Following the career of Global Design Director, Ralph Gilles has been an amazing voyage. In 2005, while Chrysler was merged with Daimler, I interviewed a then young designer on-the-rise about his work with the rear-wheel drive LX platform and his iconic design work on the 300. His legend has since grown and outside events have shaped the dynamics of his job.
In May 2007, Daimler sold 80% interest in Chrysler to Cerberus Capital Management, L.P. for 7.4 billion (AP Story on Ceberus buying Chrysler).
In 2008, the global financial market collapsed taking with it several capital intensive industries and companies like Chrysler LLC (then under the management of private equity firm, Cerberus) which had already been struggling and was literally on death's doorstep. Cerberus Capital Management, L.P. boasts former Bush 43 Treasury Secretary, John Snow as Chairman and former Bush 41 Vice President, Dan Quayle as Chairman of Cerberus Global Investments, LLC. Whether or not they influenced the Bush Administration to provide critically needed capital to Chrysler LLC is unknown; though a bridge loan of $4 billion was provided to usher the transition into the Obama Administration. Cerberus also owned 51% of the financing arm of GM, GMAC (now Ally Bank) which provided a very complicated situation in regards to the future of both companies. The life and future of the Detroit icons would be placed in the hands of a then promising junior senator from Illinois and now current President of the United States, Barack Obama.
In my latest interview with Ralph, we broached the legacy and importance of the Dodge Brothers and the entire domestic auto industry. The Dodge Brothers, two machinists who initially made bicycles in Canada were critical suppliers of transmissions and engines to Ransom E. Olds, the original pioneer of mass auto manufacturing in Detroit with the Curved Dash Olds in 1901. The Dodge Brothers were his largest suppliers along with Benjamin Briscoe and Henry Leland and their success gave them the capital and infrastructure to invest and manufacture for a young Henry Ford after the Henry Ford Company failed and he needed capital and manufacturing help. The Dodge Brothers wound up handling 60% of the manufacturing from Ford, earning a dividend as investors and payment as a supplier to the point that Henry Ford suspended dividend payments for a time.
A $10,000 investment wound up yielding over $32 million by 1914 and with that Dodge was formed. By 1925, it was sold for $146 million in cash. Eventual owner, Walter P. Chrysler was hired by William “Billy” Durant, the founder of General Motors, to run Buick and he did such a fabulous job that he was able to branch out to other enterprises like inevitably starting his own car company, Chrysler with Plymouth and DeSoto divisions and eventually acquiring Dodge for $175 million in what would become one of the most ingenious financing deals of the like. Walter Chrysler also built the Chrysler building in New York City during the onset of the Great Depression, so his legacy and the weight of the brands paired together to make his company the last of the Big Three.
With a heavy burden placed on the shoulders Ralph Gilles and his team, Ralph took on a huge role in saving Chrysler, beyond his traditional role of heading the global design team. He also became CEO of Dodge under the new management of Fiat. As CEO of Dodge, Ralph had reached an unheralded milestone as the first black CEO of a major auto manufacturer, but the history of the moment paled in the face of the challenge of his task to lead Chrysler's rebirth through the product design and engineering of this venerable American brand. To say the challenge was mighty is an understatement and with recent sales figures and the successful launch of 16 new cars in 19 months the results have been remarkable.
A personal favorite of mine is the Jeep Grand Cherokee which is made in Detroit. It was the only product the company had to build on in the critical spring of 2009, yet in 2012 to date, over 112,000 have been sold. On a bright, sunny day we caught up with Ralph at the Fair Oaks Jeep Chrysler dealership in Northern Virginia. Ralph was on hand in his new role as CEO of SRT to launch the Viper SRT GTS along with the introduction of the new Dodge Dart. Manufactured in the USA, utilizing Fiat technology, the Dart was developed as part of a requirement by the government financing of Chrysler to build a car that gets 40MPG on the highway. The new Dodge Dart has been a job creator also, as an estimated 6,000 jobs are due to be created in states like Illinois, Iowa, Michigan and Ohio.
