Chrysler: Unlike Daimler, less culture clash with Fiat

[nadepalma]

Less culture clash with Fiat, Chrysler
Unlike merger with Daimler, sharing is cornerstone of deal
ALISA PRIDDLE - The Detroit News
November 2, 2009

Employees of Chrysler Group LLC could be forgiven for being wary of their new Italian bosses.

Detroit's No. 3 carmaker has been under European rule before -- but the culture clash was too great, and the merger that created DaimlerChrysler AG ended badly.

Workers are more encouraged about their partnership with Italy's Fiat SpA.

No cash exchanged hands in the June 10 union; sharing and collaboration are the currency of this partnership. Government bailouts saved Chrysler, allowing it to emerge from bankruptcy, but the aid ends there. And now it is counting on its partnership with Fiat to become profitable again.

In these early days, cultural differences are not emerging as a divisive issue, say many employees, who spoke on condition of anonymity.

"There was a lot of fear and loathing under DaimlerChrysler, but this feels like a good partnership," said one employee.

"We're feeling more optimistic, like we're all in this together," said another. "Things are moving fast and it's contagious."

Employees and analysts say the Fiat hookup may read like deja vu on paper, but key differences may prevent a culture clash from scuttling efforts to succeed.

There are far fewer Fiat executives in Auburn Hills than the number of Daimler colleagues here in 1998; the new Italian managers show a greater willingness to work together and Chrysler's situation is more dire today.

Different attitude at Fiat

The attitude of the partners could not be more different.

Daimler was "deathly afraid of diluting the Mercedes brand," said Joe Phillippi, analyst with AutoTends Consulting Inc. in Short Hills, N.J. "Brand bibles" were established with rules to preserve Mercedes' sanctity, and Daimler never recognized that Chrysler had anything world class worth adopting. Even seemingly twin vehicles such as the Chrysler Pacifica and Mercedes R-Class did not share components, and Mercedes tried to play down elements of the Mercedes SLK in the Chrysler Crossfire. Hard feelings linger today, as Mercedes has taken back the Sprinter van from Dodge and the two automakers are sparring over supply contracts in court.

"The Daimler people felt superior and that came through at decision-making time," said Gerald Meyers, a University of Michigan professor, former chairman of American Motors Corp. and retired Chrysler executive. "The company was being structured by Daimler and the Chrysler people didn't like being put in a straitjacket."

The failure to work well together under DaimlerChrysler was not just on the Daimler side, said Mike Aberlich, a 24-year veteran who rose to head of Chrysler communications until his retirement in December 2007.

"People on both sides were not willing or ready to accept each other," he said.

The divisiveness prevented the merged company from reaching its potential, Phillippi said. Chrysler operated as a separate entity until Daimler sold a majority stake to Cerberus Capital Investment LP in 2007 and divested the last of its shares when Chrysler declared bankruptcy.

So far, similar fears are not arising under Fiat management.

"It's a partnership of inclusion," said an employee from the product side of the business. "The Fiat people are saying, here are our platforms and technologies -- what do you want?"

Ken Lewenza, president of the Canadian Auto Workers, agreed. He met recently with Fiat and Chrysler Chief Executive Sergio Marchionne and said he was struck by the CEO's confidence in plans that call for the two companies to merge their strengths -- and by the underlying threat that this is the only option.

Today there also are fewer Fiat executives at Chrysler than there were with Daimler.

There is Marchionne as CEO and board member and board member Alfredo Altavilla. Olivier Francois heads the Chrysler brand and global marketing, Pietro Gorlier leads Mopar, Paolo Ferrero is in charge of powertrain, Richard Palmer is chief financial officer, and Gualberto Ranieri runs communications. Down a management tier, Mauro Pierallini is head of systems and component engineering.

Fewer Fiat executives here

With so few Fiat executives in Auburn Hills, a culture clash is almost a nonissue, Ranieri said.

There has been trans-Atlantic travel as Chrysler and Fiat engineers and designers develop products together, but it is limited under strict travel restrictions to keep cost down, Ranieri said.

It is a far cry from the DaimlerChrysler days when the company jet shuttled employees round trip between Pontiac and Stuttgart three times a week -- five return trips in busy times, said former Chrysler communications chief Mike Aberlich.

He remembers hundreds of Daimler counterparts in Auburn Hills at any given time.

Americans took German lessons while constantly looking over their shoulder.

"People feared they would be out of a job to their German counterpart and best practice meant their practice," said an employee.

Still, misunderstandings are inevitable.

