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Sergio Marchionne, CEO, Chrysler and Fiat

by Michael Dickens, January 2012

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When Sergio Marchionne was given the keys to Chrysler in 2008, the automaker was in the throes of a financial meltdown. Marchionne, a lawyer and an accountant, had already rescued the Italian automaker Fiat and turned it into one of the fastest growing companies in the industry.

Marchionne's plan was to quickly combat weaknesses in Chrysler's product line while working to combine the small car, small engine specialty of Fiat with the predominantly large-vehicle range of Chrysler. "Fiat needed Chrysler's product range to help it become a more global company," wrote Bill Saporito in Time. Chrysler, though, needed Fiat's range as well, particularly its strengths in Europe and South America.

After ten years of severe cost-cutting and downsizing at what had been one of the world's most profitable automakers before Daimler, Marchionne had his work cut out. He worked hard, logging long hours on two continents and taking numerous plane rides, zig-zagging back and forth across the Atlantic Ocean between Italy and Detroit, simultaneously being CEO of two auto companies. He's restructured the organization, overhauled production, and revamped the Chrysler lineup.

In July 2010, President Barack Obama toured a Chrysler plant in Detroit with Marchionne and praised him for his work in turning around the U.S. automaker. Like Steve Jobs, who he's admired for years, Marchionne is well on his way to turning Chrysler into a global icon of cool.

Recently, Marchionne's management prowess has been profiled in two recently-published books: Once Upon A Car by Bill Vlasic and Mondo Agnelli: Fiat, Chrysler and the Power of a Dynasty by Jennifer Clark, a onetime Rome bureau chief for the Wall Street Journal.

Entering 2012, Chrysler enjoyed a renaissance thanks to Marchionne's leadership and acumen. The U.S. automaker hit sales of $55 billion and paid off the government debtor-in-possession loans, six years ahead of schedule. Tens or hundreds of thousands of jobs in both Michigan and Ohio have been preserved. Chrysler and Fiat's first joint production car was the Dodge Dart, which Marchionne hoped will set the tone for the future of the auto industry.

Biography: Sergio Marchionne

Sergio Marchionne was born on June 17, 1952 in Chieti, Abruzzo, Italy, the son of Concezio Marchionne and Maria Zuccon. At age 14, Marchionne emigrated with his family to Toronto, Ontario, Canada. As a result, he has dual Canadian and Italian citizenships and speaks fluent English as well as Italian. He completed his undergraduate studies at the University of Toronto and earned an MBA from the University of Windsor in 1980 and Bachelor of Laws (LLB) from Osgoode Hall Law School of York University in 1983. He is a Canadian Chartered Accountant, barrister, and a member of the Canadian Institute of Chartered Accountants.

Prior to being appointed CEO of Fiat S.p.A. in 2004, Marchionne amassed an impressive C.V. in business and finance. From 1983-85, he worked as an accountant and tax specialist for Deloitte & Touche in Canada. From 1985-88, he was Group Controller and, later, Director of Corporate Development at the Lawson Mardon Group in Toronto. In 1989, he moved to Glenex Industries where he served as Executive Vice President for two years.

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From 1990-92, Marchionne was Vice President of Finance and CFO at Acklands Ltd. Then, from 1992-94, he served as Vice President of Legal and Corporate Development and CFO of the Lawson Group, which was acquired by Alusuisse Lonza (Algroup) in 1994. From 1994-2000, he worked at Algroup based in Zurich, where he became CEO in 1997. Then, following its spin-off from Algroup, Marchionne served as CEO and Managing Director of the Lonza Group Ltd. in Basel, and became its chairman in 2002.

In February 2002, Marchionne became CEO and Managing Director of SGS S.A. of Geneva and, in March 2006, he was appointed Chairman. He was elected as an independent member of the Board of Directors of Fiat S.p.A. in May 2003, until being appointed CEO in 2004.

In June 2009, as Chrysler emerged from Chapter 11 bankruptcy protection, Fiat Group received a 20% stake in Chrysler Group LLC and Marchionne was appointed CEO, replacing Robert Nardelli. In July 2011, after buying interests held by Canada and the U.S. Treasury, Fiat's stake in Chrysler increased to 53.5%, and in September 2011, Marchionne was also elected as Chairman of Chrysler, replacing C. Robert Kidder.

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Marchionne is widely recognized for turning around Fiat Group, returning it to profitability in 2006, less than two years after he took the helm. In 2009, Marchionne played an instrumental role in guiding the Fiat Group into forming a strategic aliance with then-ailing Chrysler, with the support of both the U.S. and Canadian governments and trade unions. Within two years, following its emergence from Chapter 11, under Marchionne's leadership, Chrysler returned to profitability during the first quarter of 2011 and by May 2011, it had repaid all of its government loans.

