I would be remiss if I failed to acknowledge Mr. Schwab, too, for giving freely of his time and wisdom. The relationship between PCNA and the PCA is strong, and unique among automobile manufacturers. This interview is another indication that Porsche recognizes and appreciates its customer loyalty and is completely committed to satisfying the customer.

Following is the full text of the interview (FS=Fred Schwab; BC=Bob Carlson; BJT=Betty Jo Turner; RS=Ray Starbird).

RS: Porsche sales numbers look fantastic. Are you on plan, over plan? Have the North American sales made up for what I’m going to guess are difficulties in other areas of the world where economies are not so strong?

FS: Sales in North America are excellent. We are back into the sales season. In the United States we’ve always sold our cars like a two-hump camel, with the big hump being the springtime and the little hump in the fall. Boxster sales are just phenomenal. If we can get it, we can sell it. In terms of 911 sales, the Coupe has slowed down a bit, but the Cabriolet is selling like hot cakes. The press on the Carrera 4 has been fantastic. There just haven’t been bad articles on the Carrera 4. None. I said at the Los Angeles Auto Show that Porsche Stability Management makes you a better driver than God ever intended. Through the good press that we’ve generated for the car, demand is high.

To give you a little sidelight that might be fun for your readers, [Jerry] Seinfeld is a Porsche fan. He loves the 993; I think he has the first one and the last one. He saw the 996 and said, "I don’t like it." He didn’t buy one. Didn’t want one -- didn’t buy one. He’s been at our launches for the Boxster and the 993, but didn’t show up for the launch of the 996. He wasn’t invited to the Boxster launch but he was a big part of it. He just arrived. And he gets up and works. I get about 45 minutes from him for the price of a car at our dealer launches and that’s a good deal. The Suddeutscher Zeitung wanted an interview with Jerry in connection with the Carrera 4. We sent a Carrera 4 to Jerry; he had it Friday, Saturday and Sunday. The interview with the young lady from the Suddeutscher Zeitung was Monday and he placed an order on Tuesday. So he’s going to get the first production model from the year 2000 Carrera 4.

BJT: What about supply of Carrera 4?

FS: Our demand far exceeds our forecast. It’s tight. I don’t know what you guys in the club are going to do when you have some of your slalom courses.

BJT: It may well be an autocross issue.

FS: It has to be. The system turns on the minute you hit the brakes, even if you shut it off. What I want you all to know is at race tracks, drivers — you know, the big hairy-chested ones who drive our cars – say "I don’t need Porsche Stability Management, I’m better without it. I don’t need this." They are all faster with it than without it. You have to drive the car a bit differently, but you are better with it than without it. It is safe to say that the demand for the car is greater than anticipated.

BJT: How many do you expect to have this year?

BC: About 1700.

FS: I’ll tell you this, they are all sold.

BJT: Do you expect it to shift the balance in the future?

FS: I don’t know. It will take a while to find out. Business is really good. Americans are rich. If you take a look at what has happened to the Dow Jones, the Russell 2000, etc. -- it’s just been a phenomenal run. You live in a town like Atlanta and you’ve owned a house for ten years… All Americans believe they have a God-given right to an annual pay raise and that their house is worth more than they paid for it because they are using it. Neither one of those make any economic sense at all. There is no economic foundation for either one. But I’m American, you’re American, we all believe it and since we believe it, reality has proven it to be so. There have been some exceptions to it and, incidentally, Porsche sales really get hurt when house values sink. House values in Southern California went down in the late 80s and early 90s and Porsche nose-dived in sales. House values on Long Island went down in the same period, and there was a huge drop in Porsche sales.

But today, the only person who thinks the economy might not be good is Alan Greenspan and he gets paid to scare us. But people have learned that there is no place like the stock market to generate wealth and you can use the dart board theory to make money today. Anyhow, I hope I answered your question. Sales are good. We’ll do about 20,000 cars in the U.S. and Canada this calendar year. Remember 1993? 3781 cars. I will never forget that number as long as I live.

BJT: How about total production worldwide?

