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Der Sturm (The Perfect Storm)
By MARTHA HINDES AND MYRON STOKES

Page 5 of 5 | previous

A Heavy Hand

Analyst Ronis put the blame for Chrysler's problems squarely on its German handlers. "I blame Schrempp for cleaning out the executive suite," she said. "That's exactly the opposite of what Ford did with Volvo and Jaguar," where those acquisitions have not created similar problems.

Fordís purchase of Volvo Cars nearly two years ago, was under the direction of company president Jac Nasser, who is seen as intent on building Fordís empire even more.

When Eaton got his walking papers in early 2000 accompanied by a fat severance check, he wasn't the first to be purged from the company nor would he be the last.

The German officials of the company over in Stuttgart, whether by firings or by discouragement, succeeded in scouring the top Chrysler ranks of its magical team that had been credited with making it such a success before the merger.

Among those who quickly departed were Chrysler president Tom Stallkamp, his successor Jim Holden and the company's design chief Tom Gale. Since departing, Holden has been cast by the German hierarchy as the villain for the current problems, although he held that position for less than year.

"Bob Eaton did not make Chrysler. He did not do a damn thing," said the insider. "Bob Lutz, Tom Stallkamp and Tom Gale and all those other guys really did something for the company and they got squat."

Sleeping with the Enemy?

According to other sources inside the company, it was Lutz, Chrysler president in the early '90s, who had pushed Eaton towards accepting the merger. And Lutz concurred as much in his 1999 book, "Guts," when he referred to the "marriage made in heaven," so named by Schrempp.

"I, for one, think that he's most likely right (and not because I happened to have a hand in picking the final name for the new company...)," wrote Lutz.

"Unlike so many deals of this sort where one strong and one weak company (or sometimes two weak companies) link up, this is a coming together of two very strong companies that could have easily survived quite well separately but that chose to follow the principle underpinning of all good marriages: that the whole really can be greater than the sum of the parts."

It didn't take long for Lutz to appear to backpedal that consensus during a recent television report on Detroit's NBC-affiliate station that dissected some of the reasons for the failure.

Casting Blame

Lutz also singled out Holden, formerly the company's sales chief, for being too extravagant in developing new products, although current vehicle programs were in effect before Holden assumed the top U.S. job. "He's the guy who occasionally has to say 'no,'" said Lutz. "(He) can't spend eleven hundred dollars when a thousand dollars is your target."

There were other mistakes on the U.S. side as the Germans in Stuttgart snapped up the $9 billion the Americans had brought as a dowry. Attempts to save money on the Chrysler side faltered.

A decision to save $10 million by downsizing a new paint shop at the Belvidere, Ill. plant backfired when it turned out to be a few inches too short to accommodate the hot selling PT Cruiser which needed more space for assembly.

Eaton, who has taken the bulk of the blame for getting Chrysler into its current state, has remained hidden since the first shoe fell in January.

Bittersweet Victory

Prior to the merger, he had been rated as something of a savior, when shortly after his ascendency as Chrysler chairman, he ushered the company safely through an attempted hostile takeover by Las Vegas billionaire and corporate raider Kirk Kerkorian.

During a one-on-one interview after the disposal of the Kerkorian "problem," Eaton was a man in full control. There was no give and take of questions and answers, no flexibility in anticipating what might be asked. He strung his answers together in an impenetrable wall in the manner of a commanding general not accustomed or willing to acknowledge anything that he did not want to pony up to. Instead, questions that got through were rather done as quick assaults.

Some of the issues he did not want to deal with at the time dealt with television news magazines' interpretation of the nasty problem the company was having with rear latches on its minivans that had failed in all too many instances, leaving some rear seat passengers ejected from their seats and in many cases injured or dead.

This was not a man who was willing to compromise about anything. And there was no compromise in his decision to conjoin with the German city-state that had first set the world on automotive wheels a century before.

Eaton acknowledged - as the signing of the agreement approached - that he would depart in two years. That news was like a coup by his own allies who had waited patiently for all the details he had wrought to be put in place before assassinating the leader

There would be a nearly $100 million consolation prize, an estimated amount that continues to bristle hourly workers and raise media accusations of greed. But if Eaton was greedy in the events he started, it was the greed for power not of money that did him in - and ultimately took Chrysler with him.

 

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