Importance of Being Persuasive; Daimler-Chrysler Merger Made an Art of Making a Case - The New York Times

6/7/10 10:28 PM

May 26, 1999

Importance of Being Persuasive; Daimler-Chrysler Merger Made an Art of Making a Case

By YOUSSEF M. IBRAHIM

Correction Appended Jurgen E. Schrempp, the man who reigns over DaimlerChrysler, has a weak spot for trial movies. One of his favorites is ''Twelve Angry Men,'' in which one juror painstakingly reverses the others' views on the guilt of a murder defendant. To Mr. Schrempp, the tale is, at heart, a training film in persuasion. ''It helps me put my arguments into words, focus on people,'' he said. The power of persuasion is a valuable commodity for corporate chiefs hoping for a front-row seat in the global marketplace -- people like Mr. Schrempp. Orchestrating complex mergers across borders and cultural divides takes a lot more than management skills -it takes the political knack to win over a wide range of people, often with sharply conflicting agendas. And Mr. Schrempp, the intense German chief executive who last year brought about the world's largest completed industrial merger, may best exemplify this blending of skills. ''Running a global, multicultural business is half stomach and heart, and the other half is brain,'' said Mr. Schrempp, who started as a mechanic, then ran Daimler-Benz divisions in South Africa, the United States and Germany. ''You've got to see your goal clearly,'' he said. ''But you've got to deliver it just as clearly to clients, employees, shareholders, politicians, labor unions, analysts, the media.'' Indeed, on May 4, 1998, three days before the world learned of the merger between Daimler-Benz, Germany's largest company, and the Chrysler Corporation, Mr. Schrempp, 54, practiced what he preached in a suite at New York's Four Seasons hotel. Pacing the room, he made his pitch repeatedly before a dozen investment bankers, public relations experts and corporate lawyers. Their task was to critique his soon-to-be-public presentation to shareholders, the news media and the world -- until he had it right. ''Today, every company has many constituent groups,'' said Gershon Kekst, who has been in public relations 40 years and was one of that dozen. ''The publicity that is good in America is not so good in Europe.'' If anything, the era of globalization, the Internet and multinationals has intensified the need for specialized skills in communications. ''There are so many interest groups that can disrupt the process,'' said John D. Bergen, president of the Council of Public Relations Firms in New York, ''that public relations now gets in on the strategy level.'' Nor, of course, does the process stop with the merger. Ten months after the birth of DaimlerChrysler, Mr. Schrempp was still trying to convince his many audiences that it was a good idea. ''Networking consumes 40 percent to 50 percent of my time,'' Mr. Schrempp said in March in an interview in
http://www.nytimes.com/1999/05/26/business/importance-being-persuasr-merger-made-art-making-case.html?pagewanted=all&pagewanted=print Page 1 of 4

Importance of Being Persuasive; Daimler-Chrysler Merger Made an Art of Making a Case - The New York Times

6/7/10 10:28 PM

Montreux, the Swiss resort town. He had just returned from Tokyo, where he had flown secretly to tell Nissan Motor executives that he was backing away from a merger. ''Face is important in Japan. You have to do it in person.'' Clearly, he was still thrilled by the success of the initial public relations campaign for the Chrysler deal. While the merger has faced some rough patches, that campaign, by all accounts, was second to none. The two corporate relations teams worked for months with three public relations firms: Kekst & Company and Golin Harris/International of New York and Bell-Pottinger Communications of London. The work was supplemented with soundings from a few top executives, friends of Mr. Schrempp, including James D. Wolfensohn, president of the World Bank, and Sir John Browne, head of BP-Amoco-Arco, who sits on the company's board, and influential people like the Washington lawyer Vernon E. Jordan Jr., the former Treasury Secretary W. Michael Blumenthal and the former Senator Sam Nunn. It emerged that the principal concerns included the need to address the reaction of American Jews to Daimler's involvement with slave labor during World War II; Chrysler's focus on diversity in the work place, to which Germans are not as dedicated, and employees' fear of being ''Germanized'' or ''Americanized.'' Much of the advice was bounced back and forth in private conversations with three advisers -- Christoph Walther, who heads DaimlerChrysler's corporate communications; Mike Taylor of Bell-Pottinger, an old friend of Mr. Schrempp from his days in South Africa, and Mr. Kekst, whose activism in Jewish causes was a plus. The result was a confidential 36-page plan that set forth every detail with military precision. Drums rolled on May 7 last year when Mr. Schrempp and his counterpart at Chrysler, Robert J. Eaton, made calls to President Clinton and Chancellor Helmut Kohl of Germany to tell them of the merger -- the first of 147 big calls, including one to the next Chancellor, Gerhard Schroder. The message was tailored to the audience. To Mr. Kohl, Mr. Schrempp described the merger as a great boon to Germany's largest company and the country's industrial power. But the Socialist-leaning Mr. Schroder asked, ''But are you laying off any workers?'' To which Mr. Schrempp said. ''I can give you my word there will be no layoffs.'' Mr. Schroder went on to ask if the company would be German. Absolutely, Mr. Schrempp assured him. Mr. Eaton, meanwhile, was implying to President Clinton that it would be a merger of equals. The issue of slave labor was debated in a meeting on April 30 last year attended by Mr. Schrempp, Mr. Eaton, Mr. Walther and Mr. Kekst. Mr. Schrempp said that in 1986 Daimler commissioned a study on its role in slave labor and published the results. It also erected a memorial at its Stuttgart headquarters. Now, though, he knew that would not be enough. A few weeks later Mr. Schrempp came up with the notion of creating a compensation fund. Lower-level executives around the globe made 10,000 more calls that day to unions, community leaders, managers and politicians. On the announcement day, Mr. Walther's team sent out 140,000 E-mails; letters and gifts like watches were delivered to all 428,000 employees of both companies; briefings for 950 analysts were held in London, Frankfurt and New York; news conferences, interviews and television appearances were conducted for 502 journalists on four continents; 5,000 videos were beamed by satellite to television networks and thousands of champagne corks popped. ''By the time that day was over, we had spent $25 million,'' Mr. Walther said over breakfast during the Geneva
http://www.nytimes.com/1999/05/26/business/importance-being-persuasr-merger-made-art-making-case.html?pagewanted=all&pagewanted=print Page 2 of 4

