DaimlerChrysler has sent a top financial executive back to North America as it tries to cut costs at its struggling Chrysler operations.
The company sent Jim Donlon back to Chrysler group headquarters in Auburn Hills, Michigan, as senior vice president and controller.
Donlon, 53, was Chrysler Corp.'s controller before the company was acquired by Daimler-Benz in 1998. He was named corporate controller for D/C and moved to the company's German headquarters in Stuttgart.
Known for his cost-cutting skills, Donlon returns to the Chrysler group at a time when D/C North American boss Jim Holden is trying to cut $2 billion from his operations.
Donlon's reassignment followed a series of intense meetings in Auburn Hills conducted by D/C's Chief Financial Officer Manfred Genz. Insiders say Donlon was designated for the task by Chairman Jurgen Schrempp
'Jurgen Schrempp wants to have Donlon on this crucial job in a difficult time,' said a D/C executive. 'He trusts Donlon a lot.'
The Chrysler group has relied on aggressive consumer incentives to drive unit sales and market share gains, while investing heavily in product launches.
Second-quarter operating profit was down 12 percent from a year ago to $1.1 billion. The company issued a profit warning for the third quarter.
'We knew things would be tough at Chrysler, but we didn't know it would be this tough,' said a source close to D/C's management board in Stuttgart. 'The price war in the USA has increased in intensity and we did not anticipate it.'
Chrysler will introduce three new models within five months. Two of them, the Voyager minivan and the Jeep Grand Cherokee, are key to the company's profitability.
Chrysler was forced to sharply increase incentives on the current Voyager, Jeep Cherokee and Stratus.
The popular PT Cruiser can't make up the difference because Chrysler can't build enough to satisfy demand.
'The main problem at Chrysler is the mismanaged product life cycles,' said a DaimlerChrysler executive in Germany.
'This is an historic problem, nothing which arose suddenly. There has always been this zig-zag performance at Chrysler, which almost inevitably ended in tears for the company.'
Compared to Chrysler, product cycles at Mercedes-Benz are carefully balanced, he said.
'When one model declines, another is introduced to keep customers inside the brand,' said the insider.
'When A-class sales slow down we can compensate with rising C-class sales. We have recognized this problem of life cycle management at Chrysler and now it is Holden's job to tackle it.
'Schrempp has given him the chance to bring the company back on track, and certainly also the time to do so.'
In other personnel changes, Rainer Schmuckle replaces Donlon as corporate controller in Stuttgart.
Schmuckle is currently Chief Financial Officer of Adtranz, D/C's rail company.
Donlon replaces Jurgen Walker, 50, who has been named president and CEO of DaimlerChrysler Financial Services, N.A., LLC.
Walker replaces Darrell Davis, 61, who becomes senior vice president for service and parts for Chrysler.
This newly created position combines service and parts operations into a single group and eliminates the position of vice president for Mopar parts held by Lawrence Baker, 58, who plans to retire at the end of the year.
Davis also takes over some duties from John MacDonald, 55, whose title changes from senior vice president of sales and service to senior vice president of sales and field service.
Davis will manage global service and parts issues, including warranty and recall; MacDonald will oversee Chrysler's sales and dealer service operations.