Monday, August 24, 2009
Chrysler prepares to lay out future under Fiat
Fiat bustling as it gets ready to lay out future for U.S. carmaker
There is a flurry of activity behind closed doors in Auburn Hills as Chrysler Group LLC reinvents itself.
While the restructuring is occurring largely out of view, the automaker's long-range plan is expected to soon be made public. There are promises that Chrysler will be more open and transparent than under previous owner Cerberus Capital Management LP.
That would be quite a change for a company with a spotty record of disclosure through a tumultuous period that began more than a decade ago when Chrysler Corp. was absorbed by Germany's Daimler AG. Since then, Chrysler has been sold twice and run by various CEOs.
Employees at Chrysler's suburban headquarters, who asked not to be identified because they are not approved to talk to the media, said preparations for a public unveiling of the company's plans are at a fever pitch.
Under the new guard
Operations at Chrysler since CEO Sergio Marchionne took over have already been different. He conducts business from a modest office in the Auburn Hills tech center, forgoing the penthouse office on the 15th floor of Chrysler's headquarters tower that has housed most senior executives.
The no-nonsense Marchionne, who is also CEO of Chrysler partner Fiat SpA, is "totally allergic to status symbols and all that is pretentious," said Gualberto Ranieri, who followed his boss from Italy to lead Chrysler communications.
There is a practical element to Marchionne's new office digs as well. The dual-CEO runs companies here and in Italy and has little time to turn Chrysler around. He wants to be near the product development group and accessible to his 23 top managers.
Morale seems to be higher among salaried workers, who are energized by the new blood and have a better view of the speed of decision-making at the top of the company.
Salaried workers, especially in product development and design, have been logging overtime amid a frenzied pace as they work to meld Chrysler and Fiat vehicles, engines and technology.
Best assets blended
The Chrysler Group was created in June through a noncash deal, which was valued at between $8 billion and $10 billion, that combined the best assets of the bankrupt Chrysler LLC with the technology of Fiat. Fiat owns 20 percent of the new company that needs to start making money to repay some of the more than $15 billion in loans it received from the U.S. and Canadian governments.
Under Marchionne, employees are working to revamp everything from the automaker's organizational structure to its manufacturing processes to the future product lineup.
Employees say the early days of the Chrysler Group have been marked by snappy decision-making and the discarding of old practices unless their value can be proven.
"The overarching reality is that Fiat will call the shots and the board will do whatever Marchionne wants them to, and that's the way it should be," said Gerald Meyers, a University of Michigan professor and former chairman of American Motors Corp.
Step 1 for Marchionne was flattening the management structure to resemble Fiat's by creating a team of 23 managers with clearly defined responsibilities. All report to Marchionne. Management appointments are now largely complete, and each of the company's brands -- Chrysler, Jeep, Dodge and Mopar parts -- is responsible for its own success.
Step 2 is a product plan to strengthen those brands. Already, there have been reversals of decisions to kill the Chrysler PT Cruiser, Dodge Viper and a third shift of minivan production.
One casualty: a diesel Dodge Ram light-duty pickup due next year has been shelved, according to bankruptcy documents that show the termination of a contract with Cummins Inc. to supply the engine.
All decisions now take into account how products for Chrysler and Fiat can be developed by sharing the best of both automakers. The first Fiat for the U.S. market, the 500, could go on sale by the end of 2010.
Step 3 will be emerging from Chrysler's self-imposed silence through its first 90-days post-bankruptcy.
Chrysler will not provide a date, but some employees said they have been working to meet a Sept. 1 deadline for the product plan. The expectation is that Marchionne will publicly outline the product plan and perhaps financial goals.
A proven foundation
Marchionne is following the same agenda he used to turn around Fiat after becoming CEO of the Italian automaker in 2004, Ranieri said.In one of his few comments since taking command at Chrysler, Marchionne said the automaker already is burning through less cash, without disclosing any figures. Ultimately, he has said he wants to take Chrysler public, but that is not expected before 2011, and 2012 may be more realistic.
Beyond that, there has essentially been a muzzle on Chrysler executives and employees. Traditional media events, such as monthly sales calls to explain results to analysts and reporters and an annual event to showcase new models, were canceled because Chrysler is still reinventing itself and not ready for public scrutiny, according to sources familiar with the situation.
Marchionne declined an invitation to speak at the annual Management Briefing Seminars in Traverse City earlier this month, said David Cole, chairman of the Center for Automotive Research in Ann Arbor, which hosts the event. "The weaving of large companies together is a challenging task," Cole said.
Chrysler executives also were conspicuously absent from the Woodward Dream Cruise and Vice President Joe Biden's recent visit to Detroit that included awarding money to Chrysler for electric vehicle development.
Ranieri said these actions are short-term and once the 90-day honeymoon is over, Chrysler will not operate cloaked in secrecy.
Even when the company opens up, however, the new management must be convinced there is value in every action it takes, even something as routine as hosting a sales call, especially since Chrysler's government loans mean it will be closely watched.
Analyst Joe Phillippi of AutoTrends Consulting Inc. in Short Hills, N.J., said he is anxious to learn more about Fiat's plans and hopes secrecy is not a hallmark of an automaker that has made cynics of many.
Making up lost time
That includes Chrysler's product plans. Chrysler will make four versions of the tiny Fiat 500 in Mexico. And it is working to pair the Dodge and Alfa Romeo brands by sharing product development and potentially selling Alfas as Dodges in the United States and putting an Alfa Romeo badge on Dodges for sale in Europe, company officials said.
The automaker also is trying to make up for time lost before and during bankruptcy. Chrysler executives have said they feared key launches for next year could be delayed, including the 2010 Chrysler 300 and Dodge Charger as well as the 2011 Jeep Grand Cherokee and Dodge Durango.
Employees say Fiat management has already ordered changes to the vehicles to make them sharper and more distinctive. Many current models also are receiving face-lifts, sources say.
Change makes sense for Chrysler now, said spokeswoman Lori McTavish.
"You don't file for bankruptcy and then do things the same way."
Article Link:
Chrysler prepares to lay out future under Fiat | detnews.com | The Detroit News
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