more high level meetings taking place in which I did not participate, but those meetings ultimately came to that same conclusion and upper management decided that the two vehicles would stay The M-Class would continue on in its life cycle.
00:35:44
Speaker
The Grand Cherokee, of course, would stay i and and has gone through multiple life cycles since. There was even discussion that eventually one day the two vehicles could potentially share a platform even though one was more road oriented and one would be more off-road oriented.
00:36:03
Speaker
For me, life changed a little bit at Mercedes-Benz in the fall of 2001. I shifted into a completely new role, something that was was very new to me. It was volume planning.
00:36:16
Speaker
Up until now at Mercedes-Benz for several years, I had you know spent my time in product management and yeah focused on all of the the slew of SUVs that would be coming into the into the product portfolio of Mercedes-Benz.
00:36:32
Speaker
you know My team even prepared and paved the way and ultimately launched the G-Wagon on the US market, but I would not be part of the product management team at the time of the of the launch.
00:36:43
Speaker
My successor took over that role and launched that product, which has become really ubiquitous on city streets now. you You see G-Wagons everywhere. It's an incredibly popular, extremely expensive, extremely premium product.
00:36:59
Speaker
Well, I moved over into into volume planning. I took over the strategic volume planning department at MBUSA. And at the time, the brand had just broken the 200,000 units sales mark.
00:37:14
Speaker
And by doing so, they also happened to displace both Cadillac and Lincoln from their top spots as luxury brands in the US market. Until and that point in time, the American brands had actually dominated the market. And I think nobody had ever exceeded them in sales ah at any point ever.
00:37:35
Speaker
was even a celebration ah where every employee at Mercedes-Benz USA received a Bose Wave sound system that even had printed on it the fact that Mercedes-Benz was the number one selling luxury brand in the United States at that point in time.
00:37:52
Speaker
So that was the setting. The brand was was already very successful on a roll. Lots of new model lines had been launched over the previous couple of years going into 2001. So on September 1st, 2001, I took over the role of head of strategic volume planning.
Impact of 9/11 and Strategic Shifts
00:38:11
Speaker
11 days later, tragedy struck.
00:38:14
Speaker
That was when the terrorists attacked the World Trade Center. you Thousands of people were killed and injured, and some, of course, with with long-term illness based on the the dust that they breathed from the from the the site of the tragedy.
00:38:32
Speaker
This would have an immediate impact on the economy and ah very quick impact on the auto industry. This was when companies like General Motors and Ford would would roll out employee pricing as for the very first time, I believe, ah to offset the almost stoppage of sales in the last months of 2001 and going into 2002.
00:38:57
Speaker
and going into two thousand and two Mercedes-Benz had the plan to increase from that roughly 200,000 mark by about 10% and to stretch itself with even more new models that were being added to the product portfolio.
00:39:13
Speaker
And so I should have been working on a growth strategy together with the sales department and marketing department and to reach that 10% growth. But instead, I found myself for the very first next month's planning submission to the headquarters in Stuttgart, actually cutting the volume plan by about 10% or even a little bit more.
Transition to Chrysler International and Conclusion
00:39:37
Speaker
you know As long as we stay tried to stay above the 200,000 mark for
00:39:44
Speaker
Unfortunately, there was a personal tragedy within my own team, my volume planning team. and And this would also lead to having to rebuild our internal volume planning system at MBUSA.
00:39:59
Speaker
And this happened exactly at the moment that the global headquarters was trying to roll out an online planning system that would match up to our local system to do ah the planning submissions into the headquarters.
00:40:15
Speaker
So very challenging times at that moment. After spending about one year in this strategic volume planning position and overcoming the challenges we had, number one, with trying to reach the the target, the sales target of the company, with rebuilding our internal system at MBUSA, following this this internal tragedy that we that we had in the in the department.
00:40:40
Speaker
um And then also adopting this new system in Germany from Stuttgart, this web-based system, I suddenly got a phone call, a phone call from someone I had met on a big international Mercedes-Benz project about two years before.
00:41:00
Speaker
That person ah from Stuttgart had now moved to Auburn Hills and he took on the role as the senior director of Chrysler International. Chrysler International was a unit inside of Daimler Chrysler at the Chrysler headquarters responsible for about 120 countries where the company was selling its products, which were not in the then NAFTA agreement, right? So this was all the countries other than the United States, Canada and Mexico.
00:41:32
Speaker
This the person, as I mentioned, was was German. He was a leader in Auburn Hills, Michigan, and he had some big challenges ahead of him. There was a big product offensive coming with new products to be rolled out globally.
00:41:47
Speaker
ah growing the business, not just in the United States and Canada, Mexico, but to really grow the Chrysler business internationally, which was supposed to be one of those efficiencies um and opportunities synergies between the two companies to help Chrysler increase its international footprint.
00:42:07
Speaker
And I was asked if I would be willing to join the team over in Auburn Hills. and to bring along some of my cultural knowledge in implementing some relatively big changes in Auburn Hills with the Chrysler team.
00:42:21
Speaker
This concludes part one of episode 12 on Daimler Chrysler and the merger of equals. Stay tuned tomorrow for episode two. Thank you for joining us on today's journey.
00:42:34
Speaker
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