Engineering the Neon — and why Chrysler can’t do it in 2008
The PL (Neon) was started out of the JTE (AMTech, at the time) replacement for the Renault Alliance. When Chrysler bought AMC, the PL people, who came from the old L-body (Omni and Horizon) group in Highland Park, merged with those AMC guys and the idea was changed from a "square" 2 box car to a 3 box much more modern design that Tom Gale's guys had penned (literally, since Alias and CATIA were still in the future for the corporation as a whole).
Attention was paid to efficiency in the original vehicle. The Neon was Iacocca's answer to the statement that American auto manufacturers could not build anything decent to compete against Japanese cars. The Neon was to show just what Chrysler could do (what all of Chrysler could do, not that the fights between ex-AMC and ex-Chrysler guys had slowed down at the time). Lightweight, fuel sipping, powerful, comfortable in an American manner, yet to cost no more than a bit under $4,000 to build, with a retail sales price of no more than $8,000.
While these targets were not hit squarely — the intro retail price was around $9,000 — considering inflation over 38 months, this was not considered a failure. The Neon passed all its crash testing the first time, or with minimal rework. This is not to say it was perfect, but it did pass quite well. Fuel economy, even with the ACR high powered engine, was better than cars with similar hp ratings from the Japanese manufacturers. The ACR version of the Neon, advertised in the general press only in its first year of availability (this does not count advertising in Grassroots) continued to win its class, until it had dominated so heavily, the SCCA started allowing (in my opinion) questionable addons for other cars, to give a more "equal chance" of winning to them.
Unfortunately, Eaton had replaced Iacocca before the launch of the Neon, and demanded several changes that were the undoing of the car in the public eyes including the exhaust donut and head gasket. About $2 saved per vehicle (over $2,000,000 total), but more was lost in customer value.
On the JA (Stratus/Cirrus/Breeze) side, the LH (Intrepid/Concorde/Vision) was already under way at that time and studies were being done by Tom Gale's people on the LH second generation replacement. The cab forward styling was decided to be implemented more aggressively for the LH stage 2 (1997 cars - this was in late 1992-mid 1993 as I remember), so the JA was to preview the second generation LH styling applied, which was given high marks by public testing clinics in late 1991, 1992, and 1993.
When JA was released, it was selling at almost twice the projected rate and Sterling Heights Assembly was hard pressed to keep up. Eaton's cronies were overjoyed and decided to start extra cost cutting on this car also, since the Neon had already saved $2 million+ for the company (this was before the hit from the major failures). It was felt that JA could be distinguished enough to be able to offer a version of JA for each of the three car divisions, and have minimal cross shopping. At the time, the car buff mags agreed and so did the buying public.
Chrysler was on a roll......
Then came 1998. And we all know what happened then. All programs were stopped for review and reconsideration.
1998, the year of the "merger of equals."
In 1998, the Neon was in its second generation (in engineering), the JA was almost ready to be "put to bed," and the LH third generation—the LX— was almost ready to be design-concept frozen.
Although billed as a "merger of equals," the net result was almost immediate infighting between the transferrees and the hometown boys. In a few areas, arrogance was replaced by an admirable level of competence (I was consulting with the Technical Computing Center — the IT group of Vehicle Engineering) but the general reaction of the Germans was to look down their noses at the "less capable" Americans’ efforts to design a truly mass market vehicle.
Dieter Zetche and Wolfgang Bernhard were not of one mind on this with the rest of the German staff. Zetche came in after the initial "uber leader" was transferred to Freightliner to "clean up that mess" and Dieter brought Wolfgang with him to play good cop/bad cop in "straightening out Chrysler."
Although the popular press had ignored the warnings, internal people knew that Chrysler was heading for a massive outlay of warrenty cost repairs due to the cost cutting done and enforced by Bob Eaton's cronies. PL, JA, LH were all plagued by parts problems such as air conditioning, power steering racks, transmissions, head gaskets, exhaust leaks, etc. that were starting to show up on an unprecedented scale. Engineering scrambled to fix the issues, but with the budget constraints imposed by the Eaton crowd, and later by Daimler, little more than bandaids could be applied. The trickle of people getting fed up started in earnest.
