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Marchionne comments on earnings call

by Bill Cawthon on

Chrysler CEO Sergio Marchionne called in from Italy to be part of this morning’s Q3 Analyst Webcast. The following is a transcription of his opening comments:

“It’s been a terrific quarter for Chrysler; I think the numbers speak for themselves. I’ll let Richard (Palmer, Chrysler CFO) take you through the details of the performance in the quarter, but I think, fundamentally, the third quarter of this year is a confirmation of the fact that the plan that we put together back in 2009 has got legs. We are on our way to closing off the year with roughly two million in shipments for the year, making about two billion-plus worth of operating profit. We’re, as Richard will explain in a few minutes, we feel relatively comfortable with our cash generation capabilities; the investment plans are on track.

“We’re looking forward to a pretty exciting 2012 with the introduction of our C-sedan for Dodge which is the first tangible proof of the collaboration between Fiat and Chrysler on an architectural basis and it’s the basis of a series of launches that will accompany Chrysler from 2012 until 2014 which is the completion of the plan that we laid out back in November of ’09.

“I really have no negative news: I could give you a litany of issues that have impacted on us operationally including issues that actually impacted on the number of vehicles that we shipped out by the end of the quarter. These are normal things; Richard will explain what impact they have had in terms of operating income for the quarter, but these have now become normal events within the running of the businesses, and they were, in hindsight, I think they were part of what we expected the past to do going forward.

“I know that there were a lot of skeptics back a couple of years – we’re not here to prove anybody wrong – I just feel comfortable that what we told you, we’re delivering on.

“The commitment remains to deliver 2012 plan as we laid out back almost three years ago.

“I’m delighted by the fact that we were able to close our deal with the UAW: it was handled in as professional a way as anybody could possibly handle these events. I can tell you from having had experiences across the world on this matter that the UAW and ourselves took the high road on this site, regardless of the skirmishes that happen in all these types of negotiations, we ended up with a set of answers that are crucial to underpinning the operational performance of the house until 2015.

“I’m delighted that we could find a way to get this done. I’m glad that we got the majority of our people to subscribe to the agreement; it makes us a lot more confident going forward and I think what remains a key challenge for us going forward is the ability to deal effectively with the two-tier wage structure which is still embedded in the contract and which, in some fashion, needs to be resolved as we go forward. I think we looked at this issue as part of the negotiations and we tried to find a way, whether we had enough time and enough runway, to get this resolved in this round – we came to the conclusion that the immediacy that was required in signing an agreement was the predominant factor here and that we had to postpone the longer-term solution to the next round of negotiations.

“I think there’s a willingness on our part and on the part of the UAW to build a hell of a solid basis for this business going forward. I am really confident and hopeful that between now and the time we sit with them again that we’ll be able to find a permanent solution going forward.”

To see the presentation slides, click here.

Bill Cawthon grew up in the auto industry in the 1950s. His Dad worked for Chrysler and Bill spent a number of Saturdays down on the plant floor at Dodge Main in Hamtramck. Bill is also the U.S. market correspondent for just-auto.com, a British auto industry publication, and a member of the Texas Auto Writers Association, which has named the Jeep Grand Cherokee the “SUV of Texas” several times and named the Ram 1500 as the “Truck of Texas” two years running.

Bill has owned five Plymouths (including the only 1962 “Texan”), one Dodge and one Chrysler and is still trying to figure out how to justify a Wrangler. He also has owned at least one of every 1:87 scale model of a Chrysler product. You can reach him directly at (206) 888-7324 or by using the form.


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