Chrysler, now under management by Fiat, has also paid back its loans to the U.S. Government in entirety and recently announced an additional 1100 jobs at its Jefferson North Plant in Michigan. The Dodge Durango is made at the Jefferson North Plant and in the next year the Maserati Levante SUV will also be made at the same plant. News of Chrysler's evaluation of the growing demand and production in the China market recently caused a stir when U.S. presidential candidate, Mitt Romney mislead workers and claimed the imminent shutdown of operations of Jeep in Toledo, Ohio. The claim was stunning in that Jeep has had a long history in Ohio. In fact, prior to Jeep, the original company, Willys-Overland was based in Toledo, Ohio from 1908. In 1941, Willys made Jeep vehicles to support the Greatest Generation in WW II. The irony is that Mitt Romney's father, George Romney was former CEO of American Motors Corporation which owned Jeep prior to Chrysler's purchase in 1987. Chrysler has also been running 3 shifts in its plant in Toledo, Ohio where over 100,000 Jeep Wranglers are made annually.
Without great products there is no demand and without demand it becomes impossible to generate the revenue necessary to keep the company afloat and enable the aspirations of the thousands of workers that work for Fiat and Chrysler. The burden on the end results of his work are massive, yet Ralph's demeanor has always been humble and his work has always risen to the occasion. Our conversation went as follows.
(After some small talk and catching up)
RG: ...It's fun to now be on a design side. I've been in design like all along but now working on the SRTs which most of them are Dodges right now, it's exciting to kinda take that...SRT is like the hot sauce so to speak. It takes what's already cool and makes it a little hotter.
OI: But deeper into that and you're talking about the entrepreneurial spirit because in my purview Dodge Brothers also had a history with Ransom Olds who's really like the first guy to kinda like set the foundation of American manufacturing.
RG: Yeah, they did a lot for Ford. They did a lot for – 'cause they were basically parts suppliers. They used to do the very precise gear sets, a lot of stuff that went into most of it. They were actually huge suppliers. They almost got too powerful because if they stopped shipping parts they could shut down Ford overnight, you know, so that got everybody nervous and that's when they realized they had to maybe make their own cars not just supply parts so they kind of understood the value from the beginning - how important quality is, how important innovation is, taking – you know managing costs for innovation not just cutting corners so to speak so all that's part of who they are and I think who we are today.
OI: But it's such a humble beginning because they really were like craftsman in engines - like they really built these parts and it's like this family and then it grew but it's like - and I say that because your job being a designer then running that brand and actually bringing that brand back – I mean you oversaw the launch of the Charger, right, the new Charger integrating that into Fast & Furious 5. I think we ran into each other in New York about that...
RG: You know the thing that's different about Chrysler now is how well the management team works, right. So yeah, we have a lot of fun so you've got the - What Sergio's done is he put a lot of passionate people together and they're all running slightly different parts of the company. When you group that all together the energy's incredible. It's like taking a few suns and putting them in one place. The creativity of our marketing team combined with the creativity of the design office and the Dodge brand and all that and we do some cool things like the movie stuff. Olivier has done a great job connecting to the movie industry which allows us to put product placement in a way that makes the cars superheroes, you know. Like the Fast Five was incredible, watching our cars kind of be heroes, but we also blended not just SRTs but you know Charger police cars. We had Jeeps in there. We had a lot of stuff in there. It’s a very clever way to show the cars in a heroic way but also show them in a different way. Normally Fast Five has all been about import cars. This one was about American cars and here the Americans come in and get some respect. You know what I mean. So that was pretty neat so it takes again a company willing to take risks and do things a little differently and you end up standing out when you do that.
OI: So now contrast that because you've actually been through three ownerships You were there when Mercedes then Cerberus and then Fiat. Talk about that transition and contrast what's going on now to the evolution of your start especially working the LX platform.