In view of all these "insurmountable problems," the Germans instituted several policies that lead directly to the implementation of poor decisions, poor design approvals, and most importantly, poor quality and durability.
In came "quality gates" and forced direction.
It became apparent that there was a fundamental difference in the manner of people at Chrysler and those of Daimler (note-I am not saying specifically Mercedes for a reason. Mercedes was a unit of DCX, as was Chrysler). On the positive side for Chrysler (this is before the "merger"):
1. Vehicle engineering, manufacturing, and vehicle design (styling) were tightly integrated, leading to very fast turnaround times for a new product. The Dodge Durango was done in 18 months from approval to production. PT Cruiser was done in 24 months, which led to the first major conflict-more on that later.
2. Purchasing was subserviant to engineering, although the approval process to bypass purchasing selection and override it by engineering was complex and slowed the design process tremendously.
3. Chrysler styling, under Tom Gale, had achieved the type of approval from the marketplace that had not been seen since Bill Mitchell of GM. Gale could do no wrong and each product garnered more approval for the styling in each successive car. All were on target for exactly what the customer wanted, and the customers responded by putting their collective money where their eyes were.
The downside of this process by Chrysler:
1. Shooting from the hip. Many changes were made and approved at a low level of management. This could have worked fine—because the person designing and engineering the part—whatever that part was— knew the most about it....in theory. The problem was one of experience. Because the corporation had expanded greatly in responsibilities for the individual engineering staffs, people without the necessary experience to judge values and performance were promoted beyond their capabilities, and, as a result, quality suffered from too much concentration on price, not functionality. This shooting from the hip was required due to the pace of the process. When a decision had to be made, Bob Lutz impressed on the corporation that it was to be made then, not after endless consultations with others to build a concensus, which slowed down the development cycle.
2. Concentration on “cost to the corporation,” not “value to the customer.” Under Eaton, engineering approvals were often stopped in their tracks when Purchasing went to upper management with the complaint (paraphrased here) "Engineering is wasting money on unnecessary items." The air conditioning fiasco in the LH is a perfect example of this. Engineering specified a system capable of cooling and heating an interior that contained much more glass, due to the cab-forward design, to provide the coldest possible cooling and highest heat in under 5 minutes of engine run time. This required a system capable of cooling at, as I remember, an extra 12,000BTU/hr over the comparable GM, Toyota, Honda, and Ford systems, which were used as a cost basis for comparison. As this example was related to me, the little catch was that extra glass requirement that Purchasing carefully left out of their analysis. They concentrated on a strict cost comparison and ignored performance. We all know the end results of that little argument and decision.
The positive side of Daimler (in perceptions from this side of the pond):
1. Mercedes had the reputation of building vehicles which regularly went 250,000 miles and more, could handle climatic conditions far in excess of US domestics, and most importantly, stayed together without failing from rinky tink parts falling off. The epitome of the Mercedes, was from Chrysler's standpoint, the venerable W126 body, which was used for everything from million mile taxis in the Mideast, to the top of the line luxury cars in the EU and Americas. After all the problems in the late 1970s with the Volare/Aspen, Chrysler needed to have an MB 220D type vehicle for its stable to outdo the Valiant as "everyman's car."
2. Mercedes had access to varied and diversified advanced engineering groups. Like Chrysler of the 1960s, Daimler built everything from civilian passenger cars ,to aircraft, to spacecraft, to trains, to power systems development, to pure research labs (that did nothing but "think" and come up with "stuff"). This diversification was thought to insulate Daimler from periodic downturns of the automotive industry (they were to find out differently).
4. Daimler had a specific quality control system in place for Mercedes that was the given reason for the high quality of their cars. Eaton wanted this desperately because of the problems of his system. [Webmaster note: this system involved massive testing and rework, and was economically unfeasible for Chrysler.]
I have no direct knowledge of the New York discussion that went on in private between Chrysler and Daimler execs. That has been covered extensively by the guys from the Detroit News, Bob Eaton, and even Iacocca's memoirs. Suffice to say, it appears now that there was a lot of "shining on" going on, from BOTH sides.
