Jim Press

When he jumped ship from Toyota to Chrysler last September, Jim Press experienced his fair share of culture shock. But now he’s up to speed and sowing the seeds of an American brand as president of Chrysler LLC. (January 2008)

jim pressPaul W. Smith: When I first heard that Jim Press was leaving Toyota after nearly 40 years, I didn’t believe it; I really didn’t. I said, “They’ve got the story wrong; that can’t be true.” Well, it’s true. Jim Press is now on the American side with Chrysler. How’s it going?

Jim Press: It’s really going well. There’s a tremendous spirit here and a great resource and a workforce that’s world-class, and I’m really excited about this opportunity.

PWS: How different is Chrysler from Toyota?

JP: It’s a completely different culture. Obviously, the roots of the company and the DNA is quite different, but … the business is the same. And when you put those two together, there’s some familiarity, and there [are] a lot of new things to learn, and I can see a great deal of potential and opportunity and a wonderful future here. I think that in some ways, Chrysler’s position, sort of on the global ladder of success in the auto industry, is similar to what Toyota was when I joined [them]. That was a long time ago, and it was an unknown company and a longshot, and frankly, didn’t have its level of success, really, for 20+ years. And I kind of think Chrysler may be in a similar situation, where the potential exists, but it’s gonna take us a little while to see it come to fruition.

PWS: And it seems that Cerberus is giving you that time — at least right now — to do what you have to do to get it in [the] right position.

JP: Yes, absolutely. I think one of the key differentiating factors here … when I joined Toyota, again, it was a private company. And we made a lot of decisions quickly, we were nimble, and we were focused on one thing — the customer — and making products [that customers want] better. And as the company grew up, and as I watched the industry … the bigger the company, the bureaucracies, the worrying about Wall Street and investors and a lot of those kinds of distractions really carried the companies away from focusing on the customer. Well, guess what — we’re back. This is a nimble, relatively small, all-American private company. Cerberus has given us a long-term marching order to create, as an American company, one that can compete with the global best. That’s the direction from the owner [and] all the way down the organization.

PWS: What would you say would be the single biggest difference between Toyota and — not just Chrysler, but the Detroit Three?

JP: Well, the decision-making process is a big difference. It takes us minutes to do what used to take months. And that’s in terms of a slow-moving organization that makes its mind up over a long period of time versus one here that’s action-oriented. And it allows you to be more focused on a mission and a lot less focused on the organization and the internal operation of the company, which I think, ultimately, will give us a big advantage.

PWS: So many Americans now buy Japanese cars, and so many of them have an affinity for Toyota. And unfortunately, so many of those people who have gotten in the habit of buying Japanese or other foreign makes don’t even take a look at our cars. [They] don’t even go and look at them and maybe test-drive them. What can you do to change that?

JP: First of all, [Toyota] is a great company, and their products are outstanding. There’s a reason that they have a strong presence in the market. But at the same time … a few headwinds are starting to creep up in terms of currency and the size of the company …

PWS: Could Toyota make the same mistakes as our Detroit Three made? Or have they studied us so much and taken all the good and identified the bad and avoided it?

JP: It’s not a company that’s prone to make mistakes. I think it’s a company that’s coping with growth and coping with size. It’s coping with issues of growth in different markets and focus that they won’t make mistakes, but it will perhaps give those of us here in North America an opportunity to get our own act together. I’m convinced of one thing — and that is that if you give consumers today a better product, better value, better quality than a car that’s made by an international manufacturer, then each time they’re going to decide to buy the American brand. Our company, you know — about 95 percent of our employment is North American. The other Detroit-based companies are hovering right around the 50 percent level or below. [Chrysler] is the only true American company, and it’s one where I think we can show that Detroit and America will compete with the global best.

PWS: Is there symbolic importance in the fact that Chrysler is back in American hands? And did that play a role in having you come back? You started in the American auto industry. … When I brought this subject up on [the] radio, including when I filled in for Rush Limbaugh, I got lambasted. I got e-mails from all over saying, “C’mon, Paul. Don’t be stupid! [Press is] going to Chrysler because they offered him a bushel basket of money.” [Perhaps] money was part of [your] decision, but I really sensed there was more to it than that.