FS: Total production worldwide will be over 40,000. We are very close to half -- not completely, but close. That’s one of the neat parts of our company, the fact that we export as much as we do and the economies of the world aren’t in synch. Because they aren’t in synch it serves as an equalizer for Porsche AG. Production can stay constant while America goes down and somewhere else goes up. We are, however, the key market. Porsche is in almost 70 markets now. There was a conscientious effort in the mid-90s to really broaden the customer base so Porsche wouldn’t be so dependent on any particular market.

RS: Where is the next big growth market from Porsche AG’s point of view?

The best market for us is the Washington/Boston corridor. That’s where we sell most of the cars. Now, if you look at the American populace and look at the wealth centers, it’s the Washington/Boston corridor. There are greater numbers of wealthy people in that area. The second best market is Florida — the same folks in the wintertime. Third best market is Santa Barbara south. Now, the Southern California market as a location is the single best market. Texas is fourth and Houston is much more important than Dallas -- old money, new money.

The Europeans are wealthy. Britain is a better market than France. Always has been, always will be. But if you look back historically, Britain has always been a sports car place, much more so than France. France is a breadbasket. I described that we sell our cars around the country, but I didn’t tell you that we sold a bunch in Kansas. France is Europe’s Kansas. My French friends won’t like that but France is a breadbasket and because it is, we don’t sell as many cars there. We sell more in Germany, of course, because Germans are loyal folks. You sell a lot more Volkswagens to Germans than you sell to any other populace on this earth. Germans are loyal to their own producers and that accounts for some of the disparity there. Plus, it’s probably the wealthiest nation in Europe.

RS: Speaking of the world economy, let’s touch on the merger and acquisitions frenzy sweeping the industry -- Daimler/Chrysler, Ford/Volvo — I’ve read a lot about BMW and Porsche being the strongest independents.

FS: Percentage-wise, Porsche is one of the most profitable companies in the car industry. If you take earnings as a percentage of sales, we’re up there with the leaders. I don’t think that’s quite true for BMW. BMW has done some things lately that they probably shouldn’t have done. I think my numbers are approximately correct—they had to spend three billion marks to buy Rover and lost nine billion marks since and it was said that they needed a further 15 billion to fix it. I think 15 and 9, that’s 24 billion to fix something that you spent 3 for and the ROI is not excellent. They own Rolls Royce jet engine, a manufacturer that has never made money. And while the BMW car business is extremely profitable, it has been funding two unprofitable pieces of business.

This business takes cash. This business requires constant new product. Very few Porsche owners will trade in a blue one for a white one. They’ll trade their blue one in for a new one. So we need to be there with a new car when you want to buy a new car. We have to guess long before you think you want it when you’re going to want it, when you’re going to be able to afford it, and then come out with a package that inspires you to do so. And that’s not an easy game, and there is very little room for failure.

FS: It takes a long time for dinosaurs to die, and they hurt a lot of people I the process as they’re flopping around with their great big tails. Size isn’t the key. Lean and efficient are more important. This company today has the same number of employees as when we sold fewer than 4,000 cars. [Carlson’s] bonus and mine are dependent upon that kind of efficiency. (Leafs through financial section of annual report) Some of these numbers are impressive.

BJT: Do you consider Porsche to be over the hump now?

FS: Yes. I see no reason for us to go back to the desperate days. We made mistakes. We didn’t have new product. We’ve demonstrated to you that we understand the need to have new product. You watched us roll out the 993 and 996. When we came out with the 993 we lowered its price. Since then we’ve had some price increases, but nothing major. And when you look at how the content has changed… Our employees are receiving their God-given annual pay raises, and they’ve earned it. They’ve earned it with efficiencies. We’re all more efficient today. Through the Porsche Improvement Process, we constantly force ourselves to make our own processes, inside the house, more efficient.

BJT: Can I go back to one issue Ray was talking about early on: the independence of the company. The thing that is different now from a year ago is Ferry Porsche and Louise Piëch are gone. That first generation of the Porsche Company is gone. Do you think independence is more at risk now?

