Version classiqueVersion mobile

Americanisation in 20th Century Europe: business, culture, politics. Volume 2

 | 
Nick Tiratsoo
, 
Mathias Kipping

Barreiros Diesel and the Chrysler Corporation, 1963-1969: a troubled Americanisation

José L. Garcia-Ruiz

Résumé

En 1963, Eduardo Barreiros, fabricant espagnol de moteurs et de camions rentra satisfait de discussions avec la Chrysler Corp. Il avait obtenu une aide financière tout en évitant de donner trop de pouvoir aux Américains pour intervenir dans ses affaires. Cependant, Chrysler avait un projet caché et quatre ans plus tard la famille Barreiros fut obligée de céder le contrôle de son entreprise. L’histoire de cette américanisation confuse est menée en s’appuyant sur les publications les plus récentes au sujet des transferts et de l’expansion des modèles de production étrangers à travers les frontières.

Texte intégral

introduction

  • 1 J. Dunning, International Production and the Multinational Enterprise, London, George Allen and Un (...)
  • 2 F. T. Knickerbocker, Oligopolistic Reaction and Multinational Enterprise, Boston, Harvard Universi (...)
  • 3 Time, 13 June 1969; Madrid, 27 and 28 May 1969.
  • 4 For the problems of ‘Americanisation’ in European firms, see R. R. Locke, The Collapse of the Amer (...)

1There is a vast literature about the role of multinationals in economic growth, but John Dunning’s ‘eclectic’ paradign is widely influential.1 Here, a multinationals investment overseas is understood as a mature stage in its growth, which will normally bring advantages to all the parties involved. However, Dunning’s optimism may be somewhat misplaced, as the case study explored in the following pages demonstrates. In 1963, due to difficulties in raising funds from investors and banks at home, the Spanish engine and truck maker Eduardo Barreiros sought to find a multinational partner, which would support his company, Barreiros Diesel, S.A., but not interfer too much in the running of the business. After some fruitless negotiations with British firms, Barreiros reached an agreement with the Chrysler Corporation. Its Chairman, Lynn Townsend, was interested in investing abroad, as Ford and General Motors had done some decades before.2 The plan was that Chrysler would take over car production, while Barreiros would continue to produce diesel engines and commercial vehicles, its core business since 1954. But Townsend had a hidden agenda aimed at using his bargaining power to impose the acquisition of outdated vehicles, components and parts, the sale of patents, and the provision of financial support with unfair conditions. Only four years later, in 1967, the Barreiros family had to surrender control of their firm. A once highly profitable business was now mirred in debt. Similar problems also affected Chrysler’s British and French subsidiaries during the 1970s and, in 1978, the American company finally abandoned Europe altogether. When the Barreiros family left their ex-company in 1969, Time magazine talked of “a conflict of cultures”, and Eduardo Barreiros criticised Chrysler’s managers for not trying to understand the “Spanish mentality”.3 The following paragraphs examine this case of troubled ‘Americanisation’ with special reference to the new literature on the transfer and spread of foreign production models across national borders.4

chrysler: a multinational in europe and latin america

  • 5 For investments of Chrysler in Europe and their context, see Y. S. Hu, The Impact of US Investment (...)

2Before 1960, Chrysler had only a slight presence in Europe: a Dodge factory at Kew (England) producing a few commercial vehicles, some commercial outlets in Anvers, and assembly facilities in Rotterdam that had been acquired from Kaiser-Frazer in 1958. This situation changed at the end of 1961, when Lynn Townsend was appointed Chairman, with the aim of revitalising a firm that was in the doldrums. After some early successes, Townsend turned to the possibility of investing abroad by means of joint ventures, a method that he felt was more efficient than the establishment of subsidiaries from scratch (the Ford stategy) or the acquisition of prestigious brands (the General Motors preference). Accordingly, Chrysler soon developed relationships with the British Rootes, the French SIMCA, and the Spanish Barreiros Diesel.5

  • 6 Some remarkable books on the subject are R. O. Jenkins, Dependent Industrialization in Latin Ameri (...)

3Meanwhile, Townsend also Consolidated a network of affiliates in Latin America, with plants in Argentina, Brazil and Mexico. The Mexican case was the most important with regard to units produced and the nature of the work, real manufacturing and as opposed to mere assembly.6 The affiliate was Auto-Mex, a firm founded in 1938 by Gastón Azcárraga. This had begun operating as a Chrysler vehicle assembler, but in 1959 the American company acquired a third of its stocks with the aim of turning it into a true car producer. In line with the Townsend credo, Chrysler refused to buy outright. In 1965, with sales of about 28,000 vehicles, Auto-Mex became the Mexican leader. Chrysler’s strategy seemed to provide the Azcárraga family with a satisfactory degree of autonomy in management activities, but there was a much darker side to the story. The key point was that Chrysler forced Auto-Mex to buy its technology and parts at high prices, rather than at a discount, as General Motors and Ford were doing with their affiliates. Auto-Mex’s costs thus grew dramatically as compared to its rivals and the firm suffered financial problems. In this situation, Chrysler was only too happy to appear as a saviour, providing either direct loans or making arrangements for the Mexicans to do business with its American banks. By 1970, Auto-Mex’s long-term debt to Chrysler had soared to 191 million pesos, and the following year, the Azcárraga family was obliged to sell out to the American giant.

