Total 911 plays tribute to the late, great Peter Schutz, one of the most important figures behind the 911's success
“Can you do that?” asked an astonished Bott. “Yes I can,” was Schutz’s reply, and for a while he really could. Having reinstated the 911, he goaded the racing department into building the Le Mans-winning 936, encouraged the production of the ‘missing’ 911 version, the Cabriolet, and above all, vastly increased Porsche sales and profits. For a time it seemed that everything he touched turned to gold. But of course there is far more to the story than a simple run of luck.
It is often said that people make their own luck, and that, to a large degree, defines the sort of man Peter Schutz was. Born in Berlin, he was the first of two sons of a Jewish paediatrician, Leopold Schutz, who at the time of Peter’s birth in 1930 was teaching at Berlin University. By the mid-1930s it was increasingly apparent to Dr Schutz that although his children and wife were not classed as Jews, the family would never be safe from the Nazis, and in 1938 he acquired exit visas. Incredibly, he then felt constrained to give these visas up to four of his Jewish undergraduates who were in danger of imminent arrest. It was March 1939 before he could secure more exit visas for his family. In a compelling passage in his semi-autobiographical book The
Driving Force, published in 2005, Schutz recounts how the family fled to Stettin (now Gdansk) with the Gestapo literally on their tail, and just managed to catch a ferry to Oslo. From there, they sailed to Havana, and endured a two year wait in penury
(the Cubans refused Leopold Schutz a work permit) until they secured visas to the US. Once in North America, things were hardly better at first. Despite his qualifications, Dr Schutz had to fold sheets in a Chinese laundry and do other menial work until he obtained US citizenship – a five year process – and could take the examination to practice medicine again. Shortly after, recalls Schutz, they went to see
Yankee Doodle Dandy at the cinema and were all moved to tears. On their return home, Dr Schutz told them: “We are now Americans. No more
German will be spoken in this house,” and Peter Schutz added, “We had finally arrived; we were proud to be Americans.”
In 1952, with a BSC in mechanical engineering from the University of Illinois, he joined Caterpillar, working in a series of product-development roles. Exposure to Caterpillar customers gave him a taste for selling rather than engineering, and in 1967 he went to Cummins Diesel as a product planner,
before eventually becoming sales chief. Following the oil crisis of 1974, and responding to a perceived need to reduce fuel consumption, Cummins fitted a fuel pump which restricted diesel flow. As a consequence, trucks using Cummins engines went slower. This frustrated drivers, who would keep the old model of pump and refit it as soon as they were clear of the company depot, refitting the factory-specified item before they re-entered the depot. Schutz, who had several times before advocated doing what the customer wanted rather than what Cummins wanted to make, thought this situation was silly: companies were not getting better mpg, drivers were antagonised and there was a tendency to blame the engine supplier, Cummins. Schutz encouraged Cummins to build a more powerful engine in the first place which, because it wasn’t being driven at the limit, would provide better mpg, and would please the drivers who would feel their complaints had been listened to. According to Schutz, his solution was a hit – Cummins made more profit from the bigger engine, and Schutz himself was seen by Cummins clients as a manager with their interests at heart. He was even invited to address the Teamsters Union congress (the big US transport trade union). This was a step too far for the conservative Cummins board who forbade him, and Schutz resigned over the point of principle.
From Indiana and Cummins he would move to Cologne, Germany as president of the diesel division of conglomerate Klöckner Humboldt Deutz – a remarkable switch for a man who had fled Germany almost 40 years earlier. His role at KHD would prove a very effective preparation for his later role at Porsche: he discovered the differences between American and German business culture and, above all, relearned the German he had not spoken since his early teenage years. When the call from the head hunter employed by Ferry Porsche came, almost on Schutz’s 50th birthday in April 1980, he was puzzled, but keen to know why a car company should be so interested in a heavy diesel engineer.