FS: I don’t think so. In March we had a board of directors meeting, we celebrated our first Atlanta anniversary, and we had an all-employee meeting. Wolfgang Porsche and Michel Piëch, who are on our board, were here. Dr. Wiedeking, [Holger] Härter, [Hans] Riedel, and myself complete the board. The independence question came up. We were told by the family that there is absolutely no intention of selling the company. That’s a business question. It’s not as much an emotional question as it is a business question. If we stay successful, we’ll stay independent. So please keep buying our product.

FS: There are a lot of sports car enthusiasts who think we’re nuts building a truck. "They are having good sales, good earnings, what the heck are they doing building an SUV?" It’s the third leg to our milk stool. It’s extremely important to a business to not be as peak-and-valley as the sports car business is. The economy doesn’t have to be excellent, like it is today, to sell sports cars, but it can’t be lousy. We sell our sports cars to entrepreneurs, professional people by and large. If we sell them to big corporate folks, they tend to be on the R&D and technical side of life. But we basically sell them to entrepreneurs. The fact that these people can afford it can be irrelevant. It doesn’t make economic sense for John to show up in a brand new Porsche when he’s got to lay off Mildred who has been loyal to him for 20 years. It’s just not right. Leadership requires loyalty and loyalty requires mutual respect and everybody in the business world understands that. So even though John can afford it, no way on God’s earth is John going to do it. It’s the ultimate deferrable purchase.

If you check our customers, by and large, it’s the third car or more. It’s a weekend machine. We need to get more mainstream if we are going to keep a production base and a sales base that keeps the cash flowing. Then there is no reason to be bought. There is absolutely no reason for anybody to take us over if we can continue to provide better than average return on investment to our owners. Why sell it? If we are to provide a good return to our owners, if we are to provide adequate cash flow to perpetuate the idiosyncrasies of our Porsche sports cars, if we are to provide the cash flow to our dealer body, which is absolutely necessary so you can be serviced the way you want to be serviced, if we are to provide all the services to the owners of a Porsche that the giants in the industry provide, which you also expect of us, then we need stability and we need to constantly generate cash flow. An SUV, more often than not, will be a daily driver by someone in the household. Generally speaking, there will be more miles put on the SUV than are put on a Porsche. As such, it will be more frequently replaced, and we won’t lose customers.

It’s really interesting to see what’s happening with the Boxster. There are two customer groups for the Boxster: under 40 and over 55. The mean age of the Boxster owner is higher than that of the 911 owner. It’s 51. These are empty nesters, people who maybe had a sports car before their kids came and all of the rest. They can now afford it. It’s a neat car, it’s a good-looking car, and it isn’t scary. There have never been stories about "Watch out, the back end will pass the front end on this one." None of that has ever surrounded this car. It’s always been a dream to handle. My own family -- my 29 year old son who is a lawyer in Houston, and his mom (whose age I’m going to leave off) -- both drive Boxsters. They absolutely love them. They use them as differently as night from day. But let’s say my young son gets married, buys a house, and has kids. He may not have the cash to have the toy. Well, if practicality enters the equation, why not stay in a Porsche and go into an SUV? Stay in the family, stay connected, stay a part of it, and then his kids, too, will grow up connected.

BJT: Does that suggest that the SUV is going to be a practically priced vehicle?

FS: Part of it will be.

BJT: One wheel?

FS: You’re correct, Betty Jo, we do need a model that is reasonably priced. The curve of people who are able to buy cars based on price is geometric. As the price goes down, the number of people willing to pay for the car goes up geometrically. So that’s why we’ll always sell more Boxsters than we do 911s. At $45,000 versus $75,000, I’ve got a lot bigger audience that will consider that a reasonable price to pay for a vehicle. Yes, they will be a competitively priced, and you don’t have to understand a whole bunch about the business to know what I’m talking about. There are others out there that are competitively priced. SUVs have been small, medium and large -- mainly underpowered.

BJT: It will be badged as a Porsche?

FS: It will be a Porsche.

BJT: Sold in a Porsche store?