  • 7 S. Young and N. Hood, Chrysler (UK). A Corporation in Transition, N. York, Praeger Publishers, 197 (...)
  • 8 L. Iacocca and W. Novak, Iacocca: An Autobiography, New York, Bantam Books, 1984.

4By the early 1970s, Chrysler had to recognise that its investment abroad was not producing the forecast returns, and the position worsened with the general recession triggered by the oil crisis.7 In 1978, now with Lee A. Iacocca at its head, Chrysler sold its European bases to Peugeot and there was an overall withdrawal from the rest of the world. The firm’s predicament was so strained that Iacocca had to obtain a guarantee of $1.5 billion from the American government to keep the support of the banks. Reflecting on what had gone wrong, Iacocca was very critical of Townsend’s European adventures.8 Unsurprisingly, Chrysler remained outside the European market until 1987.

the first steps of chrysler and barreiros diesel, 1963-1967

  • 9 Some years before, Barreiros Diesel had begun its struggle against the ‘national champion’ in the (...)
  • 10 Minutes of the board of directors of Barreiros Diesel, S.A., 26 June 1963, in Archive of the Eduar (...)
  • 11 Actually, Barreiros Diesel’s shares were never placed on the stock market.

5In May 1960, Barreiros Diesel asked for permission to diversify its output with the production of big passenger cars (often used as taxis) in order to capitalise on its diesel engine know how. The ‘national champion’, Sociedad Espanola de Automóviles de Turismo (SEAT), a public firm supported by the official Institut» Nacional de Industria (INI), opposed these plans, observing that there were already similar models on the market (the Seat 1400), and underlining that it was best to have a small number of high-volume factories rather than scattered production. Eduardo Barreiros’s idea was to produce 2,000 units during the First year, 4,000 during the second, 7,500 during the third, and 10,000 thereafter. The capital required was estimated at 100 million pesetas. To make this feasible, Eduardo Barreiros approached British firms (David Brown, Jaguar, and Rootes) to get patents and technical assistance, but his attempts were unsuccessful. Notwithstanding, an official authorisation was granted in July 1961.9 In September 1963, Barreiros Diesel finally decided upon new targets for engine and truck production, though no reference was made to passenger cars. Its plans were ambitious, requiring high capital investment. One option was to raise capital from the stock market, another to issue 500 million pesetas in bonds with a mortgage as collateral.10 In the end, floatation was postponed after the beginning of negotiations with Chrysler-then bonds to the value of 250 million pesetas were issued.11

  • 12 Barreiros Diesel supported the new regulations and even asked for higher requirements for engine p (...)
  • 13 Eduardo Barreiros to the Vice-Secretary of the Ministry of Industry, 1 July 1963, Box 191, Busines (...)

6The tone of the negotiations with the Americans improved thanks to the Spanish Government’s decision in January 1963 to change the terms of entry into the motor industry. Free admission was to be allowed, though with some strings: any new entrant had to guarantee the annual manufacture of at least 75,000 passenger cars, 8,000 trucks and buses, 10,000 tractors, 25,000 motorcycles, and 15,000 engines. The authorisation that Barreiros had been awarded in 1961 was well beneath these figures but, thanks to the governments’ newly expansionist stance, its renewal was approved.12 One factor that moved Barreiros to search for rapid solutions was the need for it to solve the problem of having to discount drafts coming from the sales on long-term credit. In July 1963, Eduardo Barreiros urgently asked the Vice-Secretary of the Ministry of Industry for a 200 million pesetas loan, to be cancelled when all the bonds were placed.13 Sixteen days after the Ministry had declined to help, the first agreement with Chrysler was signed.

  • 14 Board minutes, 13 December 1963, EBF.
  • 15 E. Barreiros, “Notas autobiográficas’, c. 1975, Box 5, Personal Files, EBF.
  • 16 E. Barreiros to the Minister of Industry, 20 January 1967, Box 297, Business Files, EBF.

7In December 1963, Chrysler took 250 million pesetas in bonds. This was only a part of the final agreement, signed on 31 October 1963, “for the production and assembly in Spain of Chrysler products, its financing, and distribution in Spain of all kinds of Chrysler vehicles currently produced in the US, its components and parts, and the new models that will replace them”.14 Eduardo Barreiros told his board: “The agreement cannot be more favourable: small royalties, all the required technical assistance, and Chrysler’s world sales network within our reach”.15 The involvement of Chrysler took the form of a capital increase of up to one billion pesetas: the old shareholders disbursed their new stocks at par value, but Chrysler paid three times more to get 40 per cent of the capital.16 The new organisation reflected the change: management would continue to be carried out by the members of the Barreiros family acting as CEOs (with Eduardo Barreiros as Chairman), but there would be some limitation on their powers, and a new Chrysler Division headed by a managing director.