"Culturally, you're still looking at an American company entrenched in North America and an Italian company entrenched in Italy," said Rebecca Lindland, director of automotive industry research for IHS Global Insight in Lexington, Mass.

Each has its quirks.

One employee told of Americans visiting Italy, ready for meetings at 7 a.m. while their Italian counterparts tended to start later and expected to continue through 10 p.m. dinners -- bedtime to Auburn Hills colleagues.

There is also the challenge of working to put small cars into dealerships that celebrate the Hemi V-8 and helping Fiat executives understand the importance and popularity of pickups and minivans the size of a small Italian apartment, Lindland said.

MORE AT Detroit News

[nadepalma]

I've been saying this from the get go and I'm glad that the papers are recognizing it as well.

Chrysler is in poor shape and Marchionne has a long way to go before he proves that he is Carlos Goshn 2.0.

However, his oveall approach to Chrysler has been vastly different from what Jurgen Schrempp (and later Dieter Zetsche) had in mind for Chrysler. The Americans were never really given a seat at the table when they merged and were always treated as second class citizens. Bob Eaton was a sidelined partner from the get go, regardless of his Co-CEO title, and left soon after the merger. Tom Gale left on his own soon. Jurgen was all about buildling walls to protect Mercedes and squeezing whatever surplus and profit Chrysler had to offer.

I'm not going to harp that EVERYTHING Daimler did was bad, but it was far from a true cooperation.

Comparitively, Fiat seems to genuinely want to share product, tech, and resources with Chrysler. And conversely, Chrysler will share a limited number of platforms (the Grand Cherokee, LY) and engines (the new Phoenix V6) with Fiat. Not only will see the LY underpin future Alfa and Lancia modes, but the Grand Cherokee's platform could underpin an Alfa SUV for the States, and the Phoenix V6 could replace all GM/HF-based V6s that are currently in limited Alfa models.

That's the way a partnership is supposed to work and I wish them all the luck in the world.

[benroethig]

I guess we'll how much Fiat gets it on Wednesday.

[PAULSTS1]

I am pleased that somewhere in the World a business relationship is positive. I realized that both parties in this merger need each other, Chrysler needs a new direction and support, FIAT a Passport to a more lucrative US future. I wish both parties well and look forward as I would in a marriage to the combining of the genes; on the 4th I hope to hear more details about of their "offspring."

[KingElvis]

The key difference:

Mercedes already had all the access it wanted to the US market.

Fiat wants into the US market again, and sees Chrysler as the doorway.

[Bravada]

The key difference:

Mercedes already had all the access it wanted to the US market.

Fiat wants into the US market again, and sees Chrysler as the doorway.

Not really - it is a poignant difference, but I don't think it defines the relationship. On the contrary, if that was all that Fiat was after, they'd probably be even more ruthlessly dismissive of anything Chrysler beyond the dealer network than Mercedes was.

The differences are:
* Fiat is freshly out of the dumps themselves, they have much less of a superioristic stance
* Marchionne put Fiat through a rather profound shake-up of both management ranks and culture, the people there are "fresh from the shower" enough to be still susceptible to new and change, this is not a company ran by "Besserwisser" retired engineers like Daimler
* Fiat actually needs Chrysler's technology, manufacturing, design, engineering and marketing capabilities
* Chrysler staff has been decimated during the last decade, there aren't many senior people left to stand off with Fiat, they are the survivors hoping to get rescued
* Due to the above, the mood about the takeover is rather buoyant rather than openly defeatist as in case of a good number of Chrysler staff at all levels in 1998
* Finally, Chrysler is not riding on the 1990s success wave but a borderline dead skeleton of a car company - anything that happens rather than outright liquidation can only make the situation better, there is a lot to do and (re)build from the ground up - such skunkworks athmosphere is always uplifting, even if conditions are hard

[KingElvis]

Bravada:

All these are true - still that market access is certainly 'key.'

I would add this about Mercedes: I don't think they ever had plans to make Chrysler thrive. I think it was more that they saw Chrysler as a threat and wanted to neutralize it. There was a reason Kerkorian sued. It's not all just sour grapes.

And they probably did want the Jeep name. I'm always amazed at how many Jeeps - of every stripe but mostly the Cherokee - you see in Germany.

Chrysler fans should remember that they were at the brink of destruction going back to the Airflow - and even Lynn Townsend's miracle working of the mid sixties rivaled Iaccoca's in the '80's.

I'm pretty sanguine about this merger - in sharp contrast to the way I felt about the Cerberus vultures. We're just lucky they didn't rip out all of the copper wiring in the buildings to sell.

