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Fiat Chrysler looks to continue success in new year

12/30/2015

From the main entrance of the FCA U.S Technical Center in Auburn Hills to the dome where the company’s design staff is housed, the long corridor is crowded with meeting spaces used by employees.

With the automaker expected to chalk up its 69th consecutive month of sales increases when it reports the final numbers for December, the crowded corridor illustrates the FCA’s comeback the last recession when the company teetered on the edge of ruin.

During 2015, FCA and its storied brands such as Jeep, Chrysler and Dodge as well as new ones such as Ram and Fiat won over customers, while it continued to refurbish and rebuild its factories and signed a new labor contract, covering its 42,000 hourly workers who had grown restless under the term of the old labor pact imposed in the wake of the company’s federal bailout in 2009.


Over the course of a few dramatic weeks last autumn, FCA succeeded in fashioning a new contract with the United Autoworkers that gave workers a bigger share of the company’s new prosperity and moved towards eliminating a two-tier pay system, where new hires received less pay than long-time employees that workers generally considered unfair.

The new labor contract, while it was expensive, will leave FCA, which has nearly 13,000 employees based in Auburn Hills, with sufficient resources to weather an economic downturn, the Center for Automotive Research reported in November after the new labor contract was signed.

In addition, FCA top executives led by chief executive officer, Sergio Marchionne, appears confident that they will continue to finance project such as the $1 billion renovation of the company’s big assembly plant in Sterling Heights and rehabilitate the company’s product portfolio with new vehicles, such as the new minivan that will make its debut during the 2016 North American International Auto Show.

The confidence is bolstered by the steady growth of the company’s sales.

With sales across the industry booming during the fall, FCA posted a 3 percent increase a month ago, compared with sales in November 2014 and brought home the group’s best November sales since 2000.

The Jeep and Ram Truck brands each posted year-over-year sales gains in November compared with the same month a year ago. Meanwhile, Jeep, which saw its sales increase 20 percent during November, is expected to post its best sales ever in 2015.

“Despite having two less selling days this November, FCA US still recorded its best November sales since 2000 and our 68th consecutive month of year-over-year sales increases,” said Reid Bigland, head of U.S. operations.

The Jeep brand alone was expected to set a new sales record, and the brand has now expanded it reach by adding factories in Italy, Brazil and China, while the design and engineering are handled in Auburn Hills. The new factories are expected to help Jeep to set another sales record in 2016.

Certainly, FCA remains vulnerable to the vagaries of the global automotive industry.

Last spring, Marchionne said that the entire industry faces a crisis because it no longer earns the cost of capital. In other words, it can’t repay investors when they invest in the car business.

FCA is vulnerable simply because it is not as large as competitors such as Toyota and General Motors or Volkswagen AG.

Marchionne’s proposal to purchase GM went nowhere but it did underscore the spirit of always being an imaginative challenger that has helped propel the company over the past half-dozen years, noted Gualberto Ranieri, the head of communications at FCA U.S.

FCA is also still haunted by it past missteps. Its reputation for building dependable cars, the company main day-to-day challenge, remains a work in progress, Marchionne and other FCA officials acknowledge.

Like several other automakers, including the likes of Toyota and BMW, FCA was targeted by regulators for failing to acknowledge past misdeeds and failing to correct the in a timely fashion; again Marchionne and other FCA executives have promised to do better.

The other challenge is technical.

At a time when self-driving cars and new fuel-economy regulations are looking ahead, FCA has to fight off the perceptions that it is falling behind in an unfolding technology race. But the corridors at the tech center in Auburn Hills where the population has climbed steadily since the last recession are filled with hundreds of new engineers, who are preparing the company for the future.

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