Secrecy cloaks Marchionne's vision

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April 29, 2010 Secrecy cloaks Marchionne's vision | detnews.com | The Detroit News

Secrecy cloaks Marchionne's vision

Chrysler chief inspires, but lack of information on new products criticized


There is growing consensus that Chrysler Group LLC is a healthier company than the Chrysler that entered bankruptcy a year ago Friday.

Talk from the top is bold, ambitious and backed by a first-quarter operating profit -- slim at $143 million, but a profit nonetheless.

Those who work most closely with Sergio Marchionne, CEO of Chrysler and Italian partner Fiat SpA, are energized believers in the man and his mission to grow the Auburn Hills automaker as a pivotal piece of a larger global company, and to restore long-term profitability.

But even Chrysler's most optimistic supporters wish the automaker weren't keeping evidence of its progress secret -- especially about new models being readied for sale. Other automakers trumpet concept vehicles months, even years, before they reach the market.

"A year ago, even though it was horrific times, there was more trust and pulling together," said Alan Spitzer, a dealer in Elyria, Ohio, who lost seven Chrysler Group franchises in the automaker's restructuring.

Earning the confidence of key stakeholders is critical for Chrysler. The 85-year-old automaker's future is tied to a foreign owner. But its success depends on the contributions and support of dealers, suppliers, consumers and nearly 50,000 employees worldwide to deliver a solid return on American taxpayers' $15 billion investment.

Outside of Chrysler's executive ranks, workers complain that middle management remains wed to practices in place when the automaker filed for bankruptcy on April 30, 2009.

Marchionne's vision is inspiring, but it hasn't reached the middle and lower ranks of the company, said one veteran product development employee who asked not to be named because workers are discouraged from speaking publicly without Chrysler approval.

Among suppliers, some see opportunities to win bigger global contracts, given the $68 billion in combined purchasing spending by Chrysler and Fiat. Others are afraid to quote jobs and invest hard-won capital only to get caught if Chrysler doesn't survive.

Consumers are getting mixed messages as well. Chrysler built fancy displays at recent auto shows, but didn't unveil new models that might generate publicity and send consumers into showrooms.

Chrysler seems to have dropped off the radar of many consumers. Chrysler's U.S. sales plunged 36 percent last year. While most of its rivals have enjoyed a rebound this year, demand for Chrysler products was off 5 percent through March compared to a year ago. April sales, to be released Monday, are expected to be up about 20 percent, Chrysler sales chief Fred Diaz recently predicted.

"Chrysler is much better off because the cost structure is dramatically improved," said analyst Joe Phillippi of AutoTrends Consulting Inc. in Short Hills, N.J. "But without a portfolio of new products to trumpet, it's tough to get consumers excited. They have to be much more visible. There are not even spy shots out there creating a buzz."

The first significant new product on the way is the remade Jeep Grand Cherokee. Production begins next month in Detroit, and the SUV hits showrooms in June. A concept version was shown at the 2009 New York auto show, but the vehicle has been under wraps since then.

"I don't know why (Chrysler) is being so secretive," said Ken Lewenza, president of the Canadian Auto Workers union.

He respects Marchionne's decision not to show vehicles too far in advance, but said the argument breaks down when a model launch is imminent. Lewenza sees Grand Cherokees on the road for testing, but nothing at auto shows or in the media. He contrasts that with General Motors Co.'s strategy: "They dominate the ads. They are the leader in bragging about their products right now."

Senior management 'gets it'

If the zeal of the Chrysler management team is any indication, however, it is only a matter of time before skeptics become believers.

"There has definitely been a culture change and it is fairly dramatic and rapidly moving down the organization," said Mike Manley, head of Jeep and international operations.

Peter Grady, who is in charge of network development and fleet operations, describes Chrysler as a "new company with an energized workforce."

Purchasing chief Dan Knott is equally adamant. "I drink the Kool-Aid," he said. "In many cases, I'm making it. Senior management is getting it. At lower levels some get it, some don't."

Knott meets with nervous suppliers to share product plans, outline opportunities for larger global contracts and bolster their confidence so they will continue to quote on Chrysler business.

"Suppliers are starting to see transparency," he said. "It has not driven all the way down yet but we are working on it."

Rodney O'Neal, CEO of Delphi Holdings LLP and a member of Chrysler's supplier council, said the automaker values input from key suppliers. "The model of being adversaries has been broken," he said.

Neil De Koker, president of the Original Equipment Suppliers Association in Troy said there "definitely is a difference" at Chrysler. "We are hearing a lot of positive things."

The CAW's Lewenza called the speed of change on the plant floor "unprecedented. We're building cars differently."

Dealers remain nervous

Chrysler's surviving dealers remain unsettled.

In the past, Chrysler treated retailers as partners to a much greater degree, said Spitzer, the Elyria, Ohio dealer. "There was more openness and dialogue and trust."

The automaker terminated 789 dealerships as part of its bankruptcy without offering any financial help to shut down. Chuck Eddy, an Austintown, Ohio, dealer on the national Chrysler Dealer Council called the approach "dead wrong."

Eighty-six dealers have since been offered reinstatement and more are in arbitration to get their franchises back.

Eddy said some dealers remain nervous about investing in their business, and some consumers are afraid to buy new cars because of what they perceive as Chrysler's still uncertain future.

He believes Chrysler "will never be the transparent company it was in the past." But communication with dealers is "10 times better than six months ago," Eddy said. And Chrysler advertising is "twice as good as last fall, when we weren't comfortable with it or Sergio's management."

Purchasing chief Knott said it takes time to change a company's culture -- six or seven years, according to some studies. "Bankruptcy makes it quicker," Knott said. "We've changed, but not enough, and we need to prove it."