Category Archives: Government and regulations

Fiat SpA to become Fiat, Inc. with U.S. move?

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A brief comment on Bloomberg News triggered an article in the Detroit News saying that Fiat might move its corporate headquarters to the U.S. following completion of the merger with Chrysler Group.

The stories cite the usual anonymous sources saying Fiat is attracted by the U.S. market financial advantages and noting Chrysler is currently the component bringing home the majority of the bacon.

Pardon us if we don’t get excited: there are two insiders who have repeatedly said that the old Lingotto factory in Turin might not be the home base of Italy’s largest private employer forever. Or even for very much longer.

One of these is Sergio Marchionne, Fiat’s CEO; the other is John Elkann, Agnelli family scion and chairman of the board.

For at least the past three years, Marchionne has been saying Fiat could move and has mentioned both The Hague and the United States as possible destinations. When Marchionne first mentioned that the company might leave Italy, then-Prime Minister Silvio Berlusconi took time off from his scandals long enough to summon Marchionne to Rome for a Saturday dressing-down. The talk subsided somewhat once pro-business Mario Monti replaced Berlusconi, but the state of flux that seems to have replaced that which previously passed for an Italian government has Marchionne looking westward again.

To Marchionne’s credit, he has repeatedly offered to keep Fiat in Italy. He has even transferred production from a very efficient plant in Poland to a plant in Italy to secure Italian jobs. Most recently, he said he would divert some production from the NAFTA region, where some Chrysler plants are running at or near full capacity, to Italy if the government would work with Fiat on the cost of exports. Most of the major labor unions have adopted new contracts but the Italian government seems to believe Fiat will stay the course merely because it has done so for 114 years and all this talk of relocating is political posturing to get financial concessions from a cash-strapped government.

John Elkann is normally more diplomatic than Marchionne, who has a penchant for blunt, if well-mannered, speaking. However, he has made no secret of his determination to put the success of the business ahead of the 114-year history of Fiat in Turin. In 2011, at the Meeting in Rimini, an annual cultural event, Elkann told reporters, “Fiat will continue to make cars; you have to see if Italy wants to make cars and if there are conditions for making cars like Fiat wants to do.”

Unfortunately, Italian politics have, if anything, gotten worse. The results of the elections earlier this year have so far failed to produce a prime minister who can put together a coalition to run the government. A lot of hopes are riding on Enrico Letta who was appointed by Italian President Giorgio Naplitano to build a government and get the country back on track.

Speaking of the turmoil, Marchionne was quoted by Italian newspaper Corriere della Sera when he said, “The certainty of running a country is essential for any industrial reality. I hope they hurry to restore credibility to Italy. Beyond the crisis, Italy is in a very difficult situation: without a prime minister and with the departure of Giorgio Napolitano, whose work in the seven past years inspires my enormous respect, there are no references.”

The signs of a potential, if not a pending move, are there. In April of 2012, Chrysler leased space in the old Dime Bank building in Detroit and had the structure renamed “Chrysler House.” The company has just two floors at this time, but there’s little doubt room could be found for Fiat’s corporate staff.

When Fiat Industrial and CNH complete their merger in the third quarter of this year, the new company will be based in the Netherlands. Marchionne, who is chairman of Fiat Industrial, hopes to have both U.S. and Italian listings for the company. Some analysts believe this could be a template for the structure of the merged Fiat automotive group and Chrysler. However, all the signs recently would indicate Marchionne and Elkann would be perfectly happy with just the New York listing and a Detroit address, especially if the European vehicle market doesn’t show signs of turning a corner.

No one is saying Fiat will close up shop and leave Italy entirely; the dislocation and financial impact of the loss of so many jobs could cripple the Italian economy. In addition, Fiat has already invested hundreds of millions into upgrading Italian plants and maintains that it plans to invest even more. However, even the loss of the headquarters would mean loss of significant tax revenues and as well as a blow to Italian pride.

Prime Minister Letta would do well to recall John Elkann’s comments at Rimini. Fiat will continue to make cars; it’s up to the Italian government whether or not they will be made in Italy.

NTSB wants legal alcohol limit cut to 0.05

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At 10:55 p.m. on Saturday May 14, 1988, 34-year-old Larry Wayne Mahoney of Worthville, Kentucky, was driving his pickup truck in the wrong direction on Interstate 71 in unincorporated Carroll County. Mahoney was intoxicated when he collided head-on with bus operated by the First Assembly of God Church in Radcliff. There were 67 passengers on the bus, mostly teenagers returning from a day at the King’s Island theme park near Cincinnati, Ohio.

