Juergen Schrempp

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Juergen Schrempp

Throughout his professional life, Juergen Schrempp (born 1944) has been willing to make bold decisions and take big risks. After being named chairman of Daimler-Benz, Germany's largest industrial company, he slashed ten percent of its workforce, eliminated unprofitable business units, and set ambitious goals for the future. Schrempp is credited with transforming the ailing giant, which had suffered record losses, into a profitable venture. It is hoped that he will accomplish similar success as cochairman of Daimler Chrysler.

Juergen Schrempp was born on September 15, 1944, in the small university town of Freiburg, in southern Germany, at a time when World War II was still raging throughout Europe. His father, a clerk at the university, was able to provide his son with the comforts of a middle class life. Schrempp went to parties in high school, enjoyed skiing, and played the trumpet. True to the spirit with which he would eventually run billion-dollar corporations, he decided that he was having too much fun and should, therefore, drop out of school. At his father's suggestion, he began to learn a trade. Schrempp was 15 when he joined Daimler-Benz as an apprentice mechanic. "I learned to do the most with as little effort as possible; I still do," Schrempp commented when he discussed his early years in the auto business in a Business Week, article of November 16, 1998.

From 1974 until 1982, Schrempp ran South African operations for Daimler, and enjoyed the relaxed lifestyle of that continent. His next assignment was to deal with Daimler business operations in Cleveland, Ohio. He was able to rid the company of its troubled truck unit, Euclid, and enjoyed the casual American environment. In 1984, Schrempp returned to South Africa as vice-president, then president of Daimler. He used his position of notoriety to speak out against apartheid, the legal separation of races then practiced in South Africa. Years later, Schrempp was named the South African Honorary Consul-General in the German Federal States of Baden-Wuerttemberg, Rhineland-Palatinate, and Saarland by South African president, Nelson Mandela. He was awarded the Order of Good Hope in 1999, in recognition for his outstanding service to South Africa.

Bold and Friendly Wins Big

Many Germans, especially those connected to the success of Daimler-Benz, were concerned when Schrempp took over the reins as chairman in 1995. He had gained a reputation as a fun-loving daredevil, and they wondered whether such frivolity was conducive to running the solid and somber German institution. Schrempp was determined to act on the devastating losses his company had endured by buying too many companies without enough concern for profits. Schrempp began to develop his strategy when he noticed Daimler's listing on the New York Stock Exchange. He set up accounting practices that would make the severe losses apparent to everyone, particularly foreign stockholders. When investors wanted to know whether they would earn any return on their investments, Schrempp became an evangelist. He began advocating the need for continual change if a business was to prove profitable. He also preached honesty, that others sometimes found brutal. Early in his tenure as head of Daimler-Benz, Schrempp announced that each division of the company must realize a 12 percent return on all capital investments. Only five months after the previous chairman, Edzard Reuter, had indicated a company turnaround, Schrempp announced a loss of $1.1 billion during the first half of 1996.

According to the AFL-CIO website in 1999, Robert Eaton, chairman and chief executive of the Chrysler Corporation, earned a salary eight times that of Schrempp. This was not an isolated case. American executives tended to out-earn their European counterparts by vast sums. While Schrempp held a more conservative European approach to business in some areas, he continued to pursue the American method of cutting costs in order to make operations run more efficiently, both for production and finance. Still, Schrempp always identified with workers rather than corporate management. His brashness and irreverence toward issues considered sacred to corporate boards, stood him well with those he managed. With his background as a lowly mechanic, Schrempp understood the importance of meeting his workers on their terms, in their own offices rather than mandating their appearance before him. Managers at one of the Black Forest (the region of southern Germany) factories let Schrempp know that they could not make the 12 percent return he was requiring. He went to the works council himself. A few beers and some persuasive discussion did what the managers had been unable to do: he got a commitment from the workers that they would get the return he wanted. On November 27, 1998, the Financial Times named Schrempp to the number three position on their list of the "World's Most Respected Business Leaders," following Jack Welch of General Electric and Bill Gates of Microsoft.

Rebel With Many Causes

Schrempp remained pleased with his reputation as a rebel, while he remained determined to rise in the world of business and corporate boardrooms. In discussing the changes in German business, he told Forbes in April 1996, "Germany is becoming somewhat more like the U.S. The first priority, in order to be able to look after social issues, is that you have to be profitable." Schrempp had created Germany's first downsized company that resulted in enormous profits to stockholders when he distributed Daimler's hidden reserve of $5.63 billion in a one-time pay out. According the Holman W. Jenkins, Jr. in The Wall Street Journal, on June 10, 1998, "Under German law, the pay out was done tax-free. Daimler became an honest woman, and German capitalism [would] never be the same."

Schrempp preferred the company of artists and others who were not in the business world. He seemed to create a balance between his private and work life. His commitment, particularly to the cause of economic development in South Africa, showed that this man of constant surprise cared about improving the lives of all members of society, not just the corporate bosses and wealthy investors. In an age when executives change jobs frequently, Schrempp remained loyal to the one company which gave him his first real opportunity at the age of 15.

Further Reading

Business Week, February 10, 1997, p. 52; November 16, 1998, p. 83.

Detroit Free Press, May 8, 1998.

The Detroit News, January 8, 1999.

The Economist, March 16, 1996, p. 72.

Forbes, April 22, 1996, p. 165.

The New York Times, January 26, 1996, May 8, 1998; April 1, 1999; November 18, 1999.

The Wall Street Journal, May 8, 1998; June 10, 1998.

The Washington Post, May 8, 1998.

CNNfn, the financial network. "Car bosses in unison," (February 1, 1999). Available at: http://www.cnnfn.com.

IQuest, January 8, 1999. Available at: http://www.iquest.html.

Panafrican News Agency. "Mandela Departs for Germany."Available at: http://www.aaafricanews.org/PANA/news/19990128/feat4.html. □