Daimler (specifically Schremmp) had to know what was going on at Daimler-Benz and that the war chest that Chrysler was sitting on was the golden goose, ready to be cooked and eaten. Nothing else of Chrysler had any real value to Mercedes, except for flexible platform design and development. An outgrowth of AMC, it represented a different manner of thinking. At Mercedes, each car was developed for a specific set of conditions, with no thought of parts sharing across models, under the theory (or assumption) that the customer will pay for whatever Mercedes produced. Engineering, not the customer, mattered.
Chrysler has, on the other hand, centered all product development and design around what the marketplace was demanding and was expected to demand in the future. Flex allowed Chrysler to respond quickly to problems, as long as budget was there to perform. With all the Cost Savings programs, joined under the SCORE heading, Chrysler was saving money for the next cycle downturn... which was fast approaching. I must give Eaton credit here... the corporation could survive a long time on $8-$12 billion dollars. Future development was assured.
[See the PT Cruiser example]
When Daimler people came across the pond, it became apparent that things were going to change—they were the "saviors" of Chrysler [which at the time was immensely profitable] with their "superior technical knowledge" and "superior marketing knowledge." The first hit I know of was the elimination of the SCORE program Chrysler had so successfully used to involve the suppliers to reduce the components individual costs.
The SCORE program is covered well here on Allpar, so I will not belabor all the points. See:
- Overview of the SCORE program
- Specific application of the SCORE program
- Tom Stallkamp, the man that made SCORE work for the corporation against all odds and interferance
I will however, re-emphasise one point (my paraphrase):
"By involving the supplier in the INITIAL design of the vehicle, KNOWING they were going to get the business and any saving they could bring to the table up front was going to be shared EQUALLY with the supplier, turned the supplier into a Chrysler design, engineering, and manufacturing partner and extension, by default, with as much to lose as Chrysler if a mistake was made or subquality parts were used."
Mercedes people, when first viewing the PT Cruiser and its engineering, were aghast at the "sloppiness and shortcuts" (a quote I was given by one of those Chrysler people present at that design review), and the program was halted within the span of a week. Hard tooling was ready to be built to put the vehicle into production, but none of that mattered to the Germans. The car did not meet their standards and never mind the customer. "We know what the customer needs" was a favorite saying that was used to justify the decision and the opinions of the Americans were politely listened to...and promptly ignored.
The net result was that every piece of the car was scrutinized for deviation from the Mercedes Design Standards Manual (yes, a real book, just like the Chrysler Design Standards references in CATIA and in hard copy—this was the collected experience of Chrysler since the 1950s on "how to build a car and what to use.")
The same design review of the PL (Neon) itself resulted in the same end. Same with the LX. Same with the BR (Ram). All of the programs were stopped dead in their tracks and every part, no matter how close to production, was placed up for review. Crash test results were no longer to be acceptable, but rather had to be the "best" without defining what the word "best" meant. This inability, or perhaps disrespect, to the Chrysler guys’ experience, to define the term went against everything that had been instilled into every Chrysler employee since 1989, the introduction of the Quality Improvement Process headed up by Lutz and Stallkamp.
The good thing that came of this were things like adapting the E Class suspension geometry to the LX (funds had set lower requirements for the original) and for a while, things were taken in stride by the Chrysler engineers and other employees. This also included the jobs going on at JTE (then renamed PROC- Plymouth Road Office Complex) and the team that did all the trucks, both Jeep and Dodge, was split up.
However, a problem started to be noticed by the Chrysler people. Any time any American said "no," that person was gotten rid of shortly thereafter, regardless of position or experience. Discouragement accelerated and the top staff started leaving in droves. People that were instrumental in the development of the "fun" in the cars of Chrysler (guys like Neil Hanneman from Viper) had enough of the disrespect and browbeating from Daimler.
Daimler’s “quality gates” process was supposed to provide a stop point for the vehicle design concept, engineering, tooling, and manufacture to review the work to ensure the design met all the program requirements at each stage of the process. No gate could be passed until the review board approved the work. Once passed, no decision was changed, regardless of supporting data pushing for a change or revision.
From a theoretical standpoint, the idea was good. The downfall was in the implementation. What the review board said went... which was totally against the Chrysler approach of "give the responsibility to those that perform the job." No project could pass a gate without approval, and a manager that exercised control over his people was rewarded, much in the same manner as feudal warlords, by their Daimler masters. Managers that excercised personal initive and free thought that went against the "party line" were removed from the decision process.
