DaimlerChrysler Loses Patience with Freightliner Leadership
May 25, 2001 12:00 PM, Gary MacklinJames L Hebe Jr has been removed as president and CEO of Freightliner LLC, parent company of Freightliner Trucks, Sterling Trucks, Western Star, American LaFrance, Thomas Built Buses, and Orion Buses. The Wall Street Journal reports that Hebe was informed late Wednesday, May 23, that his tenure with the company was ending. He joined Freightliner from Kenworth and was appointed CEO in 1992. Of some note, he replaced Dieter Zetsche at the head of Freightliner. Zetsche was placed at the head of DaimlerChrysler North American operations in 2000 in a management shakeup of the automobile builder.
Throughout his tenure as Freightliner president, Hebe worked ruthlessly to build market share. This effort included the purchase of Ford’s heavy truck operations, now known as Sterling, and Western Star. Total market share for the combined companies has been as high as 38%. Hebe’s quest for market share has left him open to criticism from some that Freightliner was partially responsible for the glut of used trucks with the attendant loss of residual value. On a related issue, Hebe has taken fire for Freightliner’s practice of selling trucks with a guaranteed residual value after a specified period, typically 30 to 36 months. This practice, which was followed by other manufacturers, resulted in rapid new truck sales and produced a staggering inventory of unsold used trucks. The result is that many small fleets are purchasing late model used trucks, still under warranty, at extremely low prices instead of buying new vehicles. Both Freightliner and Volvo recently announced strategies to improve sales and value of used trucks.
Hebe is the second head of a major truck builder to be ousted since the beginning of 2001. Marc Gustafson was replaced at Volvo in February. Like Gustafson, Hebe is expected to be replaced by a European. The Wall Street Journal reports that Hebe will be replaced with a German national. Speculation centers on Rainer Schmueckle, former financial chief at Freightliner.
Freightliner has cut more than 1,000 jobs since the first of the year. The Wall Street Journal report suggests that more job cuts are possible as well as the sale of parts of Freightliner.