Zetsche Praised Even by People He's Fired

Dieter Zetsche seems to win high marks from just about everyone for his 2-year turnaround at DaimlerChrysler AG's Chrysler Group, even from Wall Street skeptics and people he's fired. “The only negative is he said he'd end incentives, but he has spent more on incentives than we ever spent before. He has learned he has to compete in the market,” says one former Chysler executive whom he let go, and otherwise speaks of him glowingly.

“The man listens, and you can change his mind,” he adds.

Zetsche earns an A-minus from Merrill Lynch automotive analyst John Casesa, although his firm still recommends “sell” on DC shares. “He has won the respect of his constituencies, some of whom were skeptical and disillusioned (when he arrived). I think it's an immense accomplishment that he's won the respect of Chrysler's workforce.”

Casesa says Zetsche “took a holistic view” of his challenge, not just cutting jobs and costs, “and as a result he has changed the business in a lot of little ways. He's done a better job of executing, whether it's labor, product or whatever — across the board.” Merrill Lynch maintains its “sell” position primarily because it views the automotive outlook in general as cloudy. “He's done a great job in everything he's able to control,” says Casesa, “but he can't control external pressures.” The only negative Casesa cites is the “clumsy way supplier relations” were handled early in Zetsche's tenure when Chrysler demanded unilateral price cuts.

David E. Cole, director of the Center for Automotive Research (CAR) based in Ann Arbor, MI, checks off an “A” in assessing Zetche's 24-month run as Chrysler Group CEO. “He was viewed (initially) as a stormtrooper from Stuttgart, but he got (the late UAW president) Steve Yokich behind him because he showed he was a leader. And that's what DaimlerChrysler was looking for. Dieter came in and connected with people.”

Cole says the management shuffle following the Daimler-Benz takeover four years ago hurt the Chrysler Group. “They let costs build up and became complacent — they took their eye off the ball,” he says. “Chrysler had built up great successes over 10 years of good times, and there was a feeling of euphoria. They failed to achieve manufacturing flexibility, and that hurt them,” a shortcoming he says is now being corrected.