FS: Yes, and that gets me back to my dealer body. Today, with our sales, we cannot afford to have independent Porsche stores. With the SUV, it will be a very affordable business activity. You know our dealers are our partners. You all are their customers and they are my customers. The trick to making them treat you the way I want you to be treated is to make having a Porsche franchise be a profitable venture. We need to have win-win relationships. Every speech I’ve ever given to our dealer body, I say the words win-win because A.) I believe it, and B.) every time they put their hand too deep in my pocket, I can stand up there without blushing whatsoever and say, "Does that feel like win-win to you?" And when I stick my hand too deep in their pocket, they can say it right back to me. But we’re going to have 35 to 50 exclusive stores. Customers will get better attention. Customers will get better service because the business is totally focused on one thing, and that’s Porsche.

BC: Most all of our dealers are dualed with other manufacturers. Having the SUV is going to eventually double their sales, and that gives us a much greater opportunity within a dealership, as Mr. Schwab said, for seeing more dedicated showrooms. They may have dual franchises, but the Porsche store is going to be down the street or across the lot. It gives us a greater presence, and, all the way down the line, is going to give better service to our customers.

RS: Any concerns about coming into a crowded marketplace?

FS: No. I’ve said this over and over again, the press back in the early 90s said the sports car was finished. Everybody is going to be driving trucks, they said, and the sports car industry is a dead duck. We didn’t believe it. We were out there predicting the future better than they were. We have sold 15+ million vehicles in this country for I don’t know how many years. The average age of the vehicle is now over 8 years. When I was a kid, cars didn’t last 3 years and they couldn’t have an average life of 8 years. So it’s much more of a replacement market today than it’s ever been. It’s also turning into much more of a niche market than it’s ever been. Prowlers. Miatas. Porsches. The Toyota MRS. The BMW. If you go to car shows today, you see a plethora of automobiles. Trucks from small to huge. The Ford Excursion—nobody has got a garage big enough to put that sucker in. There are little niches everywhere. Why not a niche in the truck business? It’s where we’re headed. We as manufacturers have all learned — the Beetle was a great example — we’ve all learned how to economically give you a niche product at a price you’re willing to pay. That takes a load of compromises that we try to keep from you, but there are ways that we can give you a product that you consider affordable that didn’t exist a few years ago. The best example is Volkswagen. The Beetle, the Audi A3, and the TT are all the same frame. The Z3 and the small 3 series use the same frame. The C-Class and the SLK use the same platform. These things look as different as night and day. Take a Beetle and an Audi A3 and put them together. You can’t tell it’s the same frame.

RS: So the platform will be the same. The engines will different?

FS: Right.

BC: We will make our own engines. The design, of course, of the two vehicles will be different. The platform is the shared component.

RS: About the engine -- I’ve heard eight cylinders going into this. Is that accurate? And is that engine to be used later on for a Motorsports application? Five liter V8?

FS: You can surmise whatever you want to surmise. I’m not going to confirm those kind of questions.

BC: We can’t really get into details yet.

RS: Perhaps you can talk about a fourth leg for the milk stool? A four door sedan, similar to the 989?

FS: We don’t have the third one yet! I don’t think you’ll see us ever produce a sedan.

RS: Can I put that in the article?

FS: I said I don’t think you’ll see us ever produce a sedan.

BC: You should never say never, but in this case, never is a long way away.

FS: Fred Schwab will be long retired before there is any sedan in our future.

RS: That V8 question led to Motorsports. This is perhaps more of a PAG issue, but perhaps y’all might touch on Motorsports.

FS: Motorsports is important to Porsche. We’ve always raced. We’ve had a period of time where the rules were totally adverse to Porsche. And the racing world has gone away from turbocharged engines and switched to naturally aspirated engines.

We’ve got to beat our competition and we need to beat our competition in a configuration that is totally competitive to that which our competition is doing. If that requires a total change in direction, we’ve got some pretty good engineers and pretty capable people, but we require a little bit of time, too. Ergo the year off. The decision about the future will be made this summer. There are a whole lot of people working very hard right now to help us make this decision.

RS: This is a total change of gears — talk about Porsche and the Internet presence of the company.

FS: The Internet is the future. I’ve read various forecasts of the percent of the GDP that will be pulled back and forth across the Internet by 2010, 2025. Porsche today is behind. We got behind moving from Reno to Atlanta. 75% of our people are new, and we have a desperate need to get back to leading edge, versus following the leader. Full admission, at this stage of the game, that we’re behind.