In October 2005, Marchionne received an honorary Doctor of Laws from the University of Windsor (Canada) and in May 2011, he received an honorary Doctor of Business Administration from the University of Toledo (Ohio) and gave the commencement address.

In November 2011, Marchionne was awarded with the Deming Cup 2011 for operational excellence by the W. Edwards Deming Center at the Columbia Business School. Other honors and awards include: Vavaliere del Lavoro (2006), Masters honoris causa from the CUOA Foundation (Italy, 2007), Degree in Economics honoris cause from the Universita degli Studi di Cassino (2007), Degree ad honorem in Industrial Engineering and Management from Polytechnic University in Turin (Italy, 2008), and Premio Pico della Mirandola (Italy, 2010).

Management style and personality

Sergio Marchionne prefers to deal directly with his managers and other employees. He promotes a culture "where everyone is expected to lead."

According to legend, Marchionne was shocked after he first arrived at Fiat to find other executives communicating through their secretaries. Marchionne practices a more collegiate style. He has an office on the same floor as the engineering department. No need for a top-floor penthouse, which sits empty where a chairman and three vice chairmen used to be, when a fourth floor office will suffice.

A chain smoker, Marchionne is also multi-lingual - he is fluent in English to go along with his native Italian - and he is loyal to his signature outfit of a checked Oxford button-down shirt, baggy black sweater and black slacks.

"That's Sergio's thing," said Washington Post automotive writer Warren Brown during a live question and answer online chat last year. "He reminds me of several college professors I've studied under." Others have pointed out the resemblance to Steve Jobs, whose signature black turtlenecks have often been a joke among Apple followers.

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Marchionne has been known to show up for important functions, such as the 2011 North American International Auto Show in Detroit, wearing his "signature outfit" and looking in need of a haircut (in 2012, in need of a shave, as well). His public persona goes beyond trend. He never feels underdressed.

"The message he wanted to pass is not wearing a tie, not wearing a suit, means we are more flexible and what really matters is not the uniform but something else," Christiano Carlutti, the former head of used cars at Fiat, told the New York Times last March. Marchionne's choice of attire around Fiat and Chrysler has drawn national media attention. "You have to understand that Fiat, before he joined the company, was very formal," said Carlutti, who said that Marchionne wanted "to break the formality" by declining to dress up.

Marchionne's simplistic signature style was once parodied in an issue of Car and Driver magazine, showing a spoof Marchionne doll that could be dressed up in a variety of outfits, which all turned out to be identical copies of the same outfit. Indeed, he has stated that he has a large stock of identical outfits, which saves time when buying. (Steve Jobs' signature look, incidentally, came after he wanted Apple execs to adopt a uniform, as some Japanese companies have; that failed, but Jobs personally ordered a lifetime supply of identical clothing, giving himself his own uniform.)

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At age 59, Marchionne will forever be remembered for his style of attire, despite not having the time or inclination to make decisions about it. And, he also has a love for the arts and maintains a large collection of classical music CDs in his office which he listens to while he works. He is at ease, both in conversation and in public addresses, quoting artists, musicians, historical figures and politicians. And, as a supercar enthusiast, Marchionne has been known to take to the track behind the wheel of a high-performance vehicle like a Ferrari or Maserati just for the thrill of it.

"It is a fascinating performance to watch," wrote Alex Taylor III, senior editor-at-large for Fortune, "because Marchionne has created an image for himself that is unique in the auto industry. What other CEO can you think of who likes to characterize himself as a 'simple, homeless, ever-wandering metal basher?' The image consists in equal measure of disarming humor, laser-like clarity, and brutal honesty.

"The principles of his management style are simple: he values merit over rank, excellence over mediocrity, competition over insularity, and accountability over promises."

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Marchionne's unorthodox style sparked controversy in February 2011, when he remarked at a roundtable that Chrysler's U.S. government bailout loans carried "shyster rates." Mr. Marchionne immediately issued a public apology, saying: "I regret the remark and consider it inappropriate. ... As the only parties willing to underwrite the risk associated with Chrysler's recovery plan, the two governments (U.S. and Canadian) levied interest rates that, although appropriate at the time, are above current market conditions."

Marchionne has, however, maintained an oddly contrasting set of habits - on the one hand, pressing Apple-like secrecy over future products, holding back on product launches until close to production, and keeping even the names of upcoming cars held back (what became the Dodge Dart was widely rumored to be tagged internally as Dodge Hornet.) Yet, he is engaged in an almost constant stream of quotes and interviews which betray future plans and vehicles to engaged Chrysler fans with a good memory; sometimes these even align with the Five Year Plan, very publicly announced and disseminated in 2009. Both Fiat and Chrysler regularly share their long term plans with journalists and investors, in stark contrast to Chrysler's tendency to keep things secret (and in ultimate contrast to Steve Job's belief in keeping product secrets not only from the public, but also from Apple employees and managers.)

