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“Taken for a Ride” by Bill Vlasic and Bradley Stertz (William Morrow, Inc., New York; 372 pages; $26) I have long been skeptical of the favorite conservative refrain that if governments were simply operated more like private businesses, the world would run much more smoothly. But after reading “Taken for a Ride,” this fascinating and detailed account of the $36 billion Chrysler/Daimler-Benz merger consummated in May 1998, one can only conclude that had American business — and not government — been calling the shots in 1941, World War II would have been a much quicker affair, with a far different result. Unlike American presidents, who must undergo at least months of public scrutiny before being elected, Chrysler executives had a far easier path to the leadership of their company. Bill Vlasic and Bradley A. Stertz, two excellent automotive industry reporters from the Detroit News, reveal that, when future Chrysler CEO Robert Eaton was selected in March 1992 as “successor in waiting” for the then-soon-to-depart Lee Iacocca, the native Midwestern farm boy had never so much as set foot in a Chrysler factory or office. A mechanical engineer and not a businessman, Eaton had actually earned his industry stripes at Chrysler rival General Motors, where, in 1988, he had been named head of GM Europe. Iacocca plucked Eaton out of GM largely to spite the more sophisticated Chrysler Vice President Bob Lutz, a tough, hard-charging type who had clashed with Iacocca and had supported the board of directors in its decision to fire Iacocca after 14 turbulent years in which Iacocca had become a corporate savior and legend. One of Eaton’s main attractions to the board was that his biography seemingly echoed that of the company’s founder, Walter Chrysler, who had also been a Kansas-born engineer and tinkerer. Vlasic and Stertz say that Eaton worked hard to understand the company he inherited from the legendary Iacocca in the same way that, as a child, he took apart and rebuilt Maytag washers to learn how they worked. Eaton was essentially a loner. No one from General Motors accompanied him to Chrysler, and he was judged by his new peers to be “bereft of confidants.” And as time would go on, it would become clear that a man who understood engineers and vehicle platforms better than practically anyone was not necessarily skilled at sizing up and combating human rivals. When Kirk Kerkorian, one of Chrysler’s largest and most impatient stockholders, began making noises in 1994 about buying up the shares, which he believed to be undervalued, and taking the company private, Eaton was so inarticulate that Kerkorian left a meeting with him convinced Eaton had agreed to the plan and that his takeover would not be a hostile one. Indeed, Kerkorian’s plan seemed to make sense. Chrysler’s stock price was ridiculously low at $40 per share, and the company was throwing off cash at the rate of one billion dollars a quarter. Kerkorian’s plan seemed to make perfect sense, and Eaton had acceded to Kerkorian’s suggestions that Chrysler repurchase more of its stock. After giving Kerkorian the impression that he realized the value inherent in a leveraged buyout, Eaton returned to Chrysler headquarters and began crisis planning that involved doing everything possible to thwart the deal, leaving Kerkorian, the holder of 36 million shares, convinced that Eaton had, at least, misled him and, at worst, lied to him. After Eaton rebuffed the leveraged buyout suggestion, Kerkorian made a bid to buy the company himself — at one point offering $55 per share for it. It was his fear of Kerkorian that led Eaton to begin discussions with Mercedes-Benz, which Eaton naively believed would join with Chrysler as a white knight. The deal with Kerkorian, Stertz and Vlasic allege, was undone by a failure of communication, which, in the long run, might be the most important business lesson in the book. “Two men, both terse and circumspect, failed to communicate clearly at a crucial moment,” Stertz and Vlasic write. “They might as well have been speaking different languages.” Eaton’s willingness to hand over his company to the German corporation, rather than deal with Kerkorian, probably had more to do with his distrust of his one-time sponsor, Iacocca, than anything else. In a Kerkorian-led Chrysler Corp., Kerkorian’s friend Iacocca would presumably have regained power over the company. The authors claim that “the idea that Iacocca was behind this turned Eaton red with rage. . . . [T]his naked grab for money and power at the expense of Chrysler was too much for Eaton to stomach.” Eaton succeeded in blunting Kerkorian’s bid but proved incapable of turning away from the new friends he had made in Stuttgart. The story then turns from being one of not how Eaton outwitted Kerkorian, but how the Kansan was out-dueled by Jurgen Schrempp, his sophisticated German counterpart at Mercedes-Benz. The two companies couldn’t have been more different, from their management styles to their production systems. From the American point of view, there was little reason or rationale for the companies to come together. From the German point of view, there was every reason to pursue a company that built the light trucks and SUVs that Mercedes coveted, to say nothing of earning entree to the American market that had long been their toughest on the planet to penetrate. Yet, Eaton seemed mesmerized by the Germans. Schrempp was everything he was not. A sophisticated world traveler who had climbed the Italian Alps and had played chess with world champion Gary Kasparov, Schrempp was brilliant, cagey, subtle, and intricate. As one colleague would say of him, “Jurgen will play chess.” When Schrempp came calling on Bob Eaton with the idea of swallowing up Chrysler, Eaton had about as much appreciation and understanding for what was happening as he did when he spoke to Kerkorian. The authors conclude that when Schrempp made his first overture at the Frankfort Auto Show, Eaton didn’t even realize that Schrempp was making any statement larger than “let’s do lunch.” From then on, the landing of the once-proud Chrysler Corp. was about as easy for Schrempp as Kasparov playing a blindfold match against a group of elementary school students. Eaton made a brief stand on preserving pre-eminence in the name of the new company at least — he wanted it called Chrysler-Daimler. He yielded at the last moment, however, when Schrempp insisted that not naming the company Daimler-Chrysler was a deal-breaker. Never in the history of U.S. business had a company so meekly been handed over to an overseas rival. And as for the stockholders, the share price actually declined from $41.38 on the day the merger was revealed in May 1998 to $41.27 on Dec. 2, 1999, presumably when this manuscript was delivered. Last week it stood at $51 per share — higher, but still at a 52-week low. “Taken for a Ride” works at different levels. It is excellent background on the international consolidation of the auto industry; contains compelling biographical material on Kerkorian, Eaton, Iacocca, Lutz, and Schrempp; and imparts valuable lessons in how to run roughshod over a weaker foe. Fortunately, this is not a book about World War III. The Yanks would have been in real trouble.

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