The collision caused the fuel tank of the 1977 Ford B700 in to rupture and the leaking gasoline ignited almost immediately. The impact also blocked the front loading door. While no one on the bus was seriously injured by the impact, in the ensuing confusion and desperation to escape the burning bus through the rear exit, 27 people, 23 of them students at North Hardin High School, James T. Alton Middle School and Radcliff Middle School in Radcliff died of smoke inhalation. Only one of the four adults on the bus survived. 34 more people were seriously injured by the fire with some receiving disfiguring burns.

It was the worst school bus crash in U.S. history.

Mahoney, whose blood alcohol concentration (BAC) was 0.24 at the time of the crash, was convicted of 27 counts of manslaughter and sentenced to 16 years in prison. He was released in 1999.

Yesterday was the 25th anniversary of of the Carroll County crash and during a meeting, the five members of the National Transportation Safety Board voted unanimously to recommend new measures to eliminate alcohol-impaired driving.

The recommendations are the result of a year-long NTSB effort make an in-depth study of the problem and craft targeted interventions. These include lowering the state BAC limits from the current 0.08 to 0.05 or less; increase high-visibility enforcement and target repeat offenders; develop in-vehicle detection technology; mandate ignition interlocks for all those convicted of impaired driving; improve effectiveness of DWI courts and improve the use of administrative license actions.

Many factors, such as body weight, make it impossible to define how many alcoholic beverages can be consumed before hitting 0.05 BAC. Smaller individuals can hit the limit with a single 12-ounce beer, a five-ounce glass of wine, or a single mixed drink containing 1.5 ounces of 80-proof liquor consumed in an hour. Two such drinks, or a single mixed drink with more than a single shot of liquor, like a Long Island Iced Tea, will have most people skirting or over the limit.

The NTSB welcomes comments related to their impaired-driving initiatives via email at ReachingZero@ntsb.gov.

NHTSA issues new connectivity guidelines

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In the opening round of what may be a long battle with drivers addicted to constant in-car connectivity, U.S. Transportation Secretary Ray LaHood today released the National Highway Traffic Safety Administration’s guidelines to cut down on driver distraction. The agency hopes the guidelines will motivate vehicle manufacturers to rethink in-car communication, entertainment and navigations systems.

“Distracted driving is a deadly epidemic that has devastating consequences on our nation’s roadways,” said Secretary LaHood. “These guidelines recognize that today’s drivers appreciate technology, while providing automakers with a way to balance the innovation consumers want with the safety we all need. Combined with good laws, good enforcement and good education, these guidelines can save lives.”

Since there has been no federal legislation addressing the issue, the NHTSA guidelines are voluntary. They recommend specific criteria for any factory-installed devices that require a driver to take their hands off the wheel or eyes off the road for use.

Included are recommendations to limit the time a driver devotes to perform any task to no more than two seconds per action and twelve seconds to complete the task. At legal highway speed, generally 70 miles per hour, a vehicle travels 205 feet, more than two-thirds the length of a football field in just two seconds.

In addition, the guidelines recommend that systems be designed so that certain functions will be inoperative unless the gearshift selector is in the “Park” position. These functions include:

Manual text entry for text messaging and internet browsing;
Video-based entertainment and communications;
Display of certain types of text, including text messages, web pages, social media content.

The agency’s recommendations are derived from research results like the findings of a new NHTSA naturalistic driving study, The Impact of Hand-Held and Hands-Free Cell Phone Use on Driving Performance and Safety Critical Event Risk.

“The new study strongly suggests that visual-manual tasks can degrade a driver’s focus and increase the risk of getting into a crash up to three times,” said David L. Strickland, NHTSA Administrator. “The new guidelines and our ongoing work with our state partners across the country will help us put an end to the dangerous practice of distracted driving by limiting the amount of time drivers take their eyes off the road, hands off the wheel and their attention away from the task of driving.”

The study found text messaging, browsing, and dialing resulted in the longest duration of drivers taking their eyes-off-road. Text messaging increased the risk of a crash or near-crash by two times and resulted in the driver’s eyes off the road for an average of 23.3 seconds total. Visual-manual activities performed when completing a phone call – such as reaching for a phone, looking up a contact and dialing the number – increased the risk by three times.