8From the very first day, there was mutual distrust between the old and the new shareholders. At the Board meeting on 31 January 1964, Eduardo Barreiros had to defend his own programme for trucks against American firm’s suggestion that Dodge vehicles be produced as soon as possible. Barreiros also insisted on the need for building and exporting engines to get the foreign exchange required to import components for the Dodge Dart car, the first model to he wanted to produce. Another problem that arose immediately had to do with retailers. Barreiros wished to continue working with his old network, but Chrysler promoted its own associates, such as Sociedad Espanola de Importación de Automóviles, S.A. (SEIDA), its main importer since the 1930s.

  • 17 Garcia Ruiz and Santos Redondo 2001: ch. 5. For Chrysler’s industrial relations in the United Stat (...)

9It is worth stressing that Barreiros Diesel was not unfamiliar with ‘rationalisation’ and Taylorism at this point in its history. Indeed, the company had already twice participated enthusiastically in the programmes for middle managers run by the Comisión Nacional de la Productividad Industrial (CNPI) from 1952. These oscillated between Taylorist and ‘human relations’ approaches. Before Chrysler’s arrival, Barreiros could in fact be considered a well-organised firm, using an original hybrid of Taylorism, ‘human relations’, and the typical ‘paternalism’ of a family business. The latter element had distinctive features in Barreiros since the main founder of the firm, Eduardo, was a very charismatic self-made man. The early introduction of quasi-Taylorist schemes made it easy to change the industrial relations approach after 1963-Chrysler’s ‘payment by results’ System was not very different from that already in use.17

  • 18 Board minutes, 6 May 1964, 24 June 1964, and 18 September 1964, EBF.
  • 19 Board minutes, 7 December 1964, EBF.

10Despite their early disagreements, Chrysler and Barreiros were nevertheless able to reach an agreement to produce a car smaller than the Dart, thus diversifying output. The initiative was taken by Chrysler, and it was Irving J. Minett who carried out the negotiations to produce the new model – a version of the Simca 1000. The Chairman of the French firm visited the works at Villaverde and technical studies were made. The required investment was estimated at 500 million pesetas. Eduardo Barreiros believed that 300 million could be raised from three Spanish banks, while 200 million should be provided by Chrysler. However, the American firm refused to invest any further in Barreiros, and, in the end, the Chase Manhattan Bank financed the whole Simca programme.18 In December 1964, the Chairman of SIMCA, George Hereil, became a member of the Barreiros board. At the same time, the Government’s authorisation to produce the Simca 1000 was obtained.19

  • 20 Board minutes, 7 December 1964 and 18 February 1965, EBF.
  • 21 Board minutes, 8 January 1966, EBF.
  • 22 K.B. Clark and T. Fujimoto, Product Development Performance. Strategy, Organization and Management (...)

11At the end of 1964, there was a new agreement on the need to put all the industrial and commercial affiliates under the control of Barreiros Diesel. The understanding between the ‘Barreiros group’ and the ‘Chrysler group’ - as they were even referred to in the board minutes-seemed to be now improving. Minett was appointed Vice-Chairman, and Eduardo Barreiros talked about the “outstanding success” of the project to inject Chrysler’s methods into Barreiros Diesel that had been carried out by Thomas S. Habib.20 In December 1965, six subsidiaries (Barreiros AEC, R. Hanomag Barreiros, David Brown Engranajes, CABSA, GISA, and Tempo Ibérica) merged with Barreiros Diesel.21 This was consistent with the Chrysler’s strategy, a good example of the American style of vertical integration.22

  • 23 In a private note, Juan Antonio Suanzes, the ‘architect’ of the INI, expressed consternation that (...)
  • 24 Auto Revista, 11 June 1966.
  • 25 An additional conflict emerged when, in September 1966, Eduardo Barreiros sold Constructora Eléctr (...)

12The beginning of 1966 was full hope. On 8 January 1966, General Franco visited the Barreiros factory.23 The press reported that the objective was to quickly reach annual production of 50,000 commercial vehicles, 165,000 Simcas, 35,000 Dodge trucks, and thousands of tractors in a new factory located in Zaragoza.24 However, tension between Barreiros and Chrysler re-emerged over two key issues, first the management of the affiliates, and second, financial problems. And there was another very important point that up until now had not been broached: the fact that though Chrysler was happy to keep manufacturing Dodge light trucks in Europe, it had absolutely no wish to engage in volume production of other commercial vehicles on the continent, a fact that was confirmed by its sale of SIMCA’s commercial vehicles division to FIAT.25

  • 26 Board minutes, 8 January 1966 and 22 June 1966, EBF.
  • 27 Auto Revista, 7 October 1967.

13As regards the affiliates, there was a substantial potential contradiction between Barreiros’s expansion in Latin America and Chrysler’s operations there. In Mexico and Colombia, two very promising countries for Barreiros, Chrysler had subsidiaries, Auto-Mex and Colombiana de Motores, S.A. (COLMOTORES) respectively.26 But the biggest source of ill-feeling between Eduardo Barreiros and Chrysler had to do with the financing of Barreiros Diesel. A Finance Committee was created in November 1966, made up of the Chairman and Habib, both also members of the company’s CEO Committee. The disagreement about financing was aggravated by poor sales. The figures spoke for themselves: the 1966 target to sell 21,000 Dodges and 62,000 Simcas was not met, with only 6,396 units of the former and 34,710 of the latter leaving the factory. During the first half of 1967 things were even less favourable: sales were only 1,645 Dodges and 17,222 Simcas.27

the end of barreiros diesel (1967-1969)

  • 28 Board minutes 13 January 1967, EBF.
  • 29 Board minutes, 22 February 1967, EBF.

