Hebe fired as Freightliner CEO

Schmueckle, a German, tapped

An analyst observes that DaimlerChrysler `has looked for scapegoats'

May 26, 2001|By BLOOMBERG NEWS

STUTTGART, Germany - DaimlerChrysler AG named Rainer Schmueckle yesterday to replace James Hebe as chief executive officer of Freightliner, the second ouster in six months of an American manager in favor of a German at a money-losing U.S. unit.

Hebe, head of Portland, Ore.-based Freightliner since 1992, had been cutting jobs and production capacity to reduce losses amid falling sales at North America's largest truck maker.

Freightliner and Chrysler, DaimlerChrysler's U.S.-based automaker, were major contributors to the corporation's 373 million euro ($333 million) first-quarter loss. The situation remains bleak for truck makers, with U.S. demand forecast to fall about 40 percent this year. Hebe's firing parallels CEO Juergen Schrempp's move to install German Dieter Zetsche at Chrysler in November, tightening his grip on the U.S.-based holdings.

"We've seen over the last few years that the company has looked for scapegoats," said Stephen Reitman, an analyst at Merrill Lynch & Co. in London. "There is no easy solution to Freightliner's problems. The liability is all the trucks currently on the market."

Zetsche, who had previously been in charge of DaimlerChrysler's commercial vehicle business including Freightliner, replaced James Holden at Chrysler in November. Schmueckle, who worked at Freightliner between 1994 to 1997 as chief financial officer, previously worked as chief financial officer of DaimlerChrysler's former Adtranz train unit.

Freightliner has cut jobs and production capacity to reduce costs as demand for trucks declines. "This program will continue under the new management," the company said in a faxed statement.

North American production of big trucks plunged 24 percent last year to about 255,000, from a record 334,000 in 1999, analysts estimate. They blame higher interest rates and fuel prices, fewer freight shipments, a glut of used trucks on dealer lots and overproduction of new trucks in 1999 and 2000.

The slowdown is hitting U.S.-based rivals as well. Navistar International Corp. said this month that quarterly profit fell 97 percent to $3 million, while Paccar Inc.'s fell 71 percent to $44.3 million.

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