Ward's Auto World Editor Drew Winter and writer Frank Washington interviewed Thomas T. Stallkamp, president- Chrysler Passenger Cars & Trucks at DaimlerChrysler headquarters in mid April. A complete transcript of the interview can be obtained by visiting www.wardsauto.com.
Q - What do you tell DaimlerChrysler employees (regarding the departure of several high-level executives), because obviously some are a little bit nervous?
A - Well, we're such a large company, and we've been so successful and continue to be successful, that there's been a focus on us and that creates opportunities. Everybody has to make their own decisions in life as to what they want to do, and a few people decided they wanted to do something else. Time will tell whether that opportunity was in fact greater than it was here. Denny (Dennis Pawley, former Chrysler manufacturing chief) just wanted to retire. Denny had been asking me for a year to leave, and we felt fortunate to keep him around as long as we did. He truly wanted to make a change in what he was doing, and he's loving it.
Q - Would it have been better if you didn't play up 'merger of equals' so much?
A - No, no. I think it was true, is true, and will continue to be true that it's a merger of equals. It was entirely appropriate. Remember, a merger of equals means that we brought two companies together with significant strengths, of almost equivalent size, strength and profitability. But it's time to get on to the next phase of things.
Q - But most of the top officers underneath your level are German.
A - No, that's not true at all. And people make too much of this issue of who reports to (Co-chairman Juergen E. Schrempp) directly. On the management board we're all equal. The fact that organizationally some of them report to me for the Chrysler side, we're a little more concentrated. We're the largest most profitable part of DaimlerChrysler. But at the management board, and that's what's been so exciting in the last few meetings, is that you sit there and you get 17 opinions of business from a different view and you're able to get a much better decision from that.
Q - Can you tell us about what still needs to be done?
A - Something this large takes time. When we acquired American Motors back in 1987, that took us a period of years to fully assimilate. The important thing is that I believe we're farther ahead than I thought we would be at this point. All mergers have bumps along the way, but we haven't encountered a bump that we haven't been able to solve. And, I'm honestly more optimistic than certainly what I read on the outside. I think internally we are much more optimistic. We just finished two days of management board meetings yesterday and they continue to get better. The quality of discussion gets better, the input from both sides gets better. The Nissan decision (not to merge or buy an interest in Nissan) that was made - that was probably one of the best business decisions I've ever sat in. We all thought through that in detail, and we now see that everything we brought up was right as more and more comes out of the story from Nissan.
Q - Is all the concentration on who's in charge of the company and who's leaving hurting the company?
A - No. We've had record sales on both sides. Clearly this is a, if not one big local story, it is not a national or worldwide issue. I think you'll see when our earnings announcement comes out on April 28 that we are doing well considering we've gone through this merger at the height of it, and you'll see our results will be very good. People like to speculate more than report on dry facts like record sales and great exciting product.
Q - You have to do a better job of convincing Wall Street that you are not a German company, though, don't you?
A - We have to convince them we are a global company. Our stock like any other goes up and down. We are now affected by more international issues than we used to be. That's what we all have to adjust to. It requires an adjustment on our investor bases as well. When something happens in Europe, it may have an emotional effect on our stock like something in the U.S. used to do. I don't feel the swing of ownership to Europe from the U.S. is permanent at all. I don't think that's bad, but yes, we want to address our global ownership, and that's going to come back as we march through time.
Q - Are you staying?
A - Sure, why not! This is the most exciting job in the industry right now. It's been tremendously broadening for me.
Q - You know what's driving some of this. We can't get a definitive statement from Bob Eaton or Tom Gale that they intend to stay on.
A - I think you'll get a definitive statement from Gale and Bob Eaton. It's been well reported, he's in this period where he's going to stay as long as he thinks it takes to get this transition merger done, and that's up to the three-year period. You'd have to talk to Bob about that. Is that hurting us? I don't think so.
Q - What about the lower levels of the company?
A - That's why we leased the Airbus (airplane for regularly transporting employees between Auburn Hills and Stuttgart). We have so many people that want to travel. When you get the powertrain people together and they sit there and they say, "Look we've got these engines, you've got these engines, boy look how these fit together." We were working on diesels; we don't need to work on diesels anymore because they've got in Stuttgart the world's best diesels. Those engineers get together and they come running back from their visit, and say look at this! Off we go. Now we are working on what kind of diesels to put in Chrysler products.