14A short time after the introduction of the Finance Committee, Eduardo Barreiros obtained some loans for Barreiros Diesel from the Banco de Crédito Industrial (a public bank), but without the prior approval of his colleagues. This was part of his struggle to keep the Spanish side in control of the firm. A meeting of the Board in January 1967 backed his activities, though the Americans registered their disappointment. The Barreiros brothers had given their personal guarantee and this was the reason why the board was relatively tolerant. However, the Chrysler contingent was determined to avoid any repetition of such an embarrassing episode.28 The Finance Committee was reshaped and its functions were expanded, so as to implement Chrysler Systems in all the departments of the company and its subsidiaries. The CEOs found themselves under stricter supervision, with an instruction that their decisions must be always recorded in writing.29

  • 30 Minutes of the Executive Committee of the Banco de Vizcaya, 14 March 1964 and 13 June 1964, in Ban (...)

15These events were driven by the financial problems. In this regard, one important fact was that Spanish banks seemed unable to cope with Barreiros Diesel’s monetary requirements. After the deal with Chrysler, the firm had continued to do business with Banco de Vizcaya – its longtime main banking partner – accepting the latter’s strong requirements on collateral.30 However, the provision of funds coming from the Banco de Vizcaya was irregular and did not meet Barreiros’s needs. Most of the other Spanish banks were wary of getting involved. As a result, in October 1966, Chrysler intervened, and obtained a $10 million loan from S.G. Warburg of London, granted for one year (with the possibility of renewal) at a rate of 8 per cent. The loan was guaranteed by Chrysler, the Barreiros family and the minority shareholders, and was used to cancel a huge part of Barreiros’s short-term debts to Spanish private financial institutions.

  • 31 E. Barreiros to the Minister of Industry, 13 and 20 January 1967, Box 297, Business Files, EBF.

16The company’s financial problems grew during 1967 and the search for a stable source of funds became a priority. The board returned again and again to the issue. In January, Eduardo Barreiros expressed his worries to the Minister of Industry: he warned that it was impossible for him to raise the necessary funds to participate in the next capital increase and predicted that the Barreiros family holding might fall to as little as 15 per cent.31 Despite anxieties over the maturity and the guarantees, a public loan was finally granted and the Barreiros family was able to keep its position as the major shareholder, with the 50.5 per cent of the capital, though Chrysler now controlled 45.3 per cent, after buying from other shareholders.

17Faced with huge losses, because of the mistakes in the sales forecasts, Barreiros Diesel’s future was discussed at length on 24 July 1967 in Detroit. The company’s financial requirements were estimated at about $35 million: $20 million for 1967, the rest for 1968 and 1969. Its main problems were identified as, first, a substantial decrease in sales; second, the high cost of meeting customer guarantees due to technical problems with the vehicles (the sum here was equivalent to roughly 4 per cent of sales); third, the need to continue with investment in production, a new sales network, and the acquisition of subsidiaries; and, fourth, the accumulation of excessive stocks of raw materials and finished products. It was agreed that the only way for Barreiros Diesel to continue, and the interests of all the shareholders to be protected, was for Chrysler to take full control of its management. For this strategy would both assure the renewal of the Warburg loan, and open the way to more funds from the Chase Manhattan Bank-perhaps as much as $30 million, leaving only $5 million to be raised from a new capital issue.

18Eduardo Barreiros deferred his answer, but by early August he had come to believe that there was no future for Barreiros Diesel unless the Chrysler’s proposal was implemented. He elaborated on his thinking in a letter to the Ministry of Industry. He began by noting: “the basic departments are now, at my own request, managed by Chrysler specialists, because this is the only way to introduce the Systems used by Chrysler throughout the World... Our company, being one of the biggest in Spain and with an international dimension, has been organised using Chrysler’s Systems”. Since 1964, 4,500 million pesetas had been invested in the works and 1,200 million given in credits to the commercial network. Moreover, there was a commitment to the suppliers that did indeed increase stocks, but it was impossible to default on this because “we could put them [the suppliers] in danger and on the verge of bankruptcy”. However, Barreiros’s sense of fairness verged on the naïve when he turned to Chrysler’s targets:

There is something special in the investment planned and developed by Chrysler in the last years, because Chrysler’s men never have said no and they must know, because of their experience in the world market, that the economic situation is not always favourable. Moreover, they have a great interest to use their international commercial channels to sell our products: diesel engines, buses, big trucks, etc.

  • 32 Board minutes, 3 August 1967, EBF.

