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Business

Fiat chief Marchionne will head up Chrysler

Latest update : 2009-05-07

Sergio Marchionne, Fiat's boss and the man behind its takeover of Chrysler, will be the chief executive of the US firm after it its bankruptcy procedure and tie-up with the Italian group are completed, said a spokesperson for Fiat.

AFP - Sergio Marchionne, the magician behind Fiat's spectacular recovery, becomes the head of bankrupt Chrysler with Canadian credentials, a name as a hard driver and an eye for overlooked talent.

He takes on the vast task of turning round Chrysler, while also moving to sweep up the European Opel end of the stricken GM empire to create the second-biggest auto group in the world after Toyota, with eyes wide open.

"This is a marriage made in heaven industrially," he said of the Chrysler tie-up in an interview with the Financial Times three days ago.


But he also observed that "you are always taking a big gamble when you do something completely new" and "you have to stay humble through these things."

Carlos Ghosn at French Renault achieved something similar when he successfuly tied up with ailing Nissan.

But Renault came badly unstuck in a previous venture with American Motor Cars, which then passed to Chrysler, and Daimler made a disastrous attempt to buy into the US market by taking over Chrysler and then disbanding it.

Marchionne however is taking Fiat, considered by many analysts only a few years ago to be too small and fragile to survive alone, into new pastures in unusual times and by unusual means.

He is known to prefer flat management structures and can be expected to focus on the hierarchy at Chrysler, while getting deep into the nuts and bolts of the business and looking for talented people buried within the organisation.

His hand is strengthened by the fact that, together with Fiat group chairman Luca Cordero di Montezemolo, he has already turned Fiat around from a series of crises in the last years of direct management by the founding Agnelli family.

Although the group has been hit by the global economic downturn, it is not in the dire straits of some companies, and notably the US manufacturers.

Marchionne is making maximum use any inclination of governments to help auto industries to protect tens of thousands of jobs.

And he is using half a century of technology built up by Fiat in the field of small-car technology to "buy" his way into Chrysler without using cash.

The initial post World War II success of Fiat Auto, the main part of the vast Fiat industrial group, was partly built on the tiny Cinquencento, capable of running through the narrow back streets of ancient Italian cities

In 2007, Marchionne decided to launch a revamped city-chic version of this runabout three months early, in keeping with his style for rapid, rigorous and surprising business moves.

Fiat builds about two million cars a year for sale mainly in Italy and the rest of Europe, and Marchionne signalled at the end of last year that he wants it to achieve a critical mass of about six million vehicles.

He told Automotive News Europe in December: "As far as mass-producers are concerned, we're going to end up with one American, one German of size, one French-Japanese, maybe with an extension in the US, one in Japan, one in China and one potential European player."

Little known in 2004 when he took the helm of the Italian auto icon on the verge of collapse, Marchionne quickly won over the media, unions and politicians by turning the company around without massive job cuts.

His first big coup came in 2005 when he wrested 1.55 billion euros (2.0 billion dollars) from General Motors in a tense game of bluff in exchange for dropping a threat to force GM to buy Fiat's then moribund auto unit under an existing agreement.

The same year, thanks to cost reductions and the launching of new models, Fiat turned a profit for the first time for four years.

Marchionne has a penchant for projecting a casual style to the media, but the tall, round-faced Marchionne is an implacable boss who let go dozens of veteran apparatchiks in favour of young Turks to head up the group's main brands: Fiat, Ferrari, Alfa Romeo and Lancia.

"I'm always assessing my staff; I give them grades and I tell them to watch out -- if they don't pull their weight, they're out," he once said.

Since the start of the world financial crisis, Marchionne has not wasted a moment to adapt, insisting in December that the choice was to grow or die.

Not even one month later, a preliminary agreement was reached with Chrysler.

Born in Italy in 1952 but raised by his Italian parents in Canada, Marchionne has dual nationality. After studying law and management in Canada, he began his career as a tax expert for Deloitte and Touche.

Before joining Fiat, Marchionne was general director of the Swiss quality-assurance giant SGS, of which he is still president.

He is also a non-executive vice president of the Swiss bank UBS. But he has signalled recently that he will cut back on such external responsibilities because "I can't do it all."

Date created : 2009-05-07

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