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Mon, Jan 02, 2006 - Page 12 News List

DaimlerChrysler boss has a lot on his plate

CHALLENGES AHEAD Dieter Zetsche is famous for his strongarm management style, and it may come in handy as he tries to put the once-mighty automaker back on track

AFP , BERLIN

The German-US auto giant DaimlerChrysler entered a new era this year as its emblematic chief executive Juergen Schrempp officially made way for new CEO Dieter Zetsche yesterday.

Schrempp, 61, one of the highest-paid executives in Germany, is leaving his position three years earlier than planned and with a mixed track record.

In 10 years at the head of DaimlerChrysler, Schrempp brought the group's primary focus back to its core vehicle-making and extended its reach internationally through a series of acquisitions, but with limited success.

Apart from the historic merger of DaimlerBenz and Chrysler in 1998, there were also costly forays into Asia, such as with Mitsubishi Motors.

But that cooperation was poisoned by major defect problems with Mitsubishi vehicles and DaimlerChrysler has recently washed its hand of its remaining shares in the loss-making Japanese automaker.

Image problems

The image of the group has also suffered from persistent quality problems within its top-of-the-range Mercedes line. As a result, Mercedes has been overtaken in the German market by its rival BMW.

So the mustachioed Zetsche, 52, has a lot on his plate.

He will make his first major public appearance at the prestigious Detroit Auto Show later this month, a location he knows well from when he was in charge solely of the Chrysler division.

Behind the debonair image, Zetsche is not afraid of shying away from the toughest of challenges.

He dragged Chrysler back into profit, but at a price -- 26,000 workers were laid off and six factories were closed.

Zetsche had previously employed his strongarm methods at the US division of DaimlerChrysler's Freightliner truck division.

More recently, he has begun making sweeping changes at Mercedes, which he also chairs as part of his wide-ranging new role.

Having taken over there in September, it took Zetsche less than a month to announce that 8,500 jobs in Germany would be cut within 12 months.

Severe measures

"Zetsche has already put his stamp" on the company with more severe measures than expected and Mercedes could well be in for more shock treatment, said Robert Heberger, an analyst at Merck Finck.

The Handelsblatt economic daily predicted last month that 6,000 more jobs could go at Mercedes by 2008, with a further 2,000 facing the axe in the utility vehicle sector.

DaimlerChrysler has set itself ambitious longer-term goals, the Handelsblatt report said, including operating profits of more than 9 billion euros (US$10.7 billion) in 2008, 4.25 billion euros of which it wants Mercedes Car Group to generate.

In comparison, the Mercedes Car Group made operating profits of 1.6 billion euros in 2004, with 5.8 billion euros for DaimlerChrysler.

And following the ending of the involvement with Mitsubishi, and an agreement to sell the MTU Friedrichshafen engine builder which was announced late last month, Zetsche "may continue to clear out the group's acquisitions," Heberger said.

The analyst added that the next in line might be the European Aerospace, Defense and Space (EADS) company, which is 30 percent owned by DaimlerChrysler.

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