19It is likely that Barreiros’s warm feelings for Chrysler at this moment stemmed in part from the fact that, shordy before, the board had been informed that the Warburg loan would be renewed, and, moreover, at a rate of 6.75 per cent.32

20On 16 September 1967, Barreiros Diesel asked the government for authorisation to increase Chrysler’s share to 77.2 per cent. In a further letter to the Minister of Industry, the capital requirements were estimated as 2.1 billion pesetas, a sum that was to be raised from Chrysler (1.2 billion pesetas), the Banco de Crédito Industrial (750 million pesetas) and the Barreiros family (150 million pesetas). This last contribution would be a part of the 1.22 billion pesetas paid by Chrysler to the family in exchange for stocks with a nominal value of 1 billion pesetas. One billion more would be used to cancel a credit granted by the Banco de Crédito Industrial. Thus, only 70 million pesetas would remain in the hands of the founder members. To persuade the Government to support him, Barreiros argued that “the non-Spaniard staff will be limited, according to requirements” and that the members of the Barreiros family would keep their posts on the board. The authorization arrived soon after, and on 11 and 13 October 1967, new agreements with Chrysler were signed.

  • 33 Chrysler’s Annual Report of 1967 States that “the Barreiros family offered Chrysler International (...)
  • 34 Pueblo, 4 November 1967.
  • 35 Auto Revista, 7 October 1967.

21In early November 1967, as arranged, the Barreiros brothers left their posts as CEOs, and were replaced by Jack E. Charipar.33 The public and the media were divided. All agreed that poor sales were the cause of the problems, but there was considerable discussion about two other factors: the government’s tough monetary policy to combat inflation, which was depressing consumption34; and the shortcomings, expense and antiquated design of the company’s car models.35 Bringing things up to date, it was remarked, would require a fabulous sum of money by Spanish standards, though not by Chrysler’s.

22Between November 1967 and July 1969, the Barreiros brothers were placed in a more and more uncomfortable position within the firm they had created. In formal terms, they occupied important posts, but in fact managing activities were in the hands of those shareholders who held more than 77 per cent of the capital-Chrysler. In fact, the nominal Chairman, Eduardo Barreiros, did not even run board meetings, being replaced by Charipar, Executive Vice-Chairman and CEO. In March 1968, Charipar announced a new organisational chart, new agreements with SIMCA to introduce the 1100 model, and new principles for the management of affiliates. At the same board meeting, Charipar proceeded to dismantle the Barreiros’s legacy. Decisions were taken to establish a department to sell proprieties due to the “evident existence of redundant and badly exploited goods”; dismantle the South-American subsidiaries, beginning with Colombiana de Automoción, S.A.; in future organise exports through the regional offices of Chrysler, scattered around the world; and buy shares in commercial affiliates in trouble so as to gain full control of them. Only if these conditions were fulfilled, it was announced, would the company be granted a $20 million credit from the Chrysler Overseas Capital Corporation: $15 million in March 1968 and $5 million before the end of the year. This would be used to cancel the Warburg credits.

  • 36 Ya, 21 July 1968.
  • 37 Nuevo Diario, 10 May 1969.

23Eduardo Barreiros tried to maintain the firm’s traditional mainstay, the production of commercial vehicles. The quality of these was high, and no less a figure than the King of Saudi Arabia ordered 200 6x6 units in March 1968. Barreiros also tried to penetrate new markets in Eastern Europe, for example participating in the Plovdiv (1967) and Poznan (1968) commercial fairs. But resources were scarce, and Chrysler sought to concentrate investment and export effort on cars: in july 1968,1,000 Dodge trucks were shipped to Colombia36 while one year later 1,500 Simcas produced in Spain were sent to be assembled by Chrysler COLMOTORES.37

  • 38 Board minutes, 25 June 1968 and 11 April 1969, EBF.
  • 39 Board minutes, 21 March 1969, EBF.
  • 40 E. Barreiros, ‘Report to the Board of Directors as a result of both the proposal for equity increa (...)

24Two events brought relations between Barreiros and Chrysler to an end: the break with El Motor Espanol, S.A., (MOSA), the older and bigger commercial affiliate, and plans for a new capital increase in 1969. In Charipar’s opinion, MOSA had “excessive structural costs” and needed to be immediately replaced by independent retailers.38 The increase in capital in 1969 was approved by the board on 21 March: $39 million that must be paid immediately. Eduardo Barreiros claimed that the amount was higher than that initially estimated ($32.5 million), while the terms of payment had been shortened. He argued that a capital increase should only reflect real capital requirements, and observed that a report on longterm finance, issued in January, had stated that these requirements would be dramatically reduced after 1971.39 In addition, Barreiros criticised the way Chrysler measured losses, because the provisions were higher than those legally necessary and the estimated customer defaults seemed exaggerated. Much of the investment could be deferred or cancelled-for example, the press plant, sometimes included in the plans and sometimes not, showing “lack of consistency in the analyses and the conclusions”. Moreover, as Barreiros noted, there were other problems, too. Chrysler’s estimates did not consider the patrimonial realizations agreed; the repayment schedule of the loans was not precise; and the estimated turnover was too low. Finally, Barreiros claimed that his access as chairman to information had been reduced. However, the American firm and its Spanish lawyers and representatives on the board (Chaves Viciana and Garcia Forero) reacted angrily to Barreiros’s polemic, defending the integrity of the data and the conclusions of the different reports, and asserting that Chrysler did not intend to increase its participation in the capital. In the end, the Barreiros family alone voted against Charipar’s proposals. Consequently, Eduardo Barreiros told the board that he was considering resignation. Barreiros’s disillusionment was summed up in a document that he presented to the board. Amongst other things, he cited non-fulfilment of the approved programmes in relation to 15 and 38 tons trucks and the new tractor, with long delays at crucial moments for the firm, when commercial reports recommended the speed up of these programmes; lack of organisation and scheduling in the launching of new models (for example, the Dodge Dart GT); staff unrest, because foreigners were occupying all the higher-rank posts, imposing a two tier salary scale (with higher wages for the Americans); and continuons imposition of new organisational charts (three in 1968 and two in the first months of 1969).40

  • 41 Board minutes, 11 April 1969, EBF.
  • 42 E. Barreiros, ‘Memorandum to Chrysler (USA)’, 23 April, 1969, Boxes 321 and 322, Business Files, E (...)