In fact, the Porsche board was not looking for an engineer or a car industry specialist; it was entirely confident in the engineering of its products. Where it had lost confidence was in its ability to sell cars and make profits. 911s lay stockpiled in a field behind the plant at Zuffenhausen. In Schutz they saw a man who could bring new life to the company’s marketing, especially in the US, then worth 55 per cent of Porsche’s sales. Schutz’s engaging nature and outgoing personality immediately appealed to Ferry Porsche, who was severely bruised by the long feud with his previous CEO Ernst Fuhrmann. Schutz was quick to note this, and one of his first moves after his appointment in January 1981 was to eject the accounts department from the office facing his own and have it refurbished for company chairman Ferry, who had moved his base to Ludwigsburg to avoid daily contact with Fuhrmann.
He also recognised that of Porsche’s three product lines: 924, 928 and 911, only the latter, the model it intended to drop, made any profit. Not a sports car specialist, indeed he had never driven a Porsche, he had nevertheless done his homework, and knew from his research in the US that American buyers loved the individuality of the 911, but the car’s reputation was let down by the camshaft chain tensioner, which had a habit of failing outside the guarantee period. When he asked Zuffenhausen engineers about this, they told him repairs were a profitable revenue stream for aftersales, so they had no intention of changing anything. This was just the kind of arrogance that brought the best out of Schutz: much in the way he berated the racing department for planning to race at Le Mans with the 924 – a car they told him had no chance of winning – he shamed manufacturing into redesigning the chain tensioner. He toured US dealers, where his almost evangelical approach won hearts and minds for Porsche. Sales increased, and as the dollar gradually appreciated, so did the profitability of every 911 sold in
Schutz’s can-do optimism had a galvanising effect, not least of which was to encourage the 959 super Porsche. After years of restraint under Fuhrmann, Porsche plunged into this project a little too fast: whereas another CEO, Bob Lutz of Ford for example, who had been Ferry’s first choice for the role (he turned Ferry down) would also have spotted the folly of dropping the emblematic and profitable 911, he might also have suggested more caution with the 959. Porsche was right to investigate all wheel drive (and since 1995 has made a profitable virtue of it in its Turbo models), but trying to make the car from the outset with every available state of the art technology was surely doomed. Supplier delays and subsequent
cost over-runs would be inevitable, and to commit so much investment to building a model which could not be sold in Porsche’s most lucrative and important market, the US, was also questionable.
A private pilot and flying instructor, Schutz had a vision of US Porsche owners driving their 911s to the local airport and taking off in their Porsche-powered planes. He talked the company into developing the 3.2 engine for aviation: the fuel-injected flat six Porsche Flugmotor could, with its smoothness and economy, offer a modern alternative to the ancient four-cylinder Lycoming units beloved of US private aviation. Ten million Deutschmarks were invested in the project, which logically should have succeeded, but which foundered on an element of ‘not invented here’ among the American plane builders. Porsche also miscalculated – US private pilots were not rich, and they would not shell out a further $50,000 to have a Porsche engine in a plane which already cost $150,000 with a Lycoming unit. The project was quickly wound down in 1988 after Schutz’s departure.
Car and Driver commented that the whole initiative seemed to correspond more with a personal interest (Schutz’s) than as a response to a legitimate market demand.
While sales and profits went up – over Schutz’s tenure, production went from 28,000 units in 1980 to 58,000 in 1986 and profitability was quadrupled – beneath the surface were dangerous currents. The 944, rightly promoted by Schutz, was a brilliant sports car, particularly the turbo, but it was not a
911. The 911 itself had received little development during the decade, but much creative resource had been channelled into the 959, which by 1986 was still no nearer launch and recouping some of its costs. In the bowels of Porsche, inventories were high and Wendelin Wiedeking, who had joined the company in 1983 as a production technology specialist, found that his was a lone voice complaining of the total lack of parts commonality between the 944 and the 911. Criticism of Schutz came from Tony Lapine, a Fuhrmann loyalist who said “Privately he was a good guy, great company, but whatever his instructions, if things went well, he would take the credit; if something went wrong, it was always your fault.” Managing director of UK distributor AFN John Aldington, who had firm ideas on maintaining the exclusivity of the 911 in his market, also clashed with Schutz, whom he accused of merely being interested in selling volume.
