September 7, 2007
Toyota’s Top U.S. Executive Is Joining Chrysler
By MICHELINE MAYNARD
AUBURN HILLS, Mich., Sept. 6 — For a generation, waves of Detroit auto executives have been defecting to foreign rivals.
On Thursday, the tide took a surprising turn, with Toyota’s highest-ranking American executive, James E. Press, being named co-president at Chrysler.
It is the second high-profile hire in short order by Cerberus Capital Management, which acquired Chrysler this summer. Earlier it hired Robert L. Nardelli, the former chief executive of Home Depot and a man with no automotive experience, to be Chrysler’s new chief executive.
The hiring of Mr. Press — the president of Toyota North America, who has four decades of experience in the auto business — was hailed as “a major coup” by no less than Ron Gettelfinger, president of the United Automobile Workers union.
Chrysler now has a top management team that is arguably the equal of those at General Motors, led by an industry veteran, Rick Wagoner, and the Ford Motor Company, which captured headlines last year when it brought in Alan R. Mulally from the Boeing Company.
In hiring Mr. Press, Chrysler’s private owners are showing clear signs that they plan to follow through on their vow to try to revive it, counter to Mr. Gettelfinger’s warning this year that the new owners would probably “strip and flip” Chrysler. However, he has since come to endorse the new owners.
Mr. Press is betting his reputation that he can carry out a turnaround at Chrysler, which lost $1.5 billion in 2006 and has lost more money this year, although Cerberus does not say how much.
His departure from Toyota, where he was the only American on its corporate board, and its highest-ranking executive in North America, was a shock to industry insiders.
But Mr. Press, 61, who started out at Ford in the 1960s and joined Toyota in 1970, faced ending his career essentially in an advisory role, said Jeffrey Liker, a professor of engineering at the University of Michigan and the author of “The Toyota Way,” which analyzed the company’s operating philosophy.
“He had the opportunity to revive a major American company, versus being a place holder at Toyota,” Mr. Liker said. “I can imagine the conversation with his wife: ‘Do I want to ease into retirement, or do I want to take on the challenge?’ ”
Chrysler can use his help. Toyota passed Chrysler last year to become the third-biggest auto company in the American market. Since then, Toyota has pushed past Ford to become No. 2, behind G.M., based largely on a lineup of cars and trucks that Mr. Press lobbied for his Japanese bosses to produce.
For Mr. Press, who will serve alongside Chrysler’s president, Thomas W. LaSorda, one priority will be working with Chrysler’s dealers. Many were enraged last year when Chrysler tried to force them to take on more vehicles, including gas-thirsty trucks and Jeeps, than they could sell.
A number of the dealers refused, and at one point more than 100,000 unsold vehicles sat on lots around Detroit and elsewhere.
That backlog is gone and so, too, are Chrysler’s German owners, who sold the company to Cerberus on Aug. 3. Mr. Nardelli was hired three days later, and now Mr. Press is on board, to some dealers’ relief.
“We’ve got great products,” said Brent Hiday, owner of Hiday Chrysler Dodge Jeep in Bluffton, Ind., south of Fort Wayne. “And I think he will get the message out and get things rolling.”
When he arrives at Chrysler on Sept. 17, Mr. Press will see a familiar face. Last month, the automaker hired Deborah Wahl Meyer, a vice president in Toyota’s Lexus luxury division, as its new chief marketing officer.
In fact, Ms. Meyer and Mr. Press are among four American Toyota executives who have left in the last year. Two longtime manufacturing executives, Dennis C. Cuneo, a senior vice president, and Gary L. Convis, who ran its North American operations as well as its plant in Georgetown, Ky., both retired, although they are serving as consultants.
Toyota officials in New York insist they have plenty of bench strength and do not fear a brain drain of Americans to Detroit companies.
Mr. Press was succeeded by a Japanese executive, Shigeru Hayakawa, even though Toyota has vowed to run its global operations with local managers.
“I wouldn’t say there’s any kind of premeditated process that Americans are being replaced by Japanese,” said Steve Sturm, a Toyota group vice president. “If anything, we defy traditional logic, and we’re not typecast.”
Mr. Press and Mr. Nardelli are the latest executives to bring management sparkle to Chrysler, which has long held a reputation as Detroit’s liveliest company. Indeed, Toyota and Chrysler have vastly different styles.
Toyota adheres to a set of principles known as the Toyota Way, which emphasize employee involvement and continuous improvement. The principles do not change no matter which executives are in charge.
Chrysler, by contrast, is more free-wheeling, and its direction generally depends on which strong-willed executive —Lee A. Iacocca, Robert J. Eaton or Dieter Zetsche are past examples — is in charge.
Jason Vines, vice president for corporate communications at Chrysler, would not disclose Mr. Press’s compensation, but said that he, like Mr. Nardelli, was being paid based on Chrysler’s performance. Private equity firms typically give executives a small salary plus a stake in the company. Their income can be tens of millions and even hundreds of millions of dollars a year, based on the firm’s profitability.
Mr. Vines added that Mr. Press was being encouraged to bring ideas from Toyota. “We’re going to borrow best practices from whomever,” Mr. Vines said. “We’re in this to win.”
Mr. Press, who was not available for interviews, said in a statement, “I relish this new opportunity with the Chrysler team to be a part of the resurgence of a true American icon here and around the world.” But he acknowledged, “This was the most difficult decision I have made.”
Indeed, Mr. Liker said, his success or failure at Chrysler will determine Mr. Press’s personal legacy. “It does sound very risky to me,” he said.
Whether Mr. Press can have an impact at Chrysler will depend on “whether they’re capable of thinking long term, whether they are capable of being customer-focused and whether they are capable of decision-making,” Mr. Liker said. “If they’re not capable, and he’s the only voice, he’ll get frustrated and leave.”
Nick Bunkley and Mary M. Chapman contributed reporting from Detroit.
2007.09.09 03:54 am
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