This, combined with the earlier promotion of inept and incompetent managers (those not capable of designing and engineering a vehicle, but were politically astute enough to be good at CYA) led to the rapid decimation of those most qualified to bring Chrysler out of the doldrums—the top 20 percent of the independent thinkers that Bob Lutz, Tom Stallkamp, and Francois Castaing had so carefully nurtured (they could be the biggest jerks anyone could imagine, but they gave an engineer enough rope to hang themselves if the engineer was not technically competent—personal attitudes didn't count against anyone in their view-everything was abbout the product) to be independent and provide the best results for any given set of circumstances at the least possible cost, regardless of political and personal power. You could call it the Chrysler Way...entrepreneurship of classic sense and meaning. Each engineer was responsible for his own work and its interface into the total vehicle, not having a review board that could arbitrarily reject any work simply on a whim, as was done under Daimler.
Dieter Zetche and Wolfgang Bernhard, after the 2004 Durango fiasco, learned this the hard way and tried to open up certain areas to the Americans to show what could be done by these Americans that were "so incapable of doing anything properly" (such as the ME Four12 which could run circles around the much pricier McLaren/Mercedes project of the same time), but this was inimical to the method of business favored by most of the Daimler people at Chrysler, as well as by the Supervisory Board in Germany. Both these excellent managers, Dieter and Wolfgang, were in "hot water" continuously with their supervisors due to their gradual understanding of and attempts to return to the Chrysler Way of doing business. Daimler management was a strict hierarchy, not to be trifled with under any circumstances.
The quality gates and rejection of the PL, JA, and JS platforms as inadequate to meet the Daimler requirements (no mention was given to the customer, except in passing, as an excuse to divert blame) was what led to the forced joining of the Mitsubishi and Chrysler small car programs (and to the decimation of the Small Car Platform team in the first of two massive program layoffs at CTC, ostensibly for "economy of efforts"). This is where most of those 2000 design and engineering layoffs came from —the Small Car Platform Team. Because the design staff at CTC was unionized, there were enough other layoffs that the US Government's Department of Labor, if called into play, could be diverted from the real reason these people were gotten rid of — they were "troublemakers and disloyal" to the hierarcy.
The quality gate system did not have any provisions to alter a previously made decision, based on new information. Communication to protect one's own fiefdom was rampant throughout the remaining staff of the corporation. In came Mitsubishi engineering, at the direction of Daimler (which appeared to be unaware of the warranty coverups that would later cause problems for Mitsu and lead to the firing of Wolfgang) and their new platform to replace the Chrysler small car team.
The Mitsubishi small car was not bad. It was economical, easy to assemble, and used relatively cheap parts. The remaining design engineering staff had been ordered to adapt the Mitsu platform (a platform is a set of dimensions—not a set of parts) to the new C and D class cars.
At the same time, Daimler was forcing a change to CATIA v5 onto Chrysler. Moving to v5 of CATIA may sound like a small change; in simple terms, v5 went back to v3 methods of generating data to design the vehicle, under Mercedes-developed operational rules-the manner of data organization, the manner of using the functions, etc. This is one of the problems Freightliner is painfully undergoing right now with v5 and Mercedes Truck IT.
There was one catch—v3 had been out of the picture since 1990/1991 (when I was still a direct Chrysler employee) at Chrysler, and the people that knew how to use v3 simply did not exist any more—v3 was obsolete. There were not enough trained engineers within Chrysler, not within the Metro area, not within the US, not within the world, in the quantity needed. On top of this, the software was notoriously unstable and did not "co-operate" with previously generated v4 data (Daimler was to soon find this out in a public blowup on the Airbus super airliner, the A380, through EADS, to which the Airbus program has still not recovered).
To use the mandated v5, you had to train all the people involved how to use the tools, including the people that trained others, all over again, including the inherent mistakes (not intentional ones, but I am sure that was also an issue, due to the overbearing attitude in mandating this software) that come from the learning curve of the tools you were expected to use. A group of people were brought in from the aerospace industry (Boeing, primarily) and dumped into the needed design positions, but these poor guys had no idea what they were getting into.