RG: Yeah, I mean I think what I like that's happening now is the product is king. At times in Chrysler's history product's been king - you know, back in the early 90's and the “cab forward” days we were really innovating and really starting to take market share and actually create segments. You know, we innovated a lot of segments - the minivan, the PT Cruiser, the Pacifica...the Durango so we were kind of going after these kind of white spaces in the market. So we kind of put all our energy in that and then obviously we had some success and Mercedes came along...What I find that’s happening now that I like is the company’s very focused on, I would say, perfection, right, trying our best to be mining every part of the business, not just the styling or the packaging of the car but the way you treat the customers, the way that cars are delivered, how you make them, when you make them. We have no problem shutting down a plant if we have to until the car’s right, so we’re not about piling up the lots with cars. It’s about when they’re ready, they ship, you know, so the full value stream of car production from the minute it’s a sketch, picking the best sketch possible, doing the benchmarking, being humble about it, executing the best you can, promoting it really well, having some fun with the marketing and then take care of the dealerships. We’ve touched - you know, Sergio and the rest of the team have touched every part of the business so now what you’re seeing and the reason a lot of our sales has been pumped up is because it’s all starting to pay off. So a lot of work, I would say the last three years the company has invested big time in the fundamentals, you know fixing the fundamentals, getting the right talent in place, promoting it well, and doing the right things and I think the market is speaking with their dollar.
OI: Now speaking about that, and what brought sort of like your marquee, your touchstone is building that LX platform, the 300, the Charger, the Magnum. I think at the peak you guys were doing almost 300,000 in volume with those three cars?
RG: Yeah, almost.
OI: Almost? Now what’s fascinating now is that with the Charger and the 300 you’re kind of almost halfway there, right, with volume. You’re doing almost about 15,000 sales a month?
RG: Yeah, we’re doing pretty well. Those cars are picking up. It took a while because people look at cars that size and they usually think - or they right them off. One of our biggest issues in the past was fuel economy or perceived fuel economy. They look at a big car they expect it to get a certain amount of fuel economy and what our engineers have done is been able to, with the magic of the eight-speed and the Pentastar you can get 31 miles per gallon in a Charger or a 300 which is unheard of, you know, in that class, at that price to have that much technology.
OI: I mean a car with that weight.
RG: Yeah and it’s a safe car. It’s a very comfortable car. It’s got world-class levels of technology and quietness so people - you know the word of mouth, you know, dealers go oh my gosh, when you really think about. You know the marketing is starting to take hold as well. And of course the results are coming. So that’s been truly on virtue we have. We haven’t done anything unnatural, just putting the best product we can out there. And Americans love their cars. They love big cars. They love some room. So what we tried to do is break the code on it, find a way to make it efficient, beautiful, quality and it’s right now, as we stand the 300 is the highest rated car in Consumer Reports that the company makes. So at a 83 score, it’s well respected even by a third party.
OI: Now I mean just speaking about that though and it’s quite fascinating that you’re speaking about that. Your product planners are doing such an incredible job because I’ve test driven a lot of iterations of that car and I’m like here is a car getting 290 horsepower, 8-speed automatic, 31 miles per gallon - you’re getting 31 mpg’s on a car that size and then 27 mpg’s with an all-wheel drive system at a sub-$30,000 price point to begin with. I’m almost like well, how do you guys pull that off? How do you sell an 8-speed ZF? I mean this is the same type of transmission you’ll find in the high Audi’s and the high end BMW's I mean these are - you’re not sourcing from cheap.
RG: I’m glad you’re saying that because that’s what’s happened lately, people are willing to invest in the product. If I can get the product right and kind of they will come. So we’re not shy to put the best technology we can get. The ZF 8-speed is an awesome piece of engineering. That’s what it takes to make the cars world-class. That’s what we’re focused on. So really hats off to our powertrain team. They did a great job.
Part 2 of our interview will be posted tomorrow.