25At the next board meeting, Eduardo Barreiros appeared to be more relaxed about the proposed capital increase, noting the difficulty of obtaining new loans and the tendency for interest rates to rise. However, he asked for two years to make the payment. The board agreed, but imposed a surcharge for the delay.41 Twelve days later, Barreiros flew to New York to visit Minett, a member of the board of Barreiros Diesel and also Vice-Chairman of the Chrysler Corporation-this was his last chance. Barreiros gave Minett a memorandum that began: “it is disgusting to preside over a badly managed company, with huge losses, and not to be able to take any decision to avoid the disaster”. Barreiros blamed Jack E. Charipar for this situation; he had breached contracts and showed a lack of professionalism in managing the firm. The only way out for Barreiros Diesel was to dismiss Charipar immediately. He should be replaced by a “competent and honourable man, able to get an in-depth knowledge of Spain”, and capable of reaching an understanding with the Barreiros family.42

  • 43 Board minutes, 24 May 1969, EBF.

26Chrysler (USA) never answered, and at the board meeting of 24 May, Eduardo Barreiros criticised Charipar’s report and interrupted the session to read an abstract of the memorandum that he had delivered to Minett in New York. Then, the Barreiros family resigned, because they recognised that Chysler head office’s silence implied support for Charipar. Both Chaves and Minett tried to make some comments, but Eduardo Barreiros told them it was not necessary to add anything and left the room accompanied by his brothers.43 On 7 July the agreement to sell the stocks was signed.

in conclusion

  • 44 See R. Church, The Rise and Decline of British Motor Industry, London, Macmillan, 1994, for the Br (...)

27Chrysler strategy with Barreiros Diesel was very similar to that it used with its affiliates in the rest of the world – the creation of a joint venture to look for profits from the sales of technology and equipment (‘tied selling’) and the provision of finance, rather than from its capacity as shareholder. But Chrysler’s problems in Spain were not necessarily exactly the same as it faced elsewhere. Several factors undermined its efficacy. The Spanish government’s policies were not always hepful. It did not intervene in Barreiros Diesel’s crises of 1967 and 1969, for example, ostensibly because there were no important associated job or foreign exchange losses, and this indifference contrasts with the British administration’s more proactive stance when faced by similar circumstances in its own car industry.44 In fact, Barreiros Diesel had always to struggle against the ‘national champions’ of INI (ENASA, SEAT). However, the major problem was a misreading of demand. The Dodge and Simca vehicles had a reduced market in a Spain because the upper and middle classes were less rich and ostentations than had been supposed. Chrysler seemed incapable of understanding the Spanish market and, even more, of adapting its products to local needs. These weaknesses, together with the cultural conflict in the management of the company, were the biggest examples of troubled ‘Americanisation’. But it also needs to be stressed that the difficulties with passenger car production caused knock-on problems for commercial vehicles, the most genuine part of Barreiros Diesel’s portfolio. The scarce resources available were always employed in the ‘Chrysler programmes’, while everything else suffered. Thus, Spain lost the opportunity to have a national commercial vehicle producer, even though there was an extraordinarily high demand for this type of transportation in the country. To sum up, it is hard to understand the evolution of the relationships between Chrysler Corporation and Barreiros Diesel without considering their relative power in the context of centre-periphery relationships. The orthodox economic theory of international direct investment frequently ignores this factor. It would appear that the business history of multinationals can provide a necessary and instructive corrective.

***

Bibliographie

Bennett D.C. and K. E. Sharpe 1985. Transnational Corporations versus the State. The Political Economy of the Mexican Auto Industry, Princeton, Princeton University Press.

Casson M. 2000. Economics of International Business. A New Research Agenda, Cheltenham, Edward Elgar Publishing.

Church R. 1994. The Rise and Decline of British Motor Industry, London, Macmillan.

Clark K. B. and T. Fujimoto 1991. Product Development Performance. Strategy, Organisation and Management in the World Auto Industry, Boston, Harvard Business School Press.

Dunning J. 1981. International Production and the Multinational Enterprise, London, George Allen and Unwin.

Freyssenet M., A. Mair, K. Shimizu, and G. Volpato 2000. (eds), Quel modèle productif? Trajectoires et modèles industriels des constructeurs automobiles mondiaux, Paris, La Découverte.

Garcia Ruiz J. L. and M. Santos Redondo 2001. /Es un motor español! Historia empresarial de Barreiros, Madrid, Síntesis.