Think about how much fun it would be, to go the dealership, and be able to configure a car, with, what’s that color…?

BJT: Ocean Jade Metallic.

FS: Ocean Jade Metallic. [Chuckles]. It’s not one many people would buy…

BJT: A redhead would!

FS: [Laughter] Talk hard to her, Bob, we may have a customer. I think – I know, that it’s good for the business when you configure your car, and you wait for your car to be built to your desires and design. You will buy more extras that are profitable to the business. If you configure your own car, then my dealer buys it for stock, and waits for you to knock on his door, and then drive it away. That’s as logical as 1+1=2. It‘s difficult for us, because buying a Porsche tends to be situation-inspired. It could be a marriage; it could be a divorce. It could be a new baby; it could be a graduation from college. It could be starting a business; it could be selling a business. It’s event-oriented. The customer who comes into the store to buy a car, it’s not the first time that he -- it tends to be a "he" – it’s not the first time he’s thought of it. He’s been thinking about it for a long time. He knows a lot about before he ever shows up, and he thinks he knows what he wants. Because he saw it in Bill’s back yard, or Harry’s back yard, or he saw it on the street. He saw somebody else’s. If we let you work with a computer to configure your car, try interior colors, exterior colors; see what it looks like with a 17" wheel, then an 18" wheel; a black cabriolet roof or a gray one -- if you want carbon fiber on the interior, zoom in and have a look -- I am convinced that we can change your mind about how quickly you need to have this thing. And that you will be patient with us and not demand instant gratification. If you order your vehicle and wait for it is more economical for everybody: A.) You get what you want, and B.) We’re not changing orders because first we have to give the factory some 90 days notice.

BJT: Will you be able to make this work?

FS: Yes. I need a little time but I would guess that in perhaps 18 months we could have it.

BJT: These would be in showrooms. Would it also be available on your web site?

FS: Yes. And more than that, let’s say you’ve ordered a car. We know the car, the model, the whole nine yards, so now why don’t I assign you a PIN, and to get the PIN I find out about Leonard [Betty Jo’s husband], your daughter, your address, telephone number, your birthday, and your hobbies. All of this stuff I’m driving through the system because I need to know about you. I want to know what you traded in, if you’re financing, leasing, buying, and why. I need as much information about you as I can get. Now you have your PIN, and I’ll take photos at different phases of the production line…

BJT: Or you could just put cameras in the factory…

FS: Let’s not make life real complicated. Let’s go one step at a time. I might be able to show it when it’s in the parking lot in Emden waiting for the ship, or on your ship. Or if it’s coming from Uusikaupunki, I might be able to show a little bit of Finland. Show it being put on a truck in Charleston. And then, I’ll inform the dealer before I inform you. Keep my business partner always in the loop.

But after I deliver your car [there is the issue of service]. You know we make appointments with our plumbers, our electricians, and our gardeners, but we show up at the dealership at 6:30 or 7:00 in the morning to get a car fixed. Then we get mad when we can’t pick it up at 4:00 or get driven to work. There ought to be ways that we are able to have discussions, perhaps via the Internet. A huge percentage of our customers are Internet active. If your car has a loose quarkus, why not make an appointment, and I’ll have all the things that I can think of available so when you come in the car can get repaired like we said we would. Then only in the case where we miscommunicated do we have the potential that the part is not there. For my business partners, the dealers, I’ve got to be willing to have some kind of automatic system where I ship them the part and, if the part wasn’t necessary, I take it back at no cost to them. To do that I’ve got to have some mechanisms that are a little more efficient, but the one thing in life that none of us can buy is time. Everything else I can buy. We’ve got to minimize the time it takes you to get something done, the time it takes me to get something done and give you satisfaction on the first go around. The Internet is the way I can make this work.

We have Selection stuff. I can suggest that you buy a present for Leonard from me instead of from some place at Phipps Plaza. If I know you’re into racing, because you told me you were, I maybe could sell you some stuff to make your car a little more agile than it would be normally. Things to tie us together.

BC: Maybe there’s another area we should touch on, too. The recent case on the domain names on the Internet and why it was important for us to protect the Porsche name on the Internet.