Importance of Being Persuasive; Daimler-Chrysler Merger Made an Art of Making a Case - The New York Times

6/7/10 10:28 PM

Motor Show in March. Only so much can be done by outside professionals. At a certain point, much depends on the boss. ''Ego does not drive the effort, but they couldn't do it if they didn't have the ego,'' Mr. Kekst said. With Mr. Schrempp, the dream of bigger things emerged early. In his 12 years in South Africa, he developed a sense about the politics of race and the price of ignoring human rights issues. In Germany, he broke away from the technocrat-patrician posture typical of German business leaders into a high-visibility, contentious Anglo-Saxon style. After he became chairman in 1995, he made another splash by warning that profits would be disappointing -an implied criticism of his predecessor's management, at odds with traditional German discretion. It was no coincidence that he hired Mr. Walther in April 1995 from the tobacco industry -- no stranger to controversy and attacks -- just as he planned a painful revamping that cost 40,000 jobs. ''If we ever sponsor a professorship, it has to be in political engineering,'' Mr. Walther joked about his boss's style. Controlling and shaping a corporate image creeps into nearly every corner of a chief executive's day. Mr. Schrempp's speaking engagements, booked through 2000, are choreographed for the ''highest-leverage effect with the right audience, the right time and the right topic,'' Mr. Walther said. Audiences will range from those at the Detroit Executive Club to the annual World Economic Forum in Davos, Switzerland, to top universities and various foreign affairs forums. Carefully researched speeches, produced mostly by Bell-Pottinger and the corporate relations department of DaimlerChrysler, delve into car making, human rights and the environment. Richard J. Wolff, manager of Golin Harris/International, says cross-border operations are creating a market for a new kind of communications skills. ''That is beyond the commodity level of public relations, the issuing of press releases and arranging conference calls to journalists,'' he said. ''Look at Schrempp. He is an international business leader. He needs to be surrounded with professionals who are comfortable in history and culture, linguists and thinkers with a broader sphere of knowledge.'' Indeed, Mr. Kekst and Mr. Harris employ partners with doctorates in history, economics, accounting, marketing and law, and many have been put at Daimler's disposal. In the sumptuous surroundings of Montreux and the success of the initial phase of the merger, criticism was hard to ferret out. DaimlerChrysler showed every sign of living up to the goals the merger set forth: innovation, global growth, job creation, social responsibility and equality. Over the last couple of months, though, the equality goal has taken a beating. The Americans have murmured ever louder that they are becoming second-class citizens, and Mr. Schrempp has left little doubt his team is first among equals. ''It is a German show,'' said one Detroit-based Chrysler executive. ''I guess it was inevitable. Someone has got to run the show, but how are Chrysler's best ideas ever going to reach Schrempp if they go through an exclusively German filter?'' Indeed, top Chrysler managers, including Mr. Eaton, have declared themselves lame ducks, agreeing to leave in a little more than two years. Some say the culture mismatch may make no difference. ''The two cultures don't even intersect,'' said Jerry Flint, a longtime automotive journalist. ''They are not even on the same planet. They have merged, but it doesn't mean they are making each other's cars or designing or marketing or selling each other.'' But this does not help morale and may, in the end, hinder the merger. Some American executives say they
http://www.nytimes.com/1999/05/26/business/importance-being-persuasr-merger-made-art-making-case.html?pagewanted=all&pagewanted=print Page 3 of 4

Importance of Being Persuasive; Daimler-Chrysler Merger Made an Art of Making a Case - The New York Times

6/7/10 10:28 PM

fear Chrysler's lean, dynamic, fast-moving style may be hobbled by the more deliberate, stodgy German process of management by consensus. Above all, a close confidant of Mr. Schrempp said that the German chief executive must sooner or later tell people that he and he alone runs the company. In other words, the heavy reliance on his charisma and the positive glow from the merger are coming to an end. To keep it going now, the other Mr. Schrempp has to come out, perhaps swinging. Photo: Robert J. Eaton of Chrysler, left, and Jurgen E. Schrempp of Daimler-Benz last May, on the day Daimler's acquisition of the American auto maker was announced. A $25 million public relations effort included 10,000 phone calls to unions, civic leaders and politicians. Letters and gifts like watches were delivered to all 428,000 employees. (Reuters) Graph: ''Global Gainer'' Since Jurgen E. Schrempp took the helm of Daimler, the company's stock has risen, and he has led it through one of the largest cross-border deals in history. May 24, 1995 -- Mr. Schrempp is named chairman of Daimler-Benz A.G. May 7, 1998 -- DaimlerBenz and Chrysler announce they intend to merge. Nov. 9, 1998 -- Daimler-Benz stock is delisted; shareholders receive 1.005 shares of DaimlerChrysler stock for each share. Graph tracks share price of Daimler-Benz/DaimlerChrysler, since 1995. Yesterday: $89.4375, down $1.4375. (Source: Bloomberg Financial Markets)
Copyright 2010 The New York Times Company Home Privacy Policy Search Corrections XML Help Contact Us Back to Top

http://www.nytimes.com/1999/05/26/business/importance-being-persuasr-merger-made-art-making-case.html?pagewanted=all&pagewanted=print

Page 4 of 4