Gourvish T. R. and N. Tiratsoo 1998. (eds.), Missionaries and Managers: American Influences on European Management Education, 1945-1960, Manchester, Manchester University Press.

Hu Y. S. 1973. The Impact of US Investment in Europe. A Case Study of the Automotive and Computer Industries, New York, Praeger Publishers.

Iacocca L. and W. Novak 1984. Iacocca: an autobiography, New York, Bantam Books.

Jefferys S. 1986. Management and Managed: Fifty Years of Crisis at Chrysler; Cambridge,

Cambridge University Press.

Jenkins R. O. 1977. Dependent Industrialization in Latin America: The Automotive Industry in Argentina, Chile and Mexico, New York, Praeger Publishers.

Kipping M. and O. Bjarnar 1999. (eds.) The Americanization of European Business: the Marshall Plan and the Transfer of US Management Models, London, Routledge.

Knickerbocker F. T. 1973. Oligopolistic Reaction and Multinational Enterprise, Boston, Harvard University School of Business Administration.

Laux J. M. 1992. The European Automobile Industry, New York, Twayne Publishers.

Lewchuk W. 1987. American Technology and the British Vehicle Industry, Cambridge, Cambridge University Press.

Locke R. R. 1996. The Collapse of the American Management Mystique, Oxford, Oxford University Press.

Maxcy G. 1981. The Multinational Motor Industry, London, Croom Helm.

Muñoz J., S. Roldán, and A. Serrano 1978. La internacionalización del capital en España, 1959-1977, Madrid, Edicusa.

Rae J. B. 1984. The American Automobile Industry, Boston, Twayne Publishers.

Tolliday S. and J. Zeitlin 1986. (eds.), The Automobile Industry and its Workers, Cambridge, Polity Press.

Young S. and N. Hood 1977. Chrysler (UK). A Corporation in Transition, New York, Praeger Publishers.

Zeitlin J. and G. Herrigel 2000. (eds.), Americanization and its Limits: Reworking American Technology and Management in Post-War Europe and Japan, Oxford, Oxford University Press.

Notes

1 J. Dunning, International Production and the Multinational Enterprise, London, George Allen and Unwing, 1981. M. Casson, Economics of International Business. A New Research Agenda, Cheltenham, Edward Elgar Publishing, 2000, tries to open new horizons, but the modem theory of multinationals bas not advanced much since the seminal work of Dunning.

2 F. T. Knickerbocker, Oligopolistic Reaction and Multinational Enterprise, Boston, Harvard University School of Business Administration, 1973, stressed the importance of emulation in the behaviour of the multinationals.

3 Time, 13 June 1969; Madrid, 27 and 28 May 1969.

4 For the problems of ‘Americanisation’ in European firms, see R. R. Locke, The Collapse of the American Management Mystique, Oxford, Oxford University Press, 1996; T. R. Gourvish and N. Tiratsoo (eds.), Missionaries and Managers: American Influences on European Management Education, 1945-60, Manchester, Manchester University Press, 1998; M. Kipping and O. Bjarnar (eds.), The Americanization of E.uropean Business: The Marshall Plan and the Transfer of U S Management Models, London, Routledge, 1999; and J. Zeitlin and G. Herrigei. (eds.), Americanization and its Limits: Reworking American Technology and Management in Post-War Europe and Japan, Oxford, Oxford University Press, 2000. For the automobile industry, see M. Freyssenet, A. Mair, K. Shimizu and G. Volpato (eds.), Quel modèle productif? Trajectoires et modèles industriels des constructeurs automobiles mondiaux, Paris, La Découverte, 2000.

5 For investments of Chrysler in Europe and their context, see Y. S. Hu, The Impact of US Investment in Europe. A Case Study of the Automotive and Computer Industries, New York, Praeger Publishers, 1973; G. Maxcy, The Multinational Motor Industry, London, Croom Helm, 1981; J. B. Rae, The American Automobile Industry, Boston, Twayne Publishers, 1984; and J. M. Laux, The European Automobile Industry, New York, Twayne Publishers, 1992. In Spain, Chrysler’s arrivai coincided with a huge flow of foreign investment as a consequence of the new liberal legislation introduced in 1959-Chrysler’s investment was still the highest received by the Spanish economy in the 1960s. See J. Muñoz, S. Roldân and A. Serrano, La internacionalización del capital en España, 1959-1977, Madrid, Edicusa, 1978.

6 Some remarkable books on the subject are R. O. Jenkins, Dependent Industrialization in Latin America: The Automotive Industry in Argentina, Chile, and Mexico, New York, Praeger Publishers, 1977, and D. C. Bennett and K. E. Sharpe, Transnational Corporations versus the State. The Political Economy of the Mexican Auto Industry, Princeton, Princeton University Press, 1985.

7 S. Young and N. Hood, Chrysler (UK). A Corporation in Transition, N. York, Praeger Publishers, 1977.

8 L. Iacocca and W. Novak, Iacocca: An Autobiography, New York, Bantam Books, 1984.

9 Some years before, Barreiros Diesel had begun its struggle against the ‘national champion’ in the field of commercial vehicles: the public company Empresa Nacional de Autocamiones, S.A., (ENASA). See J. L. Garcia Ruiz and M. Santos Redondo, Es un motor español! Historia empresarial de Barreiros, Madrid, Síntesis, 2001, chapter 4.