FS: We irritated a lot of the Porsche fans and owners. Did you know that porscheparts.com was a porn site? To fix one, you catch all. We tried to do some business deals with individuals and it didn’t work out. There is nothing more valuable to Porsche than our brand. We’ve spent multi millions of dollars making the Porsche brand mean similar things to people when they see it, and that’s not to be given away or treated lightly, or to be associated with any sex thing or anything else. We absolutely will protect to the ends of this earth our brand because there is nothing more important to us than that. And that’s what we were doing. The fact that we offended people in the process is a product of limited knowledge. If they knew the whole story, which I’m not totally at liberty to tell you, nobody would be mad at us. Developers of some of Porsche owner’s favorite sites are not mad at us, either.

RS: I think after the initial outcry, when people thought about it more and heard the stories... I have to give you credit for well-reasoned responses, because there was a lot of emotion in that debate…

FS: Unbelievable emotion! The rights that people think they have are unbelievable—where’d that thought process come from? I get paid to protect and nurture the brand. It’s a big part of my job.

BJT: Since this is going to appear in Panorama, why don’t we make it a little clearer what happened. We did print the press release. We did let people know you were going to act against those 130-odd domain names. You did. We got a follow up release that indicated 43 had voluntarily relinquished the names.

FS: My goal was to not have our brand name associated with anything that isn’t representative of what we stand for. My best example is this porn site. There were others taking advantage of us, so the broom swept clean. Other people got swept up into the bin. It is still not settled.

BJT: Is it fair to say that everybody that got caught by the broom had the option to change a name and continue?

FS: Yes, absolutely. We’re not trying to stop the discussion rooms, the chat rooms. Just don’t use our name.

BC: In some cases we would have been very happy if they were shut down -- when it came to the porn sites for sure -- which were a true misuse of the Porsche name. And others we’d like to see change their name and continue. There was even one case, PorscheList, where we tried to actually reach a business agreement. But financially it involved a lot of money that we just couldn’t justify. He has changed his name, and as far as I know, everything is going on as before.

FS: He as an individual isn’t unhappy. He put out there on the site what we ultimately agreed to, and I don’t think there are hard feelings twixt us.

BC: His readers and several PCA regional newsletters are mad with us, thinking we were going to shut him down. It has calmed down now. He told them that this is what I’ve changed the name to and on it goes.

RS: Actually John used the opportunity to go in and totally overhaul the site -- add a number a features we asked for -- and the site is better than ever now. Sometimes it takes an opportunity such as this to really improve upon what was already a good thing.

RS: You brought up a point earlier about the new 911 and the Boxster being designed at the same time, and the future of the company resting on that. I think when you look at them you can tell there were many similarities. Are there any plans in the future to…?

FS: They will grow apart. Because the need isn’t as desperate. The situation when we designed the car -- we were playing live or die games and that’s no longer the case. You will find the vehicles growing apart.

RS: Can you elaborate at all?

BJT: Which car is going to change materially?

FS: Both will. They will grow apart. Now, what you need to know is that it is extremely important to our future that the Boxster stays a Porsche. We made some cars in the past that were not real Porsches to the aficionados. They didn’t stay Porsches. It’s extremely important that 25 years from now the Boxster is seen as a mainstay of Porsche. The 911 is. I’m not planning on kicking the can, but there will be a new Porsche 911 following my hearse. There will be 911s as long as there is a Porsche. I know it is our plan that there will be Boxsters as long as there is a Porsche. You will see two distinct mid-engine, rear-engine evolutions.

BJT: And at a glance you will be able to tell one from the other.

FS: Yes, you’ll know one is a Boxster and you’ll know one is a 911. It was not an unexpected criticism. We know these things, too, because we build them and we understand them. The new 911 is simply the best 911 we’ve ever built. All you have to do is try it, drive it, and play with it. We’ve never done better. And the Boxster is everything we said it was going to be.

BJT: Can I ask you a question about that? Are you at all concerned about the magazine long-term reports that show some quality problems with Boxsters?

