A New Driver For Mercedes-Benz?
In the corridors of power at DaimlerChrysler's (DCX ) Stuttgart headquarters, the bets have been placed, and the buzz is intense. Insiders say the front-runner to succeed Mercedes-Benz (DCX ) boss Jürgen Hubbert, who will retire by next spring, is Eckhard Cordes, the head of Daimler's commercial-vehicle unit, which ranks No. 1 worldwide with $35 billion in annual sales. The jockeying for power at Germany's leading industrial group isn't over, and a dark-horse candidate may yet win the job. (An announcement is expected within weeks.) Still, Cordes' rehabilitation of the truck, bus, and van business has put the 28-year company veteran in the spotlight.
Whether or not he becomes Mr. Mercedes, Cordes, 53, remains a strong contender to succeed embattled DaimlerChrysler Chief Executive Jürgen E. Schrempp, 59. During a turbulent 2003, when big losses at Chrysler and Mitsubishi Motors pushed Daimler's net profit down 91%, Cordes steered the commercial-vehicle unit to a $1.1 billion operating profit after two years of red ink. Even in April as angry fund managers called for Schrempp's resignation, several singled out Cordes for a job well done.
Cordes' turnaround in commercial vehicles could give him an edge in the race for the top job at $64 billion Mercedes-Benz. The premium Mercedes unit generates 55% of DaimlerChrysler's operating profit, but is now struggling to keep its top-dog status. Mercedes' sales fell 3.3% worldwide in the first half of 2004 as BMW edged ahead. Quality problems continue to tarnish a once-impeccable image, and insiders say Chrysler and Mitsubishi have drained the management talent and resources needed to keep Mercedes out in front. On July 12, Hubbert announced Mercedes must cut $620 million in production costs or transfer manufacturing of the new C-Class car to Bremen, Germany, or South Africa, a move that would wipe out 6,000 jobs in Stuttgart. "The cost-cutting drive at Mercedes is now serious," says one auto consultant, noting that Cordes has proven he can wield a knife.
When Cordes took over at the truck unit in late 2000, Freightliner, the group's huge U.S. operation, was skidding into the red. As the U.S. truck market shrank by some 50%, Cordes shut three plants and halved the workforce in two years -- all without a major union walkout. "Our target is crystal clear. It's not to go after additional market share. What matters is the bottom line," he says.
Close associates describe Cordes as an unpretentious manager in a landscape of oversized egos. But he is also politically savvy. Despite the heat Schrempp took over the merger with Chrysler -- a deal Cordes helped engineer -- he remains loyal to his boss. During a boardroom battle in May over a bailout for Mitsubishi, Cordes was one of the few who backed Schrempp's bid to recapitalize the Japanese carmaker. He still argues the merger with Chrysler can deliver gains from a globe-spanning presence. "Nothing really went wrong," says Cordes, though he concedes that "perhaps we raised expectations too much."
Cordes' loyalty could help in any maneuvering before his boss's departure. Schrempp is still in command, but insiders say he'll likely step down well before his contract expires in 2008. True, Cordes has spent most of his career poring over balance sheets and vetting acquisitions: He has only been directly responsible for profits at the truck unit. And as the board member in charge of Asia, he bears ultimate responsibility for the Mitsubishi debacle. But there's no question he threw himself into the truck business. Twice a year he drives some 400 miles behind the wheels of seven-ton rigs to test his own products against those of his rivals. Keeping a monster vehicle under control -- that's a good metaphor for a top CEO's job.
By Gail Edmondson in Stuttgart