Daniel Howes: Zetsche's about-face feels like betrayal in Detroit

http://www.detnews.com/apps/pbcs.dll/article?AID=/20070216/AUTO02/702160418/1148

H e appeared to be more Detroit than Germany, or so many of us came to
believe.

He was supposed to be Chrysler's protector back in Stuttgart, the
mustachioed Mercedes-Benz veteran who learned what the Americans could do,
how their market and its pressures were different, how the pentastar and the
three-pointed star could work more closely together.

"There's no doubt," DaimlerChrysler AG Chairman Dieter Zetsche said back in
September 2005, "that the speed and sustainability of bringing Mercedes back
to very good profitability can only be increased by being able to work with
Chrysler, versus on a stand-alone."

Last September, ensconced as the boss of bosses at headquarters, he told the
German daily Die Welt: "It is certain that there will be no sale of Chrysler
or a part of a brand" -- a sentiment punctuated a month later by an official
statement that "there are no plans to sell Chrysler."

How quickly things change.

There, sitting Wednesday in the design dome of the Auburn Hills automaker he
ran for five years, was Zetsche, stone-faced, saying all "options" are open
for the future of Chrysler. If you could throw a company and its 80,700
employees under the figurative bus, I suspect it would look something like
that.

It's still early in this nerve-wracking road through Chrysler's
"recovery" -- 13,000 jobs lost, a plant closed, production capacity slashed
by 400,000 vehicles -- and its "transformation," which could culminate in
someone else (the French, the Japanese, the Koreans, the Chinese or Wall
Street sharpies) calling the tune in Auburn Hills.

No, we don't know how this will play, though it's fairly clear what more
than a few of DaimlerChrysler's supervisory board members, and their friends
in the German media, want: Cut Chrysler adrift to, in the words of board
member Erich Klemm, protect "the core of Daimler from a possible financial
downwards spiral at Chrysler."

'Best intentions' gone awry

However it ends, however much Zetsche may be relenting to board pressure,
it's safe to say this doesn't make ol' Dr. Z. look like the local hero he
was just months ago, the guy who many -- including me -- considered to be
Chrysler's strongest ally in the hostile corridors of DaimlerChrysler and
the Mercedes technical center.

"He still has Chrysler Group's best intentions at heart -- which is why he's
doing what he's doing," says an individual close to the situation. "It's 'I
want a strong Chrysler Group and that's why you keep every option open.'
He's not turning his back on Chrysler."

How come it doesn't feel that way? How come it feels like all the original
suspicions of the transatlantic deal are rushing back, consuming any of the
feel-good success and cooperation that flowered under Zetsche?

Remember, he was the affable German engineer-cum-executive who warmed to the
Detroit automotive scene even more than most of his contemporaries here, who
seldom missed an on-air chat with WJR's Paul W. Smith, who played a
constructive role in civic causes, who headed the 2005 United Way Torch
Drive campaign, raising $63.4 million.

He was the guy who arrived in the gray days of late 2000 with Wolfgang
Bernhard at his side to rescue Chrysler from the bumblers who ran it into
the ground, embarrassing J|rgen Schrempp, mastermind of Daimler-Benz AG's
1998 acquisition of Chrysler.

Zetsche was the guy who killed jobs, closed plants, tore up the product
plans, instilled what he called "disciplined pizzazz" at Chrysler. Then he
started shipping billions in operating profit back to Stuttgart just as
vaunted Mercedes was slipping into the red, thanks to an aging product line,
operational inefficiencies and a black hole called Smart.

Shining star tarnished

Chrysler was the shinier star, and Zetsche basked in its glow. It
strengthened his bid to outmaneuver rivals on DaimlerChrysler's management
board, powering his ascension to arguably the most powerful jobs in
industrial Germany -- CEO of DaimlerChrysler and head of Mercedes.

Still, he didn't forget Chrysler. Even after turning it over to Tom LaSorda,
he agreed to star last summer in "Dr. Z" ads touting the melding of American
innovation and German technology in Chrysler Group vehicles.

They even draped a vast sheet adorned with his lovable mug on the side of
Chrysler headquarters, visible to anyone driving along I-75 -- before, that
is, they quickly dumped the campaign as Chrysler's financial troubles became
too obvious to ignore.

Which is why this apparent about-face, underscored by the jubilation in
Germany and on the global capital markets, feels more like betrayal and less
like doing what's best for Chrysler.

Or put it this way: In many ways, the Chrysler descending into another
gut-wrenching workout is mostly the Chrysler that Zetsche left to LaSorda.
Zetsche's Chrysler kept the plants running, filled the dreaded sales bank
with inventory and used the tactics of his sales guy, Joe Eberhardt, to
shove vehicles down the throats of dealers, fomenting a revolt LaSorda had
to put down.

Dropping production and firing Eberhardt, as LaSorda eventually did, would
have gutted Chrysler's revenue and exposed the over-reliance on trucks and
SUVs, as well as the notion that Chrysler wasn't really "fixed." That would
have been a problem for Dr. Z, then angling to succeed Schrempp as
DaimlerChrysler's CEO.

Zetsche green-lighted the sad-sack Jeep Commander and Compass SUVs and, as
LaSorda has told people privately, left behind a product plan that didn't
deliver a single new Chrysler-brand vehicle to dealerships in a two-year
period.

The point: Chrysler and its communities will bear the uncertainty of a
present and a future only partially of their making. Big business, tough
decisions and global competition we get, because, Lord knows, we see a lot
of them all in this town.

But is this exactly what the doctor ordered? Or is he being pushed by forces
he cannot control, by board members convinced Chrysler is unfixable and
looking for an excuse to pull the plug on a deal so many of them despised
from the beginning -- and fast?

--
"The king of Israel answered, "Tell him: 'One who puts on his armor should
not boast like one who takes it off."