Manufacturing expert hopes to build on U.S. gains

By Jeff Green
Bloomberg News

DaimlerChrysler AG's promotion of Tom LaSorda as head of U.S. operations underscores Chief Executive-designate Dieter Zetsche's ambitions to catch Toyota Motor Corp. in quality and extend sales gains.

LaSorda, 51, Thursday was named head of Chrysler, the No. 3 U.S. automaker. He replaces Zetsche, 52, who returns to Germany at the end of the year to succeed the retiring Juergen Schrempp, 60. Schrempp, the architect of Daimler's 1998 acquisition of Chrysler Corp., dispatched Zetsche to the United States five years ago after the unit foundered under U.S. leadership.

"He's done an excellent job at improving manufacturing," said Rebecca Lindland, an analyst for Lexington, Mass.-based Global Insight Inc. "I think it's very telling that they put him in charge. The American strength is in manufacturing."

LaSorda, who spent 23 years at General Motors Corp.'s manufacturing arm, has been Zetsche's point man on a pledge to match Toyota, Honda Motor Co. and Nissan Motor Corp. in efficiency and quality by 2007. Chrysler has cut the time needed to assemble cars and reduced the number of customer complaints with its vehicles. The company still trails its biggest Japanese rivals in those measures.

LaSorda has improved the overall efficiency of Chrysler plants since taking over manufacturing operations in January 2002. The amount of time Chrysler needs to build a car or truck has been trimmed by 19 percent over three years, the biggest gain in the industry, according to an annual study by Harbour & Associates of Troy, Michigan. Toyota, Nissan, Honda and General Motors Corp. rank ahead of DaimlerChrysler in that measure.

Chrysler cut the number of problems reported in a J.D. Power & Associates survey of 3-year-old cars and trucks by an average 31 problems. The study, released in June, hadn't yet measured models built after 2002, when many of LaSorda's initiatives began. Chrysler's brands have about 30 problems more than the industry average of 237 problems per 100 vehicles.

In a study of quality after 90 days of ownership, as measured by J.D. Power, Chrysler's brands have from two problems to 12 problems more than the industry average of 118 problems per 100 vehicles. Toyota's Lexus luxury division leads the industry with 81.

Chrysler's Jeep, Dodge and Chrysler brands improved an average 11 percent from 2003 to 2005. The average initial quality gain for Toyota and Lexus in that period was 3.3 percent.

Zetsche and LaSorda used nine new products last year to gain U.S. market share for the first time in five years. Zetsche said that the unit will gain share again this year and will introduce at least 10 new models in 2006. Chrysler gained U.S. sales last year, while General Motors and Ford Motor Co. declined, and has gained sales and market share in the first half of this year, too.

Zetsche cut costs by more than $8 billion and eliminated 40,000 jobs. The reorganization helped Chrysler post profits in 13 quarters since 2002.

DaimlerChrysler is relying on LaSorda and his team to continue Zetsche's record of profitability and market share gains after the luxury Mercedes-Benz unit posted its first loss in 13 years in the first quarter. Mercedes had an operating profit of 12 million euros ($14.6 million) in the second quarter, while Chrysler had a $658 million gain.

LaSorda joined Chrysler in May 2000 to run the engine and transmission unit. He helped initiate a program that required engines to be tested until they broke instead of setting a mileage limit for the tests. The resulting longer-lasting engines allowed Chrysler to offer an improved engine warranty in 2002 without added cost, he has said in interviews.

LaSorda laughs when asked about sharing his name with the former Los Angeles Dodger baseball manager, a frequent question from strangers. His grandfather, Aurelio, was born a few miles from the Dodger manager's hometown in Italy, near the Adriatic coast. They might be distant cousins, he said.



-Matt-