“When Freightliner became the first American member of the Daimler-Benz family, nobody in their wildest dreams would have guessed just how much that transatlantic family would one day grow,”
said Dieter Zetsche, chairman of DaimlerChrysler and head of the Mercedes Car Group.
Zetsche was addressing employees at ceremonies this week marking 25 years since DaimlerChrysler (then Daimler-Benz) purchased the Portland, Ore.-based truck manufacturer.
With 380,000 employees, DaimlerChrysler is now the world’s single largest automotive employer. Its Truck Group, including Freightliner, Mitsubishi Fuso and Mercedes-Benz Trucks, is the largest seller of heavy-duty commercial trucks in the world and Freightliner is the cornerstone of that Truck Group, Zetsche said.
But it hasn’t been smooth sailing. Zetsche said he learned the heavy truck business as president of Freightliner in 1991. He also learned about turning around a company.
“Freightliner was bleeding red ink,” he recalled. “We turned a $33.9 million loss in 1991 to a $60.5 million gain in 1992, and to more than $153 million in profits in 1993, selling fewer than 30,000 trucks a year in a very bad market.”
“The 1990’s were a ‘go, go’ decade for Freightliner,” said current President and CEO Chris Patterson. “We gained the leadership position in the Class 8 market, and went from nothing to second place in medium-duty.”
There were acquisitions – Freightliner Custom Chassis, American LaFrance, Sterling Trucks (formerly Ford heavy trucks) and Western Star – and an expanded product line.
Then “the tide turned dramatically in 2001,” Patterson noted. “We paid a stiff price for overextending ourselves in market share and management, and for making too many investments that didn’t pay off.”
A tough internal cost-control program “got us back on our game by the end of 2003,” he said. Another program shored up business processes and improved customer satisfaction the following year. Last year, said Zetsche, Freightliner made a “substantial contribution” to the records DaimlerChrysler has set for sales, revenues and earnings.
Patterson said the goal today is to achieve “true excellence,” largely by drawing on the global resources of its parent.
DaimlerChrysler is rolling out a New Management Model aimed at further integrating its global organization, focusing on core processes, and enhancing internal cooperation.
“The new model will enable us to be leaner, more flexible and faster; and to improve productivity,” said Zetsche. “Ultimately, we will be a more efficient company. That means we’ll be better able to quickly respond to market needs without a large, multi-layered bureaucracy to work around.”
Andreas Renschler, the member of DaimlerChrysler’s Management Board who is responsible for Truck Group & Buses, outlined a new Global Excellence program with four main initiatives.
The first is to optimize the Truck Group’s business model and brand portfolio, consolidating the company’s expertise in areas where it makes sense. One example of this strategy: the sale of American LaFrance. “It was a good – and very compelling – niche business,” Renschler explained, “but it wasn’t really our core business.”
The second initiative involves efficiency programs and a modular strategy for product development. The objective of the global modular strategy is to achieve a high degree of common components and modules across DaimlerChrysler’s five truck brands -- Freightliner, Western Star, Sterling, Mercedes-Benz and Fuso – without compromising unique customer needs. For instance, DaimlerChrysler will replace eight engine platforms currently in its global product line to three – light, medium and heavy. The new global family of truck engines will be launched in Freightliner vehicles the middle of next year.
DaimlerChrysler will also have “Competence Centers” within the Truck Group: light and hybrid trucks at Fuso in Japan, powertrain and medium-duty and heavy-duty cab-over-engine trucks at Mercedes-Benz in Europe, and conventional trucks at Freightliner.
The third initiative involves market development and penetration. In markets where DaimlerChrysler Trucks has a strong presence, such as North America, they’ll work to optimize the product and brand mix.
The fourth initiative is to reinforce DaimlerChrysler Truck’s leadership role in technology. “This is where flexing our global muscle really makes a difference for Freightliner and our entire truck family,” Renschler said. DaimlerChrysler has developed safety systems including ESP, its Lane Assistant System, and a new emergency braking system, Active Brake Assist that helps drivers recognize potentially dangerous situations. Freightliner has Lane Assistant and the Roll Advisor System.
In the alternative drive systems area, Freightliner Custom Chassis is building diesel-electric hybrid walk-in vans for FedEx and UPS. The company is working on the hybrid M2 truck with Eaton, and is building Orion VII hybrid buses for the San Francisco transport authority. More than 20,000 trucks in Europe have DaimlerChrysler’s clean-diesel technology, BLUETEC. The technology debuts for U.S. passenger cars this fall.
“Our partnership with DaimlerChrysler affords us a unique opportunity and a powerful competitive advantage: the ability to draw on vast global resources to develop and utilize specialized components available only to us,” said Patterson. “The future will see a marked reduction in our willingness to share our scale with our competitors.”
As an example of this unintentional sharing, he noted that Western Star wouldn’t have existed in its early years as an independent company without major components from a variety of industry suppliers. Those suppliers in turn couldn’t have developed components without Freightliner LLC volume. “These suppliers sell parts to our competitors who, in effect, enjoy a free ride. Rest assured that those days are numbered. Freightliner has the advantage of affiliation with the world’s largest truck and component manufacturer on our side, and will fully exploit that advantage in the years ahead.”