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.
