Thirty Y Yea ears L Late ter Forgotten Le For Lesson ons Fr - - PowerPoint PPT Presentation

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Thirty Y Yea ears L Late ter Forgotten Le For Lesson ons Fr - - PowerPoint PPT Presentation

May 15, 2023 162 likes •331 views

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COLLABORATIVE VE M MANA NAGEMENT L LLC

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Thirty Y Yea ears L Late ter For Forgotten Le Lesson

  • ns Fr

From

  • m C

Chr hrysler

Fed Federal al R Res eser erve B Bank ank of

  • f Chi

hica cago,

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Detr etroit B Branch anch Autom utomotive C Conf

  • nfer

eren ence ce M May ay 10 10-11, 11, 2010 2010 Thom homas S Stal tallkam amp Ind ndus ustrial P Par artne tner R Ripplew ewood Princ ncipal, C Col

  • llaborat

ative M e Manag anagement LLC t LLC

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For Forgotten Le Lessons Fr From

  • m Chr

hrysler

  • Industrial Partner, Ripplewood Holdings, LLC
  • Principal, Collaborative Management, LLC

Background

Current

  • Borg Warner Automotive – Public Auto Supplier
  • Baxter International – Public Medical Products
  • Asahi Tech – Japanese Public Auto Supplier
  • Honsel AG – German Private Auto Supplier
  • Babson College – Wellesley Massachusetts, Chairman of Board

Boards

  • 1972 – 1980 Ford Motor Company
  • 1980 – 1988 Chrysler Corporation, Procurement & Supply
  • 1988 – 1990 Chrysler Acustar Components Division CEO
  • 1990 – 1997 Chrysler Corporation EVP Procurement & Supply
  • 1998 – 1999 Chrysler Corporation President
  • 1999 – 2000 Daimler Chrysler President
  • 2000 – 2004 MSX International CEO

Automotive Experience

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For Forgotten Le Lessons Fr From

  • m Chr

hrysler

  • Early success at brand differentiation and loyalty
  • Product innovation – SUV’s, minivans, features,

multipurpose trucks

  • Low cost, high volume large power trains
  • International expansion by GM/Ford
  • Efficiencies of volume and derivatives

LESSON: These days are over.

Fifty years of Ups and Downs

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For Forgotten Le Lessons Fr From

  • m Chr

hrysler

  • Consolidation through Alliances and Mergers
  • Insulated and isolated industry mindset
  • Widespread adversarial practices
  • Reliance on high unit volumes
  • Mico financial measures

Historic Industry Trends

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For Forgotten Le Lessons Fr From

  • m Chr

hrysler

  • Chrysler and Mitsubishi Motors – Late 1970’s-1991
  • Chrysler and Maserati Motors – Late 1984
  • Chrysler and American Motors – 1987 Acquisition
  • Chrysler and General Motors – New Venture Gear –

1989

  • Chrysler Mitsubishi and Hyundai – Global Engine

Alliance - 2004 - 2009

  • Chrysler and Daimler Benz - 1999

Alliances are Difficult, Mergers are Worse Chrysler’s Varied History

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For Forgotten Le Lessons Fr From

  • m Chr

hrysler

  • Alliances require specific definition of control
  • Acquisitions provide certainty of control
  • JV’s = shared control creates problems
  • JV’s usually have termination point or exit
  • DCX = constant battle to resolve control

Alliances are Difficult, Mergers are Worse

LESSON: JV’s can fill product or geographic void for short time while acquisitions are permanent and resolve control issues.

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For Forgotten Le Lessons Fr From

  • m Chr

hrysler

  • Easier to invent than to implement
  • Synergies often over-stated
  • Must consider each company’s culture
  • Cross-pollination is necessary
  • DCX – intended as a merger, reality was acquisition

Acquisitions Require Constant & Active Management

LESSON: Industry consolidation will continue with some failures along the way.

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For Forgotten Le Lessons Fr From

  • m Chr

hrysler

  • Follow the leader/safety in numbers
  • Copycat products, management, & systems
  • Big 3 – Detroit, Germany, Tokyo
  • Resistance to outside pressures
  • Limited learning from other industries

Auto Industry is Too Insulated

LESSON: Industry is not as unique as they think they are.

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For Forgotten Le Lessons Fr From

  • m Chr

hrysler

  • Unions

– Co-dependent, but dysfunctional

  • Dealers

– Move to multi-franchises reduced loyalty

  • Suppliers

– Dominant/subordinate industry practices – “Extended Enterprise” introduced unique philosophy – Suppliers now in control

  • Customers

– Effect of quality problems on owner loyalty ignored

  • Employees

– Hierarchical management stifled input – Introduced platform teams to correct

Adversarial Relationship Prevail

LESSON: Cooperation and collaboration free up resources and improve relationship.

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  • m Chr

hrysler

  • Financial system biased against change
  • Dedicated factory lines obsolete
  • Interchangeability of components required
  • Engineering not in step with Manufacturing
  • Need rapid response to market changes

Reliance on High Unit Volumes Manufacturing Speed & Flexibility Essential

LESSON: K-Cars: One size does NOT fit all.

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For Forgotten Le Lessons Fr From

  • m Chr

hrysler

K-Car Models

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hrysler

K-Car Models

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  • m Chr

hrysler

  • Historic concentration on component piece price
  • Unit costing misses large cost elements
  • Finance Staff domination
  • Leverage of supplier technology
  • Share supplier savings and reinvest - SCORE

Micro Financial Measures Measure System Costs, Not Variable

LESSON: SCORE should have been continued. All firms need collaborative supplier relations policy.

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For Forgotten Le Lessons Fr From

  • m Chr

hrysler

  • Adopt true collaboration over adversarial tactics
  • Achieve geographic balance in markets
  • Focus on system costs over variable
  • Leverage supplier technology over internal development
  • Track non-competitor trends and look outside, not in

Lessons Requiring Remedial Training

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For Forgotten Le Lessons Fr From

  • m Chr

hrysler

  • You’re never as good as they say your are; Never as bad as you

think you are

  • If you’re waiting for more data, it’s probably too late
  • Government aid can be a last resort, but don’t let them run anything
  • A good CFO should have run something other than a calculator

If Ben Franklin Had Been in Automotive Industry…..

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For Forgotten Le Lesson

  • ns Fr

From

  • m C

Chr hrysler (a (and d Ev Everybody dy El Else)! e)!

COLLABORATIVE VE M MANA NAGEMENT L LLC