Shakeup, `restructuring' start at Chrysler
11/18/2000FRANKFURT - DaimlerChrysler AG, admitting that problems at Chrysler are even worse than when it reported a $512 million loss three weeks ago, vowed a massive shake-up at the company that began yesterday with the ouster of its American president, James P. Holden.
In a brief statement that followed an extraordinary meeting of DaimlerChrysler's supervisory board in Stuttgart, the company said it would “fundamentally reposition and restructure” Chrysler, the third largest car manufacturer in the United States.
The company provided few details, but industry executives believe that the plans will include protracted factory closures to reduce bloated inventories of unsold cars and light trucks.
Word of Mr. Holden's dismissal surfaced several days ago, and many analysts had already stopped believing DaimlerChrysler's forecast of a quick recovery at Chrysler. Yet the official confirmations failed to have any cathartic effect or provide much reassurance to investors. Shares of DaimlerChrysler, which has lost more than a third of its value this year, hit a record low in Frankfurt yesterday of 49.9 euros, down 3 per cent from Thursday's close.
DaimlerChrysler refused to provide any guidance on how much its earnings will fall short of the company's last forecast. DaimlerChrysler's chairman, Jurgen E. Schrempp, said in late October that Chrysler would turn a profit in the last quarter of this year, produce a full-year profit of about $1.7 billion - less than half its 1999 profit - and pick up strength in 2001.
As expected, DaimlerChrysler announced yesterday that Mr. Holden would be replaced by Dieter Zetsche, a top-ranking Daimler executive who is in charge of commercial vehicles. Mr. Zetsche, 46, has held a number of top posts in his 19 years at the company. In the early 1990s, he was credited with turning around Daimler's American truck subsidiary, Freightliner.
In addition to Mr. Zetsche, Daimler is installing Wolfgang Bernhard, who ran a Mercedes subsidiary that provides customized vehicles and who played a big role in undetaking Mercedes newest S-class cars. Both men have been given orders to cut costs as well as to accelerate the presentation of new models and perhaps rethink the product line.