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Fiat-Chrysler marriage consummated
Chrysler back to work as Fiat’s Sergio Marchionne takes the driver's seat
11 Jun 2009
NEW Chrysler Group CEO Sergio Marchionne built a bridge to the old Chrysler when he retained former chairman and president Jim Press as his deputy in the new-look company that was signed off in a New York office last night and announced to staff at Chrysler’s Auburn Hills head office in Michigan.
Barely hours after a Supreme Court judge refused to intervene in the marriage of Chrysler and Fiat under the new company – Chrysler Group LLC – the various parties sealed the historic deal that sees Fiat take a 20 per cent share and management control of the “good assets” of the American company, with the remainder going to the United Auto Workers (UAW) and the US and Canadian governments.
Left behind are eight unwanted plants, billions of dollars in debt, 789 severed dealerships and a string of angry creditors and investors, including pension funds left holding almost worthless stock.
The new company began working immediately, using $US6.6 billion ($A8.15 billion) wired by the US treasury into the company’s bank account today. It has signalled an early resumption of vehicle production after 42 days in bankruptcy limbo.
Italian-born, Canadian-raised Mr Marchionne, who also retains his old job as CEO of Fiat SpA for the time being, wasted no time in announcing a major reworking of Chrysler, modelled on Fiat’s brand structure.
Each of the company’s main brands – Chrysler, Dodge, Jeep and parts company Mopar – will have an independent structure with full profit and loss responsibility.
Left: New Chrysler Group CEO Sergio Marchionne addresses Chrysler staff at the company's Auburn Hills headquarters.
Mr Marchionne has appointed presidents for each of the four brands, but in an interesting twist, has made each of the four executives responsible for one aspect across the group, such as sales, manufacturing or product development.
The idea is to flatten the management structure, speed up decision making and increase responsibility.
While several Chrysler executives, including CEO Bob Nardelli and executive vice-president Steven Landry have departed the company, Mr Press has decided to accept Mr Marchionne’s offer to stay on as deputy CEO and special advisor to oversee the remainder of the restructuring process.
It is not yet known when the formal Chapter 11 bankruptcy proceedings will be wrapped up, but it now seems a formality.
In addition to Mr Marchionne, Chrysler Group LLC will be managed by a nine-member board of directors, with three to be appointed by Fiat, four directors to be appointed by the US government, one from the Canadian government and one director to be appointed by the UAW Retiree Medical Benefits Trust.
The board is expected to name Robert Kidder as chairman once the all nominations are in.
Mr Marchionne, who has a background in law and who turns 57 on Monday, said the key to success of the new Chrysler would be its ability to share the global resources, technology and worldwide distribution of the combined Chrysler-Fiat group.
"We intend to build on Chrysler’s culture of innovation and Fiat’s complementary technology and expertise to expand Chrysler's product portfolio both in North America and overseas,” he said.
“Those Chrysler operations assumed by the new company that were idled during this process will soon be back up and running, and work is already underway on developing new environmentally friendly, fuel-efficient, high-quality vehicles that we intend to become Chrysler's hallmark going forward.
“The same attributes that first attracted us to this alliance – a global automotive company with first-class technology, a devoted workforce, improved efficiency, a strong, global distribution network and an unyielding passion for building great cars that consumers want – are even more true today.
“While it does not solve every issue faced by the automotive industry today, this alliance, established with the full support of President Obama's administration, is a very significant step toward positioning Fiat and Chrysler to be leaders among the next breed of global automakers.
“This has, I know, been a difficult process for everyone involved, but we are ready to prove to the American consumer that Chrysler can once again be a strong, competitive company that produces a full portfolio of reliable vehicles that capture the imagination and inspire loyalty.”
Fiat’s equity interest in Chrysler Group will increase in increments by up to a total of 35 per cent as long as it meets certain milestones mandated by the agreement with the US government and other partners.
The Italian company Fiat cannot obtain a majority stake in Chrysler until all taxpayer funds are repaid.
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