[AMcA]

Another take on the key difference:

Chrysler's dead meat without Fiat. And when you're dead meat, you're going to be very cooperative with your rescuer. Even if that means the rescuer does away with your products and starts to substitute in its own.

[slowinthefastlane]

It makes sense - until recently, Fiat was a basket case, too. Fiat would be dead, dead, dead had GM not paid billions to dispose of their share.

[CadiEldo67]

I'm quite excited to see what vehicles the merger pumps out - I think I look forward to these more than GM because GM's offering are somewhat predictable. I expect GM to improve interior quality, exterior style, powertrain options, etc.

But Chrysler/Fiat - Has the current lineup which is decent but can improve on so many levels its baffling.

[t-rex]

Being the consummate champion of the underdog — not to mention an unabashed lover of all things four-wheeled and Italian — I'm jumping to the front of the queue to cheer on this partnership.

I think it's unfair to cavalierly dismiss Daimler's attitude as being purely arrogant. Mercedes-Benz's reputation streches back to the dawn of motoring and it's completely understandable that a great deal of separation between it and lowly Chrysler was crucial to maintaining Benz's reputation (though the company seemingly has no problem whatsoever with SsangYong proudly touting that its vehicles use discarded, though still excellent, MB technology). Not to excuse some of the other nefarious practices of Daimler management, but I think it's wrong to fault Daimler for keeping its genes out of the Chrysler DNA pool.

As others have noted, however, the attitude is different at Fiat, and this I believe will be one ingredient in the formula to future success of this merger. Fiat's tumultuous history has left it bereft of any prestige, and its global footprint extends nowhere outside of Europe and the MERCOSUR region. With no vaunted reputation to protect, Marchionne is eager to expand Fiat into new segments and new markets. I suspect his lieutenants in Auburn Hills not only take seriously the cruciality of segments like full-size trucks in this market, but will address them with the same fervour afforded Fiat's respected city cars.

The qualities that attract Mercedes customers transcend political boundaries and the vagaries of local buyers' tastes. Mercedes can play globally, and succeed admirably, with zero adaptations to local market demands. Fiat does not have this luxury, nor does Chrysler to a great extent, and Marchionne is well aware of this. Fiat's failure in the Chinese market has prompted the company to seek a new partner, Guangzhou (partnered with both Honda and Toyota) to develop products tailored to the world's largest car market, and is seeking partnerships to break into the booming and potentially lucrative Southeast Asian market. Fiat's expertise in low-cost product development, chiefly through its successful Brazilian subsidiary, gives the company a leg up on the competition in developing products for growing emerging markets.

What makes this important to the Fiat-Chrysler merger is that it shows Fiat's willingness to take seriously the specific needs of regional markets. I have grave doubts that Fiat plan to unleash hordes of Dodge-badged Multiplas, Bravos, and Doblos on the American market, nor will we see Nitros tooling around Milan with Lancia shields grafted to the nose. The two companies will likely take the route of Nissan and Renault, sharing platforms, powertrains, and engineering resources to create unique products for each company. Fiat bring its respected small-car development technology, and class-leading Diesel engines to the table, along with storied and beloved brands like Alfa Romeo, and Chrysler bring to the table larger platforms, large-capacity engines, and even seemingly mundane things like automatic transmissions and HVAC systems that are all but foreign to Fiat, but crucial to its success in markets like China.

Car companies simply must play globally today in order to remain competitive, or even survive, and Marchionne knows this. The very "chalk and cheese" nature of the two companies is in fact the winning formula that could potentially ensure future success.

I may be a minority voice, but I see this merger as a win-win situation for both parties, and for car buyers the world over.

[eaton53]

Daimler thought they knew everything.
When it came to low cost, volume carmaking it turned out they knew nothing.
I'm sure they learned very little from it, because well, they still know everything.

[Toto]

@t-rex: Finally you are back after the lame restart. I'm fond of reading your opinion. It's a lot going on lately and I would have gladly heard your opinion about this.

[iluvcamaros]

You would think that the media might would have made a big deal of a how a German company bought an American one, raped it, and then dumped its broken and bruised body on the doorstep of the US government. Guess they would rather talk about balloon boy.

[wescoent]

Yeah... too bad all that 'superior German engineering' needed a bailout, courtesy of Ram, Caravan, Durango, and 300C profits to keep sales from collapsing when their quality went to hell and they had no development money to fix it in time.

In turn, leaving Chrysler with NO development budget, forcing them to foist trash ala Avenger and Sebring onto the market.