10 Minutes of the board of directors of Barreiros Diesel, S.A., 26 June 1963, in Archive of the Eduardo Barreiros Foundation, Madrid [hereafter EBF].

11 Actually, Barreiros Diesel’s shares were never placed on the stock market.

12 Barreiros Diesel supported the new regulations and even asked for higher requirements for engine production (36,000 units!), trying to abort an operation promoted by the Sociedad Espanola de Construcción Naval to make BMC engines. J.A. Carranza to Agrupación Nacional Sindical Autónoma de Constructores de Maquinaria (Sindicato Nacional del Metal), 5 December 1963, Box 202, Business Files, EBF.

13 Eduardo Barreiros to the Vice-Secretary of the Ministry of Industry, 1 July 1963, Box 191, Business Files, EBF.

14 Board minutes, 13 December 1963, EBF.

15 E. Barreiros, “Notas autobiográficas’, c. 1975, Box 5, Personal Files, EBF.

16 E. Barreiros to the Minister of Industry, 20 January 1967, Box 297, Business Files, EBF.

17 Garcia Ruiz and Santos Redondo 2001: ch. 5. For Chrysler’s industrial relations in the United States and Europe, see S. Jefferys, Management and Managed: Fifty Years of Crisis at Chrysler.; Cambridge, Cambridge University Press, 1986; S. Tolliday and J. Zeitlin (eds.), The Automobile Industry and its Workers, Cambridge, Polity Press, 1986; and W. Lewchuk, American Technology and the British Vehicle Industry, Cambridge, Cambridge University Press, 1987.

18 Board minutes, 6 May 1964, 24 June 1964, and 18 September 1964, EBF.

19 Board minutes, 7 December 1964, EBF.

20 Board minutes, 7 December 1964 and 18 February 1965, EBF.

21 Board minutes, 8 January 1966, EBF.

22 K.B. Clark and T. Fujimoto, Product Development Performance. Strategy, Organization and Management in the World Auto Industry; Boston, Harvard Business School Press, 1991, p. 129.

23 In a private note, Juan Antonio Suanzes, the ‘architect’ of the INI, expressed consternation that Eduardo Barreiros had met Franco, four ministers, and the new President of the INI in the Villaverde works., because he (Suanzes) was proud of never having allowed Barreiros into INI’s headquarters. See J. A. Suanzes, ‘Notas privadas’, 1966, Boxes 4 and 87, Archive of J. A. Suanzes, Madrid.

24 Auto Revista, 11 June 1966.

25 An additional conflict emerged when, in September 1966, Eduardo Barreiros sold Constructora Eléctrica Española, S.A., (CEESA), an affiliate producing electrical machinery, to the German Robert Bosch, despite Chrysler’s preference for the British Josep Lucas. See Garcia Ruiz and Santos Redondo 2001: 280-284.

26 Board minutes, 8 January 1966 and 22 June 1966, EBF.

27 Auto Revista, 7 October 1967.

28 Board minutes 13 January 1967, EBF.

29 Board minutes, 22 February 1967, EBF.

30 Minutes of the Executive Committee of the Banco de Vizcaya, 14 March 1964 and 13 June 1964, in Banco Bilbao Vizcaya Argentaria Historical Archive, Bilbao.

31 E. Barreiros to the Minister of Industry, 13 and 20 January 1967, Box 297, Business Files, EBF.

32 Board minutes, 3 August 1967, EBF.

33 Chrysler’s Annual Report of 1967 States that “the Barreiros family offered Chrysler International management control of the Company in order to relieve themselves of further capital financing responsibilities”. This is the only information available on Barreiros in the Daimler Chrysler Historical Collection, Detroit. An element that facilitated Chrysler’s operations was the devaluation of the peseta on 19 November 1967, when the rate of exchange was cut from 60 to 70 pesetas/dollar. See MotorMundial, 1 January 1968.

34 Pueblo, 4 November 1967.

35 Auto Revista, 7 October 1967.

36 Ya, 21 July 1968.

37 Nuevo Diario, 10 May 1969.

38 Board minutes, 25 June 1968 and 11 April 1969, EBF.

39 Board minutes, 21 March 1969, EBF.

40 E. Barreiros, ‘Report to the Board of Directors as a result of both the proposal for equity increase and the situation of the company’, 21 March 1969, Box 319, Business Files, EBF.

41 Board minutes, 11 April 1969, EBF.

42 E. Barreiros, ‘Memorandum to Chrysler (USA)’, 23 April, 1969, Boxes 321 and 322, Business Files, EBF.

43 Board minutes, 24 May 1969, EBF.

44 See R. Church, The Rise and Decline of British Motor Industry, London, Macmillan, 1994, for the British case.

Auteur

Universidad Complutense de Madrid

© Publications de l’Institut de recherches historiques du Septentrion, 2002

Conditions d’utilisation : http://www.openedition.org/6540

Cette publication numérique est issue d’un traitement automatique par reconnaissance optique de caractères.

Acheter

Volume papier

leslibraires.fr
Rechercher dans OpenEdition Search

Vous allez être redirigé vers OpenEdition Search