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Fiat chief carries a bag full of worries
(China Daily)
Updated: 2009-09-15 07:58
SOUTHFIELD, Michigan: To save Chrysler Group LLC, Chief Executive Officer Sergio Marchionne has to create a mid-size sedan that can compete with the world's best. It's a three- to five-year job, and he may have two years to do it. Chrysler, which got a $15 billion government bailout, may be out of cash in 24 months if he doesn't return the Auburn Hills, Michigan-based company to profitability. Developing a car to rival perennial top sellers Toyota Camry and Honda Accord would normally take at least three years, analysts say. Marchionne, 57, the CEO of Fiat SpA who brought that company back from near ruin, stepped into the toughest challenge of his career by taking control of Chrysler. Failure may mean not only the demise of the third-largest US automaker and tens of thousands of jobs, it may prevent Marchionne from turning Turin, Italy-based Fiat into a global player. "He's going to have a much harder time than at Fiat," said Maryann Keller, president of consulting firm Maryann Keller & Associates in Stamford, Connecticut. She's covered the industry since 1972 and said the question is "whether they have time to fix the product problem before they run out of money". Like Carlos Ghosn, who runs Nissan Motor Co and Renault SA, Marchionne juggles jobs. Along with his CEO posts, he's chairman of CNH Global NV, Fiat's Amsterdam-based farm-equipment unit, and is vice chairman of Zurich-based bank UBS AG. He is also chairman of SGS SA, a goods-inspection company in Geneva. He sleeps three to four hours a night, works weekends and takes five days of vacation a year, said people who know him. He carries a small backpack with two BlackBerry devices and two iPhones - one each for Chrysler, Fiat, CNH and UBS - plus a fifth handset for emergencies, according to people who have worked with him. Time shortage Marchionne declined to comment for this story. Spokespeople at Chrysler and Fiat also declined to comment. This week Chrysler will show its updated Dodge Caliber five-door hatchback at the Frankfurt Motor Show. The car will have a new interior and a diesel engine designed for the European market. It will be the first demonstration of how the Fiat-Chrysler collaboration will work. This month, Marchionne will present his plan for products and marketing to the nine-member board. The proposal will map out how to develop the Dodge, Chrysler, Jeep and Mopar parts brands. It will recommend what vehicles to build and where. "We don't have a car that can compete in the largest segment of the market," said one Chrysler board member. "Our challenge is time. Do we have enough time to bring forth new products and continue to improve our existing products?" Juggling jobs The company must sell at least 1 million cars in the US to break even, people familiar with the matter said. It's a hurdle Chrysler may not clear this year after topping 2 million as recently as 2007, according to researcher Autodata Corp of Woodcliff Lake, New Jersey. Chrysler can make about $1 billion operating profit for every 100,000 additional vehicles it sells, one person said. According to bankruptcy documents, Chrysler lost $16 billion in 2008. Without a quick turnaround, it has about 24 months of cash left, said one person familiar with the finances. Chrysler may gain time if a rebounding US economy pushes auto sales higher, giving it a better chance of exceeding its breakeven point. US auto sales ran at less than a 10 million annual rate during the first half of 2009 after finishing at more than 16 million every year from 1999 through 2007. Marchionne, who bought a condominium in Birmingham for his Michigan visits, is trying to turn around Chrysler after two previous owners failed. Daimler AG sold 80.1 percent of Chrysler to Cerberus Capital Management LP in August 2007 after an unsuccessful nine-year merger. Flipping back His attention to detail amazes colleagues. In 2004, he visited CNH's Chicago-area offices. Near the end of two days of 10-hour slide presentations, he halted the proceedings and asked the presenter to flip back four slides and explain a numerical discrepancy, according to a person who attended. The presenter admitted the mistake. The room full of executives sat up, stunned that their boss caught such minutiae after 20 hours of PowerPoint, this person said. Fiat has a 20-percent stake in Chrysler and can get up to 35 percent by reaching performance milestones set in the bankruptcy agreement such as building a car in the US that gets 40 miles per gallon or more. The United Auto Workers union retiree healthcare trust owns more than two-thirds of Chrysler, and the US and Canadian governments own the rest. The Italian company didn't provide any cash for its stake, instead contributing engine, transmission and vehicle designs Chrysler valued at as much as $10 billion. Marchionne has said Fiat's technology infusion will be the basis for Chrysler's new products. Bloomberg News (China Daily 09/15/2009 page16) |