The study did not find a direct increased crash risk from the specific act of talking on a cell phone. However, the manual-visual interactions involved with using a hand-held phone made its overall use 1.73 times more risky, since the use of these devices involve visual-manual tasks 100 percent of the time. Even portable hands-free and in-vehicle hands-free cell phone use was found to involve visual-manual tasks at least 50 percent of the time, which are associated with higher risk.

The guidelines, sure to draw criticism from some automakers and a number of consumers, are far less stringent than the proposals from the National Traffic Safety Board. Chairperson Deborah Hersman has called for a total ban on the use of cell phones and smart phones, whether hand-held or hands-free, by the driver of any motor vehicle.

GM buying shares from Treasury

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General Motors is going to leave U.S. taxpayers holding the bag for billions of dollars in loans that will be repaid at a fraction of the amount that was loaned.

GM announced it has an agreement to purchase 200 million of its stock from the U.S. treasury for $27.50/share for a total of $5.5 billion. While the price is about 7.9% higher than the current price, it would have had to be around $53.00/share or $10.6 billion for taxpayers to break even.

The Treasury will sell the rest of its holdings. 300 million shares, over a period of 12 to 15 months, depending on the market.

Treasury has also agreed to give up some of the governance rights included in the original secured credit agreement. While not specifically mentioned, the concessions likely include caps on executive compensation, which has been a sore point with GM management for some time.

“This announcement is an important step in bringing closure to the successful auto industry rescue, it further removes the perception of government ownership of GM among customers, and it demonstrates confidence in GM’s progress and our future,” said Dan Akerson, chairman and CEO of GM.

Dan Ammann, senior vice president and CFO added, “A fortress balance sheet has been a pillar of GM’s financial strategy and has enabled us to undertake today’s actions. GM’s balance sheet will remain very strong, with estimated liquidity of approximately $38 billion at the end of 2012, following the closing of the share buyback.”

“We come to work every day grateful that taxpayers from the US and Canada stepped forward to rescue our industry, and determined to show this extraordinary help was worth it,” Akerson said.

GM partners with Apple for in-car connectivity

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At the LA Auto Show today, General Motors announced that Apple’s Siri soon will be able to ride in selected Chevrolet small cars.

Beginning in early 2013, Chevrolet Sparks in the 1LT and 2LT trim levels and Sonic LTZs and RSs will integrate Siri, Apple’s intelligent assistant into the compacts’ Chevrolet MyLink infotainment systems, allowing customers with compatible iPhones running iOS 6 to direct Siri to perform a number of tasks while the driver focuses on the road, reducing the potential for distracted driving, an activity the National Highway Traffic Safety Administration says is responsible for thousands of deaths each year.

The latest upgrade to the iPhone’s software includes an “Eyes Free” mode that permits users to use their iPhone using only voice commands: the iPhone’s screen never lights up.

Set-up is simple: owners use the built-in Bluetooth to connect their iPhone with the MyLink system; pair the phone with the system and use the steering wheel-mounted voice activation button to have Siri make phone calls, play songs in the owner’s iTunes library and even switch from the car’s standard AM/FM/XM radio to iPhone mode. Siri can also access the owner’s calendar and add appointments, listen to, compose and send text messages to the owner’s contacts and answer simple questions, such as sports scores or the dates of holidays. To keep distraction at a minimum, Siri won’t answer questions that require displaying a web page.

“It says a lot about our commitment to small-car customers that Chevrolet has announced that Siri Eyes Free capability will be available in the Spark and Sonic well before the luxury brands,” said Cristi Landy, Chevrolet marketing director for small cars. “Safe, easy, reliable and portable connectivity is a top priority for our customers, and Siri complements MyLink’s existing capabilities to help deliver an incredible driving experience.”

Apple announced at last June’s Worldwide Developers Conference that it was working with several automakers to integrate its iPhone capabilities with in-car telematics systems to simplify and improve the safety of user connectivity. One of the advantages of the Eyes Free Siri integration is that implementation on both ends is entirely through software as part of the iOS 6 operating system upgrade that is already in use with the latest iPhones.

Mercedes-Benz will also use the Eyes Free Siri Integration on its new A-Class cars in Europe. Other automakers, including Chrysler, plan to add the Apple system to their own in-car telematics. The one holdout, according to sources, is Ford, which recently announced its commitment to its highly criticized SYNC, MyFordTouch and MyLincolnTouch systems developed in cooperation with Microsoft.