On paper Bob Eaton and Juergen Schrempp still look like two very smart guys.
Mercedes-Benz's worldwide car sales are up more than 20% so far this year. Chrysler Corp's U.S. sales are running more than 8% ahead of last year's pace. The only clouds on this otherwise serene horizon are Daimler's troubled Adtranz rail car joint venture with Asea Brown Boveri Ltd. (it lost $235 million, or DM388, through the first nine months) and the economic storms of Asia and Latin America.
Before the $36 billion deal closed in November, both partners reported stronger-than-expected third-quarter profits ($682 million for Chrysler and $770 million, or DM1.27, for Daimler).
Both are rolling out new versions of two of their most profitable models - the Mercedes-Benz S-Class sedan and the Jeep Grand Cherokee.
So this is a sure thing, right? The whole is greater than the sum of its parts. The future's so bright there's a run on sunglasses in Auburn Hills and Stuttgart.
Well, maybe.
"I suspect that some of the tougher decisions just aren't coming up right now," says Mr. Eaton in a WAW interview. "We haven't really had anything to cause the management board or Juergen and I to get directly involved."
Although Chrysler shareholders exchanged their stock for shares in a newly created German enterprise, Chrysler execs bristle if anyone dare call it an acquisition. But the organizational chart tends to give slightly more responsibility to Daimler executives.
The agreement calls for Mr. Eaton to retire in three years (he says he has no plans to step down earlier). From that day on, Mr. Schrempp will be the man in charge.
During any given week there are between 50 and 100 Chrysler managers visiting Daimler operations in Germany, while a similar number of Mercedes people are immersing themselves in Chrysler's modus operandi.
These folks are part of 28 integration teams studying ways to efficiently combine in as many as 95 areas of the business. Unlike mega-deals in banking, pharmaceuticals or food processing, where massive layoffs are among the first steps, there's almost no fear and loathing down through the ranks. Even IG Metall and the United Auto Workers, DaimlerChrysler's two largest unions, are at least publicly supportive of the marriage.
Already some significant consolidations have happened. Chrysler will defer its diesel development work in favor of Mercedes' more robust resources. Fuel cell research will be folded into Mercedes' partnership with Vancouver, BC-based Ballard Power Systems. Chrysler's battery-powered Epic minivan will become the testbed for the new company's electric vehicle efforts. Of more immediate relevance, however, is a pooling of resources toward development of Mercedes' first American-style minivan.
Engineers and designers are able to exchange e-mails and design files across the Atlantic because they all operate on a common CAD/CAM system known as CATIA.
Next spring Mercedes will start building its M-Class sport/utility vehicle in the Graz, Austria, Steyr-Daimler-Puch factory that also turns out Chrysler minivans and Jeep Grand Cherokees.
Will any North American plants start building Mercedes products in the near future?
"We haven't made any decisions," Mr. Eaton says. "We don't have any extra capacity available today. We have third-shift potential at Belvidere (IL) and Sterling Heights (MI)."
There also is open space at the Newark, DE, plant, where Chrysler now builds the Dodge Durango.
Speculation broke out in the wake of last May's announcement of the blockbuster deal that the partners might be interested in taking on yet another, likely Asian, partner. Much of the buzz centered on Mitsubishi, which has partnered with Chrysler on engine technology. For five years the two companies jointly owned Diamond-Star Motors in Normal, IL.
Although Daimler has made an investment in Nissan Diesel, the commercial truck arm of the Japanese automaker, talk about a third carmaking partner has remained just that.
Interestingly, Mr. Eaton does not rule out the eventuality.
"It's a very definite possibility. Clearly we've got to make a major move in Asia over the next few years," he says.
But don't expect it to happen tomorrow.
One of the strongest selling points in the merger is the degree to which Daimler's and Chrysler's product lineup complement each other. Some would argue that the M-class and Jeep Grand Cherokee will compete against each other, but beyond that there is little overlap.
The most immediate benefit of operating together will be the leverage it provides in purchasing. Co-chairmen Schrempp and Eaton expect to save $500 million in 1999 on parts and materials.
Just before announcing the deal last May, Chrysler decided to buy a new steering column air bag system the German automaker had introduced. As a result the air bag supplier offered Daimler a $40/vehicle price cut.
There will be no mixing of the brands in U.S. showrooms. In other countries there may be some showrooms offering both Chrysler and Daimler products under one roof.
Regarding speculation that Plymouth may be phased out in the near future, Mr. Eaton says the integration teams have not discussed Plymouth's fate.
"Either way, I don't think there's anything about the merger whatsoever that would have any effect on Plymouth," he adds. "The marketplace will determine what happens to Plymouth just like it will every other brand we have."
Chrysler's exposure to the ongoing tempest of global economic volatility is less than that of General Motors Corp. or Ford Motor Co., but that doesn't mean it is escaping unscathed. It already has scaled back on its production plans for a new Curitiba, Brazil, plant where it is building Dodge Dakotas on Dana Corp.'s rolling chassis.
It is proceeding with plans to build the new 2000 Neons in Venezuela. Some of those Neons will be powered by a more fuel-efficient 1.6-L, 4-cyl. engine produced at its new Brazilian engine plant operated jointly with BMW AG.
Mr. Eaton seems more wary than ever about China. Beijing Jeep Co. Ltd., in which Chrysler owns a 43% stake, suffered about a 30% drop in sales through the first half of this year.
Three years after backing out of a bidding process for rights to be a joint venture partner in a government-backed minivan project, he sees little evidence that the rewards outweigh the risks.
"At some point we'd like to have a much bigger presence in China, but given the current situation we aren't pursuing anything, and we have no plans to," he says.
The tandem arrangement under which two chairmen share power is off to a decent start. Mr. Eaton and Mr. Schrempp have offices in each other's headquarters. Mr. Schrempp occupies retired Vice Chairman Robert A. Lutz's suite directly across from the large Pentastar window gazing out from the top floor of the Auburn Hills executive tower.
If Bob Eaton is looking forward to retirement, he's not letting it show. He seems to relish shuttling across the Atlantic, absorbing the details of DaimlerChrysler's aerospace and other non-automotive businesses with the eagerness of a fresh MBA grad going through his first company orientation program.
Rumors of an early exit, and even wilder rumors - like one that had him returning to General Motors to succeed Jack Smith - clearly irk him, but he can still muster a laugh.
There was a quote recently in the German newsweekly magazine Der Spiegel that some interpreted as meaning he might step down early.
"I intend to be here as long as I'm needed in the merger, and I expect that will be three years," he says.
After that?
"I haven't thought about it," he says. "I'll probably just have more time for things I want to do and be involved with some boards."
