Fiat Gives Chrysler An Offer It Can’t Refuse…

As of this past July, Italian automaker Fiat, SpA became the majority shareholder of Chrysler Group LLC by taking a 53.5% interest after purchasing the shares from the United States and Canadian governments. Eventually, Fiat plans on holding a 70% interest in Chrysler with the remaining shareholders being primarily the United Auto Workers (UAW) union. Now, you may ask, what does the new ownership mean for Chrysler? Well, it clearly signals a change for both Fiat and the American consumer in the American automotive industry.

Now for a car enthusiast such as myself, the acquisition of Chrysler by Fiat is exciting news in and of itself. First and foremost it means that a long lived American icon will stay alive. It also means a world famous Italian brand will reach shore once again on American soil. The thought of combining some good old fashioned American muscle with the elegance and style of Italian design and engineering would most certainly be a pleasant change for anyone with a passion for cars. However, this news also brings with it promising prospects for the rapidly transforming business of the American automotive industry.

It’s not personal, it’s strictly business.

In addition to maintaining operations of Chrysler in the United States, Fiat will also be bringing its own brand back to America after what has been about a 30 year absence from the market along with its luxury brand, Alfa Romeo. The additional presence of these two brands will offer the American consumer a wider array of cars to choose from. Fiat’s most successful car, the 500, has already arrived in America and is very appealing those looking for fuel economy and European styling in the same package (Fiat’s 500 offers about 57 miles-per-gallon in cities and 65 miles-per-gallon on highways).

Alfa Romeo’s entrance in the American market won’t occur until late 2012 and early 2013 due to recent labor disputes between Fiat and the unions in Italy. Because of these disputes, there have been talks about Fiat bringing its SUV production to the United States. For the American automotive workers, this is obviously a good sign as it spells out more jobs. In my opinion, it only makes sense for Fiat to bring SUV production to the United States because of considerable experience American auto workers have in producing SUVs. Some analysts agree and go on to state that SUV production in America would also help Fiat’s SUVs be a “more competitive product due to lower costs of production” (Ebhardt).

Back on the home front for Fiat in Italy, it continues to face the economic crisis and its impact on employment in Europe as well. By entering the U.S. market, Fiat now has to learn to work with two very different cultures of the labor force. The American automotive labor force, totaling 113,000 employees represented by the UAW, has historically been able to come to agreements in a relatively easy fashion with the manufacturers compared to its counterparts in Europe where negotiations can go on for years and striking can become a daily occurrence. Adapting to the American labor practices and meeting the required expectations should not be too difficult in my opinion. After living in Rome, Italy for some time and witnessing firsthand the frequency and magnitude of strikes over there, I believe that Fiat will have much more to worry about in its Italian facilities than here in America. All in all, while Fiat will have many hurdles to overcome, I believe there is a greater likelihood for success in America rather than failure. Bringing Chrysler and its other brands, such as Jeep, to Europe will be an excellent way to kick off its revival by offering the European market more opportunities as well.

Leave the gun. Take the cannoli.

Back in 2009, Fiat CEO Sergio Marchionne first announced his company’s interest in acquiring Chrysler. At the time of the acquisition, Fiat had not been considered as a possible acquirer. When Fiat did make the move to take over Chrysler, it came as somewhat of a surprise considering Marchionne had just recently completed his turnaround of Fiat. In 2004, he took control of the then-struggling Fiat and completely turned the company around to make it once again a major player in the European auto industry among other giants such as Volkswagon, Renault, and Mercedes-Benz.

Marchionne brings a new and interesting management style to Chrysler, which in my opinion, is exactly the type the American worker is looking for in the struggling economy. Unlike most of his fellow chief executives, whose offices are elegant penthouse suites with spectacular panoramic views, Marchionne’s Detroit office at Chrysler rests alongside those of the engineers on a lower floor so he can see firsthand the direction of the company and gather personal input from his employees. By abandoning the metaphorical “guns” of the executives of days gone by (when there was more concern with running companies with an iron fist and over their paychecks than the company’s success), Marchionne brings with him a treat, a cannoli you could say, right from Italy that he hopes will leave workers in the American automotive industry with a very good taste in their mouths regarding the future.


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