The continuing transformation of Fiat and Chrysler

As CEO of Fiat and Chrysler, wrote Bill Saporito in Time, "the Man in the Black Sweater is far too busy managing the continuing transformation of two auto companies once headed for the junkyard."

Arguably, Marchionne's biggest success at Fiat has been the 500 car, which Time magazine described in 2009 as "a tiny, very cool 21st century version of a 52-year-old Italian icon once driven by movie stars such as Marcello Mastroianni and Sophia Loren -- which Marchionne calls 'our iPod'."

Thanks to a defiantly pro-Detroit Super Bowl commercial starring the rapper Eminem, automotive critics have hailed the 2012 Chrysler 200 Touring Convertible in glowing terms. One critic praised the improved Chrysler craftsmanship as "stunningly beautiful." (The 200's restyling was presaged by the 200C concept car before Fiat arrived.)

Marchionne has integrated the management of Fiat and Chrysler with the appointment of a team of 22 executives, all of whom report directly to him. The rationalization of the integration effort is enabling a combination of multiple brands and the strengthening of its core assets.

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One of the executives who reported directly to Marchionne, until recently, was Ralph Gilles, the CEO of Dodge. In an interview with Allpar last April, Gilles spoke positively about his boss. "Sergio is extremely open-minded," said Gilles. "One of my favorite things is when you see him asking lower-level management or experts -- we have these experts coming into our meetings -- and we have these great debates and discussions.

"You don't see a CEO and a manager, you see two people enjoying talking about cars. I love that; I love to see the management team discussing the cars as a mission or as a project first. We are constantly debating what's the best thing for this vehicle, the best thing for the company. That's really refreshing to see that time spent on debate. That's something that a good leader does, take as long as is required. Sometimes, it's hours, hours and hours we spend talking about one car if that's the right thing to do."

According to Gilles, Marchionne is "very open minded, very ambitious -- and, it's great to see that."

"It is exactly what the company needs right now, someone who believes in it,'' said Gilles. "And, I've seem him turn around based on feedback and say 'OK, now that I've heard this argument and I've thought about it, let's do something different.' That's also refreshing. We course correct as required."

According to Fortune's Alex Taylor III, in a December 7, 2011 article ("Sergio's style is working for Fiat-Chrysler"), "Marchionne believes that his future belongs to two brands - Jeep and Alfa Romeo - that he is prepared to take global. Chrysler and Lancia will remain local brands, anchored in the U.S. and Italy, respectively. And Dodge likely withers away." Taylor's article also notes that "Marchionne has already separated out its pickup trucks from the new Ram brand, and given sole rights to Chrysler for the minivan now marketed as the Dodge Caravan."

According to Bloomberg News, Marchionne aims to combine Fiat and Chrysler in order to reduce costs and achieve a target of more than 100 billion euros ($142 billion) in revenue by 2014. To reach this goal, there is a struggle to end Fiat's European losses, which analysts estimate at 800 million euros a year. Chrysler is doing its part to prop up Fiat. However, don't look for an initial public offering (IPO) anytime soon "until there is more clarity and stability in equity markets," Marchionne told Bloomberg News in October 2011.

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In December 2011, Marchionne was on hand for the opening of a modernized car plant south of Naples, Italy, that he heralded as the best in the Fiat-Chrysler system. The Pomigliano plant is making the new Panda subcompact. According to the Associated Press, the plant received a total of 800 million euros ($1 billion) to move production of the new Panda from Poland to Italy. Because of Fiat's importance to the Italian economy -- it is the largest private sector employer in Italy -- Marchionne was quick to give a tour of the Pomigliano plant to Italy's ministers. "We know the world is watching Italy with worry, and that often it does not like what it sees," Marchionne told workers and journalists, as reported by the Associated Press on Dec. 14, 2011. "We know that we are facing a difficult period, but we know that what will make the country take off again is not just the work of politicians."

In a recent Reuters interview, Marchionne indicated that Fiat Group's primary push in North America would occur in 2013, noting that the Alfa Romeo is scheduled to be reintroduced by the company.

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During a recent event marking the production launch of the new Fiat Panda in Pomigliano, Italy, Marchionne said Chrysler expects to earn a 2012 operating profit of $3 billion. He also said that Fiat Group, which owns a majority of Chrysler, expects to post a 2012 trading profit of between 1.6 billion euros and 2 billion euros (about $2.1 billion to $2.6 billion).

With a goal of building six million cars a year by 2014, Marchionne has Fiat-Chrysler thinking global in a highly competitive industry. After all, as a printed banner in the Pomigliano plant proclaims: "We are what we do."

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