Q&A with Bob Eaton

Here are key excerpts of Daimler Chrysler Co-Chairman Robert J. Eaton's interview with WAW Editor-in-Chief David C. Smith and Senior Editor Greg Gardner:

Q. What is your outlook for 1999 in the U.S. and North America?

A. It's going to be a good year. We're still looking at a projection in the U.S. of 15 million to 15.2 million. The domestic economy still continues to look good. I think that's probably true for the rest of North America. The key to the world economy is Japan. If they can keep from having another devaluation, that will allow South America to get by without a devaluation and you'll start to see those economies come back. On the other hand, if you start a new round of devaluations, this time I think it will go into China and spread throughout South America. Then there's a huge problem, even for North America. Japan is obviously starting to move on its banking crisis. It's still not clear yet what they're going to do to stimulate their economy.

Q. While the U.S. economy remains strong, aren't you vulnerable because all these problems overseas make it harder to export products from the U.S.?

A. There isn't any doubt about the fact that the exports from the U.S. have been dramatically reduced. That's the bigger risk. But when you've got the unemployment rate we have and the lack of inflation we have, I still think the industry can sell about 15 million vehicles next year.

Q. Do you think interest rates will fall a bit more?

A. Rates can go quite a bit lower. Between the short-term rates and long-term rates there's still quite a bit of range.

Q. Are you going to slow down any of your production plans in Asia or South America as a result of the turmoil in those regions?

A. I don't think there's any doubt. We just announced that we are pulling back by a few hundred units on our Dakota plant in Brazil. You've got to move with the market. The good news is we're small enough down there and in Asia, so neither will be a big drag on our earnings.

Q. Will the UAW be brought into the process you are using with these integration teams from both companies?

A. No, only on any items that directly involve them. We'll talk to them and consult with them on those kinds of issues, but on an ongoing basis, no. The integration teams are an internal business matter.

Q. How much progress have you made on a new Mercedes minivan?

A. We're working on it, but there hasn't been any major movement. We've gotten to where all the links are in place. We can communicate back and forth on our CATIA system. They've had people over here looking at the minivan. We've had people over there. I suspect in any given week there's between 50 and 100 Daimler people over here and between 50 and 100 of our people in Stuttgart.