FS: Yes. We have to fix our problems. I’m proud of the automobile industry. We all have grandma’s refrigerator with beer in it someplace in our garage. So the refrigerator is the one man-made thing that never breaks. It lasts for a lifetime. But I think I said earlier that the cars now have an average life of 8.5 years in North America. Back in the ‘50s, they disintegrated long before 8.5 years. The quality level of vehicles today is as high as it has ever been and I don’t know about you all, but I’m a much pickier buyer today than I ever was. I’m a pain in the tail. No matter what I buy, A.) It will work now and continue to work and B.) It will do what everybody says it will do. This car business is competitive as all get out; it isn’t a business for the meek. We are constantly, constantly, constantly improving the quality. And some of the issues that got raised shouldn’t happen. They did happen and we have to fix it and fix it yesterday.

We have a process called the Porsche Improvement Process. We have created matrix teams, and there is a matrix team whose task is to create new ways to A.) Improve communication and B.) Attack a top 20 list. There is always a top 20 list. The idea is to just eradicate these problems. The pay of the people who are on this team will be dependent on definitive solutions to problems. That’s the way you get body, mind, soul, and focus attacking the problem. You will see improvement. You won’t see instant eradication, but you’re are going to see strong improvement.

BJT: Is there some specific area?

FS: I wish there were. We have problems in body, we have problems in powertrain, and we have problems in electrical. It’s across the board.

BJT: So it is not related to where the car is built.

FS: Not at all. There are occasions when it is design. There are occasions when it happens on the assembly line, and there are occasions when it happens in the purchase. You know, people who buy our product tend to have above average earning but there is a limit to what a North American will pay for a car. You can only see that spot when you are looking over your shoulder. Because you say "yes-yes-yes-yes-yes-stupid!" That line, somehow all of America communicates to each other silently, because it’s there for nearly 100% of the 280 million of us. We have all learned new lean production methodologies, lean office situations, the whole nine yards, to make ourselves much more efficient than we’ve ever been. I’m proud of American industry because American industry has learned the lesson best. But at Porsche we are proud of Porsche because we learned it out of desperate need, and you have to manage that process. It’s easy to get too zealous in one direction, and overstep your bounds. We’re going to fix it.

BJT: Are you going to remember the price lesson?

FS: I never forget it. I’m the guy who -- we had five layoffs at PCNA, and I lived through every one of them. We fired totally innocent humans who did nothing wrong – we did it wrong. That’s harsh. I don’t forget that.

BJT: Does Porsche believe there always must be a Boxster-type car, at that price range?

FS: We can’t defy the laws of gravity, any more than anyone else can. We understand that this is a business, and to be success at the business, you have to provide, as economically as possible, value. Now, we package fun. But I don’t know that there is the price/value equation, as much as there is the price/performance equation. And the price/performance equation is best demonstrated by the Turbo. The 993 Turbo had a list price of $105,000 and the only people who thought it cost $105,000 were the people who didn’t buy it. By the time you paid the luxury tax and all of the delivery charges, the car cost $125,000. But to get that kind of performance from a competitor, you have to pay 50%-100% more. That car sold out. We will most likely have a Turbo in our future.

BJT: When will that be?

FS: We’re not quite certain of that, but not a long ways away. We just came back from a five-year planning meeting, so I know how many of those I’m going to get. I know we have orders that are three time that number. I’ve got friends who placed orders sight unseen a year and a half ago. We introduce the new 911, and they hear us say, "we’ll do like we always do, and evolve this product," and they read into that: Turbo. They go to their favorite Porsche dealer and say I want on your list, and put their money down. There’s more of them than I know I’m gonna get cars. The fun part about it for me is that the people who bought those 993 Turbos, who spent that $105,000, will get every penny back. 100 cents on the dollar, two and three years later, for that car. So that proves to me that there is a price/performance equation. Some of the people I know who bought it and sold it are kicking themselves.

BJT: Nothing good every came of selling a Porsche

RS: Unless you get a new Porsche car.

FS: See, I sell new cars, and there’s a limit to how big everybody’s garage is [laughter].

RS: What was your first Porsche?