The net result was the programs (both C and D cars) failed miserably, due to the combination of CATIAv5, program management’s lack of direction and irreversable points and decisions, incompatible and incomplete understanding of requirements of the tools and program, incompatible manufacturing parameters (Mitsu vs. Chrysler methods), and had to be completely restarted (for the design process—the development mule data was still valid, up to a point).
To be usable most 3D data had to be totally rebuilt —none of which helped the image of the Americans to the Germans. Fingers were pointed and as usual, the German fingers were longer, causing those that raised the most ruckus, the people in TCC that knew and told everyone in management it would not work, to be "absorbed" into the main IT group of DCX...a group of PC weenies that had no idea how to build a car. TCC (Technical Computing Center) was made of guys like me (design engineers) that had been later trained in the computer "stuff" to be able to provide Vehicle Engineering, a support group that understood, not only how to design a vehicle, but also how to explain the tools to the end user, provide training, and help out in small projects. For comparison, TCC was, at best, a group of maybe 150 people, versus all of Vehicle Engineering of over 6,000 people. TCC simply did not have the staff to perform as a complete design group.
The point to all this is the redesign of the Stratus and Sebring (as well as the "new" Caliber, Compass, Patriot, etc.) was done on the fly and in a much shorter time than Daimler had allowed, but still, it was not enough time to redo everything that needed to be "fixed" on the cars. Chrysler guys knew it (the few that remained and stuck it out), Deiter knew it, and the DCX board was made aware of it. They would never gain the level of control that they wanted, so they gave what was left of Chrysler away—so they could say it was all someone else's problem.
The terms rape, pillage, and plunder really do describe the mess that caused probably the most noted destruction of a carline ever.
Now, Cerberus has the chance to do it correctly....and everything I hear is that they are trying, but it will not be an overnight fix.
Questions and answers
Why can’t Chrysler create a “new Neon” now that Daimler has left?
The amount of work that is in process versus the amount of work required has to be balanced against the knowledge level of the available staff and the physical numbers of people that can do the work. After all, there are only 24 hours in a day.
A single, complete program, from start to finish, will take a body count of approximately 1700 and 1800 dedicated people through production. This is including all the diciplines from engineering and design, through legal, management, support, manufacturing and production, but not including physical plant support (I am assuming here there is a plant available to build the car or truck and the staff in available-a new facility roughly will double the costs of a platform). Currently, I know several people in the upper levels of CTC that are working on a minimum or 3, others working on 5 or 6, programs at one time.
As announced today, Chrysler is eliminating another 1000 people worldwide from this white collar workforce— engineering, support, design, management, etc. You cannot expect Cerberus management to dictate 38 hours of work per day and reasonably expect it to be done. Priorities must be decided and acted upon. You would have to ask yourself (assuming you would be in the position of this management), "what offers the most return on our investments made so far", "what provides us with the most long term return," and, finally, "what upcoming regulatory effects will be in place in both the near term (5 years) and long term (15 years)?"
As always, it comes down to the most improvement for the least cost first, then approach the long term benefits and developments, all without losing the momentum achieved since the "dismemberment" of the corporation from Daimler management and financial controls.
Q: What happened to the "final tuners" who set up the feel of the PL, JA, and LH? Were they still around for the PT?
The final arbitors of any vehicle’s "customer feel" is Vehicle Development Group, which was then part of the Platform Team (insert a link to Allpar info on Small Car Platform, Jeep-Truck Engineering, Large Car Platform, and Minivan Platform groups). Each group had its own dedicated vehicle development group that optimised each vehicle's handling and road feel. There were also a lot of cross-group transfers between the platforms to ensure that the nebulous "Chrysler Corporate Feel" was as close to constant, across all vehicles, as possible.
When Daimler came in the picture, some were laid off, or driven out, or shunted off to other groups (such as "Liberty" and its successors) to get things "under control" and "eliminate overlap."
Although there were, in my opinion, serious losses of talent, several people, such as Steve Williams, decided to stay and his talent for being able to control costs, develop what the customer needs, and deliver more than expected, was applied so that he ended up as the manager of the JTE (PROC today- Plymouth Road Office Complex) Body-On-Frame Product Team (See: http://www.allpar.com/model/ram/2009-ram.html ).
Allpar - home of Chrysler, Plymouth, Jeep, and Dodge car, truck, and minivan information.
