Spain: Conflict of Cultures

Spain’s biggest postwar industrialist, Eduardo Barreiros, in 1964 made what he then called “the best and most stimulating deal of my life.” For $18 million, he sold a 35% interest in his family-owned Barreiros Diesel S.A. to Chrysler Corp., and the company started producing Dodge Darts and French Simcas in Spain. “There are no better business partners than the Americans,” he said. Today he thinks differently. He has quit as president of the firm because, although the deal greatly increased his wealth, he sank in a few years from Spain’s No. 1 industrialist to a junior partner of the Americans.

Chrysler, Barreiros claimed, did not live up to its obligations, used highhanded methods and cared little about “human values.” His accusations reverberated across Spain, whose leaders are increasingly worried about U.S. economic penetration. At 49, Barreiros is more than one of the country’s wealthiest men; he is a legend, having parlayed a shabby mechanic’s shop on the road to Andalusia outside Madrid into one of the largest private corporations in Spain. Editorialized Madrid’s daily ABC: “The most prestigious firm of the Spanish motor industry has ended up as one more factory of an international capitalist organization for which Spain’s interests matter little.” Other newspapers accused the U.S. of “colonialism” and “economic imperialism.”

Pride v. Efficiency. Actually, Barreiros had had little control of the firm for some time. After the first disap pointing year of partnership, when car output was barely half of his overly optimistic goal of 92,000, Chrysler invested another $20.5 million to save the enterprise from caving in. In 1967, Chrysler raised its interest in the company to 77%. Barreiros was still president—and his brothers Valeriano, Graciliano and Celso were all members of the management group—but his family had only a minority voice. Unmistakably, Chrysler then started running the company through its own efficiency-minded men, who were much less sensitive than Barreiros to the traditional Spanish way of doing business through friends and connections.

The company admits that it lost “several million” dollars in 1968. The Dodge Dart, priced at $3,400 in Spain, proved much too expensive and ostentatious even for government leaders. Last year, sales of Darts slipped to only 1,598, and Simcas to 31,106, out of a total Spanish car production of more than 300,000. To help the company get back on its feet, Chrysler planned another $30 million stock offering, which would have further reduced Barreiros’ share of ownership. That, most likely, was what prompted Barreiros and his brothers to resign, though they still retain about 22% of the stock. Without them, Chrysler may find the going harder in a land where personal contacts and government good will mean much in business. The Barreiros case will probably scare off other proud Spanish businessmen from making big deals with the cool and wealthy Americans.