FS: I think you know that I am a CPA. I went to university on a scholarship and so I was always pretty frugal. I’ve always loved automobiles, but I didn’t drive a Porsche prior to joining Porsche. I’d driven BMW and Mercedes, domestic cars when I was a practicing CPA in Detroit with American Motors and Chrysler as clients. I couldn’t drive anything else. When I was in Detroit working for Fruehauf Corporation we owned Kelsey-Hayes, a subsidiary that provided wheels and brakes to everybody in the business, and the Big Three were the business. I came to Porsche after Fruehauf, so the first time I drove Porsches was when I was employed here.

RS: And you can’t go back now.

FS: No, I’m as caught as my customers are. We have about a 76% repurchase rate -- it’s one of the highest in the business. I’ve driven them now for 14 years. I hope you can tell by talking to me that there’s a bit of a love affair here. I really love the product. I tremendously love the business and I love the industry and I love the car. It’s important that we keep it independent and successful.

RS: What do you drive now?

FS: I drive a 911 Carrera Cabriolet with about every option known to man on it. My wife has a Boxster, and we just love them. We get new ones all the time. Our cars aren’t titled and to sell them as new cars and have finance companies accept them as new vehicles, we try to keep fewer than 6000 miles on them. As a consequence, I get new cars all the time. It’s a terrible burden.

FS: Want to talk about the cars you drove during the anniversary celebrations? He did a number of different events: Meadow Brook, Watkins Glen, and Laguna Seca. And at two of the events he drove the Sebring 1960 winner, an RS-60.

FS: It was a gas! Man-o-man, talk about swapping ends! Driving that car was just plain fun. Now, it was scary because they put me in the car and said, "Fred, never let it go below 8500 revs," and it has drum brakes. The third time you hit ‘em, you don’t have ‘em. You stopped it by – you didn’t stop it -- you slowed it down by downshifting. It’s really a valuable machine, and while I’ve had some driving lessons, I’m not a race driver. And you have to double clutch this sucker and the whole nine yards. What it did for me is make me realize… I graduated from college in 1960, and this is a 1960 machine. Technology today has so far improved the product that I can get in a street car and go around the track faster than I could in this thing and probably safer. Undoubtedly safer and undoubtedly faster. Now this car will go fast, but you had to be doing everything mechanically and technically correct to keep it on line.

So I’m in this car at Meadow Brook, and at the back of the track there is a little hill in a middle of a curve, and everybody told me, "Don’t let up. Squeeze it and keep the power on, Freddie." I’m sitting in this thing thinking, man this is fun—cause it is fun—and all of a sudden I come over the crest of this hill and cars are spinning in front of me, and I know the brakes don’t work because they hadn’t worked for a long time. I mean you could put your foot on them, but not a whole lot happened. So I’m right at the apex of this hill and I let up. The spin was instantaneous! I had my foot as hard on the brake as I can. I’ve got the clutch in and we’re going around in circles and I’m in the infield and life is in slow motion as I’m going towards a tree.

BJT to BC: Could you see this?

BC: Yes!

FS: He sees the dust! Life really does slow down. And I said to myself, "What a way to end a career." It stopped and it was still running. All I did was fill the tub up with dirt.

FS: And these were supposed to be parade laps.

FS: And then at Laguna Seca I went the fastest in a car that I was driving. I had Brumos’ Supercar 911 Turbo championship car. That car went like stink! About the sixth or seventh lap, you start to get a little more comfortable — go a little faster. On that front straightaway I was going a whole lot faster, and there’s that little whoop-de-do just after the finish line. That’s the only time I’ve ever had that feeling in my life -- when my shoulders and body weren’t moving, but everything inside was going up. You’re cranking by the time you get to that spot and everything is going up but you’re not.

RS: You were going how fast?

Frederick J. Schwab

EDUCATION B.A., Accounting, Michigan State University

CAREER STOPS In ‘60, joined Touche Ross and Company (now Deloitte Touche LLP); reached partner in 1969. Moved to Fruehauf Corporation in ‘74 as President of Ackermann Fruehauf, a wholly owned subsidiary in Germany. Elevated to President of Fruehauf Europe in ‘78, then Executive Vice President of Fruehauf International in Detroit in ‘82. Joined PCNA as Executive Vice President, Finance & Administration, in ‘88. Promoted to President & Chief Executive Officer in ‘92.