JP: Absolutely. First of all, another one of the differences is that at Toyota the main motivation isn’t monetary; it’s more about contributing to society. And I see that from Cerberus, and I see that as an aspect here that makes this appealing. Also, it’s an organization that can benefit right now from some leadership and perspective from a different part of the business. It’s a chance to contribute in a way that I wasn’t able to when I was at Toyota.

PWS: How so?

JP: Well, at Toyota — I had a great career there. I owe them everything and [they helped me become] everything that I am. But after 37 years, I had moved into higher levels of the organization that were somewhat removed from the operation of the business, somewhat removed from creating the day-to-day decisions. And here [at Chrysler], I can get back into that. So it’s sort of like going from the sunset of my career at Toyota to another sunrise. And that, to me, is really exciting. I get to work with the dealers, I’m working with the product, I’m at the [design] dome, I’m at the test track … we’ve got our hands in the guts of the business, in the cars, and we’re on a mission to bring this company back to prosperity.

PWS: At a difficult time, when we look at what people are predicting for next year — fewer cars to be built [in the U.S.] … although global vehicle production is expected to rise to 73 million units in 2010, up from 65 million units in 2006. What can Chrysler do to grab as big a share of the estimated growth worldwide as possible? Where do you see your biggest opportunities?

JP: Well, first of all, it isn’t necessarily [about] being the biggest. I think that there’s probably room for a good-quality, high-value, well-regarded, well-engineered product built in America. And that reputation will precede itself as we move into the international market. Internationally, we have a great deal of opportunity. We do here in North America, as well. Internationally, though, outside of the NAFTA countries, our combined market share is about a half of 1 percent. So that’s an open, clean sheet for us, and it’s a chance for us to develop a distribution network, effective product-planning processes, design centers, and engineering centers in other countries that will allow us to both build vehicles for those customers and improve our global design and sourcing and manufacturing footprint, at the same time, to become a more effective global player. But we’re not on track to be as big as these giant organizations. We’re going to be a high-quality, high-value, very prosperous, very competitive global player.

PWS: Well, in terms of your size, it’s pretty [well-known] that you’re taking a look at your dealer network and that it needs to be “right-sized.” With Chrysler focused on cars, Dodge on trucks, and Jeep on SUVs, how do you determine which dealers will be either bought out or however you work out the franchise deals? … Various states have different franchising laws that are fairly stringent … These dealerships don’t represent just business and bricks and mortar; these dealerships represent families. And in many cases, generations of families; it’s a way of life. And that makes changing that … or taking it away from them even more problematic and even more difficult.

JP: Well, that’s very true, and the first thing we need to do is to make sure that we have a viable organization that can grow and prosper as we move forward, which means we have to live within our means. We have to live within our resources. And I think that in the past, the company’s strategic position was to grow itself to be a much bigger company. And so for that reason, the footprint, the fixed costs, the dealer organization had a much higher capacity. But the reality is, in terms of where the market is today, and the effective vehicles that we have covering the different segments that exist today, our true volume is close to what we’re doing right now, which is about half of what the previous company’s most-strategic growth plan was.

PWS: How many dealerships are there now?

JP: We have 3,700.

PWS: And what does your research tell you would be the ideal number of dealerships?

JP: Well, you know, we don’t have a plan. And I’d also like to make a point that this reported “plan” that was leaked out doesn’t exist. It’s basically a lot of speculation. We haven’t developed a long-term strategic plan yet, but we are trying to make sure that the resources, the footprint, the money that we can invest in manufacturing and in product development all should drive our future volume. And based on the product offering that we’re gonna have, the coverage of the market, the production capacity, and what our sales plan is going to be, it dictates a certain size distribution footprint.

PWS: So at this moment, there is no printed plan of consolidating dealerships or closing down dealerships?

