Originally created 05/28/98

Daimler fetes investors sausage and good news

STUTTGART, Germany -- A festival atmosphere greets Daimler-Benz investors at the annual shareholders meeting. The steady beat of drums outside the hall, the smiling, red-shirted Daimler apprentices directing the crowd, the catered lunch all send the message: Kick back, enjoy.

The gathering Wednesday in many ways reflects the sense of prosperity and well-being that permeates the Daimler universe, from the factory floor to the hilltop corporate headquarters.

For the last three years, the annual shareholders meeting has become a feel-good fest -- plenty of sausage and favorable forecasts. Wednesday's gathering had an added attraction for the unprecedented 14,000 investors: the pending mega-merger with Chrysler.

With the deal's fine print still being worked out, they mostly got broad assurances.

"The partners are the two most profitable car makers. ... Both enjoy a highly innovative company culture. ... Both are dedicated to creating value," Daimler chief Juergen Schrempp told the gathering.

The carmaker has undergone a dramatic turnaround from record losses in 1995, while at the same time involving workers more directly in decision-making and offering incentives to improve production.

But of the many ways Daimler has distinguished itself among German corporations, the most profound was announcing the breathtaking $38 billion merger with Chrysler, as all-American a company as Daimler is proving un-German.

At Mercedes' largest assembly plant in Sindelfingen, workers who once single-mindedly checked joints or installed electronic cables now are invited to say what they think about their work during weekly meetings.

The change, though small, was profound. Supervisors learned to surrender absolute authority to a more open process, and workers took on additional responsibility.

Around the same time, Mercedes gave each assembly worker a rubber stamp with a control number. No longer would workers be assigned to check the quality of another's work. Each now certifies his own work by stamping a check list, putting a personal mark on Mercedes quality.

"We're trying to make every worker think like an employer," said supervisor Herbert Vollmer.

After seeing their numbers reduced from 47,000 to 35,000, workers at Sindelfingen say the merger can only enhance their job security. The autoworkers' union has signaled its approval -- and will even give one of its three seats on the Daimler board to an American representative.

Daimler executives who will work most closely with their Chrysler counterparts say the absence of cultural clashes during the long negotiations bode well for future cooperation.

One issue that must be worked out before shareholders vote on the deal in the fall is executive salaries, which are much higher in the United States.

Chrysler chairman Robert Eaton's take last year of about $16 million has been derided by shareholder advocates in Germany. Schrempp, by comparison, earned an estimated $2.5 million.

To the consumer, though, the merger has been reduced to the elusive question of image: the luxury Mercedes vs. the mass-produced Chrysler.

The image disparity is much more pronounced in the United States. A Mercedes projects status. World leaders, movie stars and wealthy neighbors drive them. In Germany, Mercedes has penetrated the middle-class market, while Chrysler is mostly an unknown.

The dream of his first Mercedes brought an Intel engineer from Oregon to the Sindelfingen factory earlier this week to pick up his eight-cylinder E-430. While his wife and children snacked in the customer center restaurant -- all china and linen table clothes -- Weimin Han waited expectantly for the delivery. It had been delayed an hour by a mechanical problem.

Concern was on the one hand eased by Mercedes' reputation, yet sharpened by a growing sense that the Chrysler deal had taken the shine off the purchase.

"The day after the merger, one colleague joked, `You just spent $60,000 on a Chrysler!"'


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