Fiat CEO Sergio Marchionne
It was little more than the equivalent of a very small, cold slice of corporate pizza, but it was the hot automotive news yesterday. Fiat was working on a alliance that could result in 35% ownership of the struggling U.S. auto company by the Italian company.
Just four, almost five years ago, The Fiat Group, Spa, whose brands include Ferrari, Maserati, Lancia and Alfa Romeo was in probably worse shape than Chrysler. Their Fiat cars were really ugly, the technology was missing, factories were old and tired, management was ineffective and the company was bleeding, according to the Fiat Groups statements, over €1 billion (that’s when the exchange rate was $1.58) in cash.
The Agnelli family, owners of Fiat, brought in Sergio Marichonne, a youthful, 50-something, Italian born but Canadian raised executive of a financial company the family had in interest in as CEO. He had but one order: fix it. And fix it he did! In less than two years, thank you. But the question was – how?
The business success secret he acknowledged in a number of interviews in financial and automotive publications, when he was named business executive on the year in 2007, was based on one word: Focus. Focus on the problems and fix them.
Marchionne’s first focus fix was on Fiat’s management. It was bad, really bad according to media reports. What did he do? He fixed it. The old management – upper and middle –was sacked and replaced with young, well educated, motivated and international executives who were given difficult targets and objectives.
Then in fast order fixes were necessary to reduce debt, shorten lead times, modernize factories, add technology and focus on the needs of the European market.
Known for his lack of sartorial attire in a nation were style is substance – he only wears sweaters, but is famous for speaking his mind on a variety of subjects and getting what he wants… results.
Fiat Plant
And results he got. In 2007 Fiat showed a €3.2 billion in profits, €4.0 billion in cash and Marchionne promised a profit of €5 billion by 2010 last year. Along the way Fiat was paid $1 billion by GM (when it had money) to get out of an engine building partnership that was not working.
New cars were introduced including the new Fiat 500, an iconic named vehicle in Italy and throughout Europe with great results. Technology was added including environmental commitments to gain mileage and reduce emissions. Small cars became big business which is important because gasoline sells for $8 to $12 per gallon throughout Europe.
Then last fall in an interview with Automotive News Europe, Marchionne noted he hoped to sell Fiat’s in America by 2012, the company has no presence in America, say for Maserati and Ferrari, but he then noted there were only 6 companies in the automotive world he would ever consider for an alliance
Was Chrysler one of the six? Maybe yes, maybe no. We’ll never know, but we do know Chrysler does need fixing and Sergio Marchionne knows how to apply fixing magic. So fix it again Tony, has become Fix It Again Sergio. Pass the pizza please.