Q - One of the things we've heard from engineers is that Mercedes gets all the advanced technology first.
A - No. We had a meeting in the automotive council in Stuttgart where they presented all of their new technology, stuff that is coming. The discussion was, Tom and I, here's what we have coming, we have planned on Mercedes brands. How much of this and what do you want on Chrysler? And it's just a question of picking and deciding what's best for the total company.
Q - Side air bags is one of the technology areas you're supposed to get.
A - We are already using their technology for the air curtain that we are putting in our future models, but the fact that we don't have it today just says there is a lead time on the technology side. But we are using their crash data for side sensing, we are looking at how to put air curtains into future vehicles here.
Q - Much has been made about Chris Theodore, former senior v.p.-platform engineering, and Shamel T. Rushwin, former senior v.p. responsible for international manufacturing and minivan assembly operations, leaving for postions at Ford Motor Co. Do you still have enough depth in your minivan program and manufacturing?
A - Absolutely. Chris is a great guy, I wish him a lot of luck
Q - Is Daimler going to adapt the purchasing strategy that you have pioneered?
A - It's going well, and working well. I won't say that they are adapting the Chrysler strategy as much as the new company is using the best of both. They had a great program called Tandem, which was for access to technology, and we had a great program called Score which was the cost efficient and cost reduction program and we are merging those together. Have there been some negatives? Sure.
Q - There's lots of speculation about the differences in pay among American executives and German executives. Are you trying to balance that out?
A - We've decided that for the vast majority of the company, like all other international companies, we'll continue to be regionally focused. There is a very small group of management that will be globally compensated, because we go back and forth more than most people in the company. If you look at our competitors, that's exactly what they do, too.
Q - We've heard of situations where there are subordinates making substantially more than whatever German director they report to.
A - No, that's not true. You have to talk about total compensation. It comes in different forms in regional areas. Taxation structure is different in Europe, and compensation structure is different. We've paid careful attention to the rankings and levels and all of that. This is the bureaucratic stuff that you go through when you merge two big companies together. I've never heard that actually being a problem.
Q - Much has been made about the big payouts top executives are taking out of this merger. With some underlings turning green with envy, does it make it more difficult to manage? A lot of people are saying they wouldn't keep working if they made the money that Tom Stallkamp makes.
A - No, I don't think that's an issue at all. No one got anything as a result of the merger that wasn't already coming to them. That's been missed. No one got stock because of the merger, they were options that everybody had. The only thing that happened in the merger was the time period of when things became due because we had to close out the company. There is this illusion that everybody had gotten rich because of the merger, but no one got anything that wasn't already handed out up to 10 years previously. It's just the time factor. I don't think it's operationally affected us at all . . . It's not this caste system at all that that question implies. I think we've still got a great team here at Chrysler. I think we've got a spirit that continues to evolve from Chrysler into the new company, something that our Stuttgart employees are constantly amazed at. Our job is to keep that. One of the reasons that Schrempp wanted to do the merger was he looked at this place and said, "Jeez, how can we capture that kind of spirit?" I think we are doing that, even though we've had some of these bumps, and we've had a lot of it over-magnified in the press.
Q - Can you keep that spirit alive?
A - It was obviously somewhat interesting when I became president to some other people. If nothing else, the merger has helped galvanize the senior level management. One meeting I just left, honest to God, I just left an hour ago with one of the guys saying, "Boy things are actually a whole lot better now." There used to be an impression back in the '80's when it was Castaing (Francois Castaing, Chrysler's former head of engineering), Gale and I . . . everybody walking down the sidewalk holding hands. Things were never as clubby as it appeared. This merger has brought us all back together again. It's helped me evolve in this job, which is less of a "he's the president and these are all of the other people" as a team, and I think it's brought the team together, and everybody has their strengths. And Gale, he's clearly here; he just called me from his car and he's on his way to the dome and wanted me to come down and look at something that he's working on. And if he wasn't here, he wouldn't be worrying about if we are going to California next week to look at the California Studio. Gale is clearly here. We're all here.