JP: The company has been pursuing a project for a number of years to combine individual brands into one multi-brand. You take a Dodge, a Chrysler, and a Jeep dealership in a particular market area, and they’ve had a program to encourage — of those three — one corporation to be formed and to absorb all the franchises up into one. They have been doing that, and that process is continuing. And it’s not a massive project that [involves] an end date and a certain number of dealerships. But … now we’re going to add to that a strategic product-development plan and a manufacturing footprint so we know how many models we’re gonna have and what brand coverage and what our capacity is gonna be. And from that, we’ll have a better understanding of how big the dealer body needs to be. And with that in mind, we’re going to go with the dealers and, in concert with [them], develop tools and information strategies to begin to migrate to a dealer organization that reflects the needs of the market and that fits within our size capacity and fits within the number of units that we’re going to be able to build and the number of models we can develop.

PWS: In the past, oftentimes dealers would have to buy vehicles as they were produced, not necessarily as they were wanted or ordered. They took vehicles they sometimes knew weren’t going to sell very easily in order to be able to get the vehicles they knew would sell easily. What have you done to fix that? Is that in place now?

JP: Yes. One thing we did is we took a lot of capacity out. We’ve reduced the shifts in some of our plants and some of our fixed costs have been reduced, and we’ve been able to adjust our production capacity to be closer to what customer demand is. And we’re turning around the system of our company … we’re going to focus on customer-first retail, giving the dealers the cars customers want and letting them retail them instead of [our] past practice, which was basically to build what was best for the manufacturer and make the dealers take those vehicles and figure out how to sell them to the customers. That process didn’t work very well; it’s not customer-first. And now we’ve begun to … reverse that process, and it’ll be driven first by customer demand. And that has already started. We’re not building sales bank vehicles, we’re not building cars that aren’t ordered; we’re taking production levels down. We took about 80,000 units out of our production plan for the quarter. And you talked about the time it takes … it took [us] about seven minutes in a conference. And it was the right thing to do; it would’ve been units that would’ve been forced onto our dealers’ lots. We don’t want to push our cost to the dealers; we want to be able to help dealers create profit. That’s the enterprise; that’s the idea. We need to have the right number of dealers that have the right organization so that they can have great profits and a very valuable franchise. That’s our objective, and if we can do that — putting our dealers’ interests before our own — we will be taken care of eventually. And the dealer will be putting the customers’ interests in front of their own interests.

PWS: Cerberus has been investing in the auto industry for a long time, including a majority position in GMAC. … Does Cerberus continue to let you guys run Chrysler and really only spend minutes at a time when you have to make a big decision and they want you to run it by them? Or are they getting more and more involved?

JP: No, they’re not hands-on; they’re wonderful owners. They understand businesses and they ask the right questions to make sure the business has the right structure and that we’re doing the right things strategically and financially … They know what they can do to help and they know how. It’s like working with a company that has a ton of consultants. We need help in certain areas; they’ve got ’em. I mean, heck, [they’ve] got John Snow and Dan Quayle and … the level of capability that they bring is tremendous, and it’s not operational, but it’s a wonderful complement that no other company has.

PWS: Speaking of Washington, what do you think of the latest 35 mpg goal?

JP: Obviously, it’s a challenge that everybody recognizes, but the auto industry in total is ready to accept its share of the burden for CO2 responsibility in a program that is consistent with other sectors of the industry that will also carry the burden, from the producers all the way through to the consumers … One thing I should mention, Paul, is that the products here are so much better than people give them credit for.

PWS: That’s why I want you to put them in the car-rental places, loaded, take a loss … put your best vehicles in the car-rental fleet so that people who would [otherwise] never drive one of these things get in one, drives it, and says, “That’s a great car.”

JP: They will be so amazed; these cars are so good. I was talking to a guy about the [Chrysler] Crossfire recently. He said he looked at the Crossfire and wanted to buy it, but he just couldn’t because the interior just didn’t seem to be the quality he wanted. So he went and bought the Mercedes SLK … It has the same interior! So it’s a perception issue. Our cars — the 300, the Charger … the Charger gets 27 miles per gallon. It’s a huge car; you can put a Camry in its trunk. I mean, we’ve got great value and great quality, and because our products are so underappreciated, I have a lot of confidence in the future for the company and for our dealers and for our team members.

PWS: How many meters did you swim today?

JP: I put in about 3,500 meters this morning.

PWS: Good luck to you with your leadership.

JP: Thank you, Paul.

Paul W. Smith can be heard weekday mornings from 5:30 to 9 a.m. on WJR-AM 760.