Schutz got into far worse trouble with US dealers. Porsche’s US importer was VW Audi, and Porsches were sold through 300 Porsche-audi dealerships. Zuffenhausen wanted to break free from this and, in February 1984, Schutz informed Porsche dealers that the company was establishing Porsche Cars North America, which would operate 30 Official Porsche Centres around the country. These, built to the OPC template, would be open within a year. The proposals caused uproar. Dealers who had previously bought direct could still sell Porsches, but reduced to mere sales agents they would have to buy from their local OPC, making only 8 per cent against a previous 16 per cent. In the land of litigation, their lawyers went into overdrive, and within a month Schutz was staring at a possible 3 billion dollar lawsuit. Zuffenhausen relented, retaining its proposed head office, PCNA in Reno, with responsibility for import and distribution, but the OPC scheme was abandoned. The affair was over before it affected sales but Schutz, who had planned the scheme and sold it to the Zuffenhausen board, was humiliated. This episode marked the beginning of his dissolution with Porsche.
The dollar reached its high point in mid-1985 at one dollar for every 3.2 Deutschmarks, but then it began its inexorable slide – DM 2.4 in 1986, and DM 1.9 the following year. Porsche earned less and less money on each car sold, and price increases drove customers away. Asked by journalists what plan B was, Schutz replied there was no plan B: Porsche’s currency hedging was fairly minimal, so the exchange rate had an immediate impact. After Black Monday, 25 October 1987, the Porsche board’s disenchantment with its American CEO reached a new level, and Wolfgang Porsche was deputed to inform Schutz his seven year contract was being terminated early. This suited Schutz, who was equally disenchanted. He was the first of several sacrificial lambs: Lapine and Bott would follow in 1988. Schutz flew back to the US to rejoin his wife, Sheila, who had returned some time earlier. An astute businesswoman in her own right, Sheila had never felt at ease, it was said, in a society which was so male dominated.
Porsche did not emerge from this dark period until 1994-5, by which time its board had seen off more top managers, notably Ulrich Bez, Bott’s successor as engineering director, and CEO Arno Bohn. But unlike many in his position, the ebullient Schutz, who efficiently promoted by Sheila had become a feature of the universities speaking circuit, bore no grudges. Friends said he unfailingly spoke of Porsche with the passion of a man still working there. In later years, Porsche belatedly recognised this, and Peter Schutz, already a star of the US Porsche enthusiast community, reportedly found that his pension had been increased. Porsche also extended official invitations to him, bringing him to Leipzig in 2004 to the opening of the Cayenne plant.
Peter Schutz was the right man at the right time for Porsche. His emphasis on dealers and customers helped to turn Porsche from being a largely engineering-orientated company into the marketing specialist it later became. If he was blamed for the extravagance of the 959 or the aviation project, it must be said that the board of shareholders, which included Ferdinand Piëch, backed him almost without question in the early days. The climate of optimism Schutz established was also conducive to things Porsche did best, like the company’s brilliant return to sports car racing with the 956 and the immensely successful F1 joint venture with Mclaren.
If ultimately his luck ran out, the major factor – the dollar’s fall – was beyond his, and indeed everybody’s control. Someone had to do it though, and Peter Schutz’s Porsche legacy will inevitably be as the man who saved the 911.
ABOVE It was Schutz who pushed hard for the 959 project’s fruition, even if escalating costs and multiple delays at the time meant it bore a heavy load on Porsche’s finances
Left Aside from saving the 911, Porsche’s revered 959 owes much to Schutz’s legacy – lots of its technology is still employed on the company’s sports cars today