Opel Ideal Partner for Super-Fiat Says Montezemolo
Chairman says Chrysler is unique opportunity but hard work starts now
MILAN – Now Berlin? “It would close the circle”. Luca Cordero di Montezemolo is reluctant to say any more. The game is still up for grabs as Sergio Marchionne works hard to convince Angela Merkel about Opel after succeeding with Barack Obama and the Chrysler deal. The shutters have already come down in Germany. Fiat elicits trepidation, among other emotions, so “let’s leave Sergio to do what he knows best”. The Fiat chair of course agrees that the German auto manufacturer “would be an amazing opportunity for us, our ideal partner. It would create a very strong group”.
You’re not even taking time to celebrate Detroit? Aren’t you overdoing it a tad? “
It’s unavoidable. Look, we in Fiat are proud and satisfied at the Chrysler operation and at what the president of the United States had to say. As chairman, let me express my enormous gratitude to a management team that has unfailingly kept its promises, in terms of results and strategies. But our first feeling is humility. Humility and great determination. For the past month, since Obama first spoke about us, we have been under the world’s microscope. We are conscious of the fact and conscious above all that it will be a very difficult task. It gives you the shivers. We are tackling the job enthusiastically, redoubling our efforts and application to strengthen Fiat and put Chrysler back on its feet. It’s a unique opportunity but the hard work starts now”.
You must have opened the bubbly, though. Six years ago, Fiat went cap in hand to Arcore [Silvio Berlusconi’s private residence – Trans.]. Paolo Fresco and Gabriele Galateri had to bow the knee. Today, the White House is ringing you up to save the US auto industry.
“I always say that you have to look to the future. But yes, sometimes you have to remember where you came from. I have very clear memories of my first days in Turin. On the Thursday morning, I became president of Confindustria [the national employers’ confederation - Trans.]. That evening, Umberto Agnelli died. Sergio and I met thanks to him. He co-opted us onto the board. The day after his funeral, Sergio was running the company and I was chairing the board. According to the world press, Fiat was on the brink of bankruptcy”.
Well, it was.
“Those first nights, we didn’t sleep at all”.
What about today?
You have already said that Chrysler gives you the shivers. “But today, we’re starting out from the enormous job done by the management team. That’s how we have built up the crucial thing that is also, if you like, the ace up our sleeves: credibility. President Obama said what he said about us thanks to our credibility”.
It’s also perhaps no coincidence that this operation is taking place outside the magic circle of power-elite capitalism.
“But it’s an operation that involves the nation. And I believe it is a source of pride for Italy and its industry. The men and women of Fiat in recent years have gone back to working on cars, leaving politics to one side. We are once again a sort of mirror for Italian industry. A privately owned, family-run firm – it doesn’t matter if it’s big or small – that travels the world, accepts challenges and stands or falls by its own products. Leaving aside disquisitions on first or fourth-phase capitalism, this is the Italy of the thousand excellences. Manufacturing is one of its pillars and the pride is also in a Fiat that drives forward an entire industrial system thanks to the hard teamwork of everyone involved, from Sergio Marchionne to the last shop floor worker”.
Now you’re going to have the workers as shareholders in America. Not to mention two governments. It’s a new twist on the public-private theme. Could it be replicated in Italy?
“They are two totally different countries, cultures and situations. I have always defended the need for the serious involvement of workers in company results. But ownership is something else altogether”.
Is that also true for possible publicly owned shareholders?
“I said earlier that recovery was made possible by teamwork. I would include the banks, without whose support we would never have pulled through. Today, I would also point to the sector incentives that the Italian government, like all the others, has put on the table to offset an unprecedented worldwide crisis. But the fundamental point is still having had the shareholders, first IFI-IFIL with Gianluigi Gabetti and now EXOR with John Elkann, firmly behind us. They took risks. They believed, and continue to believe, in us”.
The word is that part of the Agnelli family is worried now. It’s fine to be proud but there is concern over the burden car manufacturing is taking on. It feels the effects of the crisis less than others but debt is running at six billion euros and only Ferrari and Maserati are in the black.
“To start with, Fiat is not just about cars. It’s about trucks, tractors and other things besides. Then if we look at the past two months, we are reacting well to the crisis. In March, we became the third best-selling group in Germany, which had never happened before. We have grown considerably in other countries, like France, and we have a more than 9% share in Europe. On the alliance front, our plans are for objectives in the medium term. The shareholders are worried, you say? I have seen great satisfaction and great support. Obviously, every time you carry out a major operation there are risks involved. But everything has changed in the world. Fiat on its own might have been able to survive, but not in the first rank. Having anticipated change, and made the first move in a game that is destined to change the face of the world automotive industry, will have positive effects. With Chrysler today. And with someone else, I hope, in the next few months”.
What if Opel doesn’t come off? Could it be GM’s assets in South America? Or would you go back to Peugeot? And did you expect the Germans to shut you out?
“Careful now. Let Sergio get on with it. What I can say is that we are pursuing a coherent strategy. Then we’ll see. We know what cards we have. We’ll play them”.
What would Gianni Agnelli say about all this and about Chrysler?
“He always told the story of how his grandfather, Fiat’s founder, sent his first technicians to the United States with the recommendation: ‘Don’t change anything. Just copy’”.
Now they are copying us.
“So the United States, which was always Gianni Agnelli’s link, would today be a dream come true for him. The Chrysler agreement opens the world’s largest consumer market to us for the first time. Perfect, I hope, for our products. We have worked on clean engines and technology but we haven’t neglected design. The 500 could become an iconic car in the United States as well as Italy”.
What about the team? Lean and victorious, but is that enough now?
“Not many on the bench, you mean? We know the value and potential of many people you haven’t seen in action yet. We have plenty of players ready to take front-line responsibilities”.
We’ve all got a bit carried away by this historic agreement. We’ve lost sight of the challenges. The crisis is far from over, workers are still being laid off and the unions want guarantees for the factories in Italy.
“I don’t want to go misty-eyed about this but remember that Fiat stands for Fabbrica Italiana Automobili Torino [Turin Italian Automobile Factory]. Not for one second are we going to abandon our commitment to Turin, Italy and our employees. We haven’t gone American, quite the reverse. But we have to face reality as it is. There are structural issues deriving from the fall in demand that we have to tackle responsibly, together with the government and the unions. And let’s not forget Europe. The EU would risk losing its credibility if it backed anachronistic nationalism when the future of a crucial sector like the car industry is at stake”.
Do you think that we have got over the worst of the crisis, that we have touched bottom?
“I’d be very careful. There’s a risk of raising vain hopes. I think that the speed of the decline has slowed down: the first signs of recovery are there. But we still have to be very prudent.
Has Italy done as much as it should have?
“There are issues, I know, that are easier to deal when you are on a speaker’s platform and not on the spot. But there are other issues that deriving from decades of avoiding decisions: cutting non-productive expenditure, bureaucracy, pensions, healthcare. We have to be more careful than ever that the many gaps don’t widen. Between rich and poor, North and South. It would be great if the entire country acquired a taste for change, and a desire to anticipate it, from industry”.
Just out of interest. Did you keep in touch with Marchionne by text message during those critical days in Washington?
“Yes. But I’d use ten words and he’d reply with one. I sign myself Luca. He’s just ‘S’. That’s the style of a guy who didn’t sleep for a month to get Chrysler for us.
Did you persuade him at least to take this weekend off?
“I didn’t even try. It’s a lost cause”.