MEDIA WATCH: Eaton’s retirement exposes DaimlerChrysler fears

While co-chairman Robert J. Eaton’s retirement from DaimlerChrysler late last month was not especially surprising - at the time of the merger Eaton had announced he would retire within three years - his announcement gave the media an occasion to reflect upon the future of DaimlerChrysler.

While co-chairman Robert J. Eaton’s retirement from DaimlerChrysler late last month was not especially surprising - at the time of the merger Eaton had announced he would retire within three years - his announcement gave the media an occasion to reflect upon the future of DaimlerChrysler.

While co-chairman Robert J. Eaton’s retirement from DaimlerChrysler

late last month was not especially surprising - at the time of the

merger Eaton had announced he would retire within three years - his

announcement gave the media an occasion to reflect upon the future of

DaimlerChrysler.



In particular, media coverage fretted that the combined company was in

effect being handed over to the Germans.



The American media’s coverage revealed that Eaton’s departure was

expected, but it also highlighted the role of nationalism in global

business, according to analysis by CARMA International. Media reports

most often focused on Eaton’s departing words: ’The merger is

complete ... The structure and future leadership is in place. The two

companies are one. My goal has been accomplished’ (Washington Post,

January 27). However, there was also noticeable tension about the

merger. The same Washington Post article also said, ’there are many

former and current Chrysler officials who would argue whether the merger

was really a merger at all.’



Several reports pointed out that Eaton’s departure effectively ends any

talk of the union being a merger, suggesting instead the deal was a

takeover.



Eaton will not be replaced as co-chairman. Instead, full responsibility

for the company will be in the hands of co-chairman Juergen Schrempp,

the former chairman of Daimler-Benz. The media’s coverage reflected

concerns that Chrysler, once one of America’s Big Three automakers, is

now a German company. These concerns were perhaps best summarized by the

AP (January 26): ’DaimlerChyrsler has become a German-American company,

with the emphasis on German. Most of its stock is held in Germany; the

company is incorporated under German business laws and a majority of its

upper managers come from the Daimler-Benz side.’



The New York Times (January 27) reported, ’many in the Detroit area

remain bitter about the sale of Chrysler.’ The paper also quoted David

Lewis, a University of Michigan automotive history professor, on what

many fear the effect of German ownership will have on Chrysler: ’When

hard times come, and they will, there will be cutbacks, and Chrysler

will be on the short end of the stick.’



Eaton’s announcement also prompted the media to review the merged

company’s poor financial performance since the union. The Detroit News

(January 27) outlined the series of events that caused DaimlerChrysler

to lose dollars 42 billion worth of shareholder value in just nine

months.



One of the contributing reasons cited for the losses was a clash of

corporate cultures. The Wall Street Journal (January 27) noted, ’The

first year of the company’s merger was a rocky one in which US managers

complained, sometimes publicly, that the creativity and flexibility that

distinguished the former Chrysler was being quashed by the company’s

more bureaucratic German management.’



Robert Eaton’s departure serves as a lesson on the importance of

nationalistic sentiment and successfully blending corporate cultures in

international mega-mergers. DaimlerChrysler may want to address these

concerns or it may find the union running out of gas.





- Evaluation and analysis by CARMA International. Media Watch can be

found at www.carma.com.



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