Congratulations, Mr. Manley — or is it Mike? — on taking over Fiat Chrysler.
I admit I don’t know you well, since we met just once (you didn’t seem impressed; I guess my digital recorder exploding didn’t help). It’s clear you’re driven by both customers and business issues, and that you know some people will never be satisfied. Well, those are lessons learned from running Jeep! It’s tough to run a brand that’s rooted so firmly in a highly specialized past, and aiming for a much more popular future.
Everyone’s waiting to see if you’ll be like Sergio Marchionne or Dan Akerson, the gently incompetent-but-not-bad CEO of General Motors before Mary Barra took over.
Here’s my guess: you’ll keep Sergio Marchionne’s core strategies going, adapting to market changes as he would, but you won’t have quite so much of a hair trigger. Sergio had a tendency to react quickly and frequently to changes in the market and to make extremely quick decisions. I’ve suspected for quite a while that sometimes he reacted too quickly, and certainly too often.
It’s good to bend with market forces, but if you’re constantly changing everything, you can waste billions of dollars on rework, scrap, and repurposing everything. That also burns out employees and makes their efforts seem pointless, and you can end up with final products that aren’t quite as fine-tuned as they should be. (The PT Cruiser would have been a great Plymouth, a brand-saver; but it dragged Chrysler down-market at a time when the focus was making it more up-market).
I’m pretty sure you’ll continue the “one company” strategy — unifying Chrysler and Fiat. Indeed, you’re a fine leader, but I suspect being neither American nor Italian by birth helped push you over the edge. Altavilla would have focused far too much on the former Fiat, and the Americans, no matter how they acted, would be seen (in Italy) as favoring the former Chrysler.
I’m sure the Turin staff enjoyed being renamed “FCA Italy” every bit as much as Auburn Hills liked being called “FCA US,” but I understand why Sergio did it. He didn’t want the Chrysler people fighting the Fiat people. Also, the eponymous-brand thing makes it confusing sometimes. If you’re talking about Chrysler, is it the group or the brand?
In any case, it’s a fascinating strategy, of having company-wide work on basics and then the standard and upper-crust brands working separately on developing those basics into engines and cars. Neat. Saves money, optimizes things, and yet makes sure those pesky reporters don’t get snarky about how much Maserati shares with Chrysler.
My guess is that the change in leadership won’t affect the big Dodges much; the last rumor pegged them as a mix of three core setups, “Giorgia,” Maserati (Ghibli), and Dodge (Charger), partly so they could be built in the same plants using some of the same equipment. Mike, I suspect you won’t be quite as lavish as Sergio when you modify plants; he liked replacing everything, but that often just brought more delays and problems.
We both know FCA is having issues with the lack of well-seasoned production technicians. Sergio was a little cheap with engineers and techs; maybe you can talk to your people about bringing the retired cream of the crop back, with deals they can’t refuse, such as limited working hours and higher pay with special slots. Sure, you’ll get some dead wood who happen to be friends of the plant managers, but you’ll also get some irreplaceable people who got tired of 60-hour weeks.
As for perceptions that you are favoring certain brands — we all know Jeep was already favored; and for the moment it looks like the One True Global Brand. We also know the problem with Chrysler (the brand) — nobody out here knows what it’s supposed to be, and we suspect you guys are still working on it, too. Dodge took a big wrong step with the Dart before you settled on the “gobs of torque” muscle-car image; Sergio’s thought that “European performance” might work obviously went nowhere. Ram struck a chord in the US with its focus on farmers and “Ram tough.” Jeep was always pretty clear. Alfa Romeo and Maserati are both clear, at least inside the company. Chrysler is still a work in progress. That’ll be a problem for you. Do you make it some sort of new crossover brand, dropping the 300C? Do you keep “Plymouth-with-chrome,” the “affordable luxury” image some insist it already has — an image that’s very hard to keep going or operationally define? I don’t know. That’s why you’re paid the big bucks.
You are inheriting some serious problems, too. None of the brands is really strong everywhere. Dodge is big in the USA now, as a muscle brand, and that’s good as long as gas is cheap. Jeep is big in many parts of the world, but that’s a segment with increasing competition, and it’s not really dominant anywhere but North America, in certain niches. You have Range Rover on one side and Toyota on the other. Fiat has retreated to “premium-but-not-luxury” small cars and crossovers, with definite geographical boundaries.
Looking at the global brands, Alfa Romeo doesn’t seem to be making much headway so far. There’s no “killer” at Alfa so far; the 4C is a technological tour de force, and the Quadrifoglio is beating pricier BMW, Audi, and Mercedes cars in its class, but there’s nothing standing the industry on its head like the first Lexus ES did. Maybe that’s coming, with part-electrical cars of the future.
Maserati is doing well, but that crowd is fickle, and in any case it isn’t really challenging Jaguar, much less Audi, in sales. Ram has potential, but the superior ProMaster is getting clobbered by the Transit in North America, which means there’s a long way to go in its home turf. Ram has to be clearly and obviously superior for the price, which is hard to keep going everywhere and forever. Ram International sales remain fairly minor, and Chevy beat you to Australia, with two Silverado shifts while you’re presumably working on how to convert to right hand drive.
FCA isn’t very large given the number of brands it has; but I suspect that’s not so bad. As fashions change, there’s always going to be an FCA brand to take advantage.
A huge future problem for Alfa Romeo, Dodge, and Maserati is the power of electric cars. Chinese electric supercars have taken ’Ring records, running faster than the best Viper or Ferrari. Electric motors will end up beating gasoline engines in performance soon, in the mainstream as well as at the edges, and automakers are investing billions to avoid being left behind. How can you deal with that at Maserati, Alfa Romeo, and (though it’s not part of FCA) Ferrari — at a pace your customers are comfortable with? Will there be a sudden shift at some point where electrics go from almost nothing to 60% of the premium market, within five years, and how will you move with that?
Here’s another big problem: quality. You know it, we know it. It’s not a big secret when I say FCA keeps blowing it. When your reputation is poor, you have to be better than everyone else for ten years just to be seen as acceptable. That requires a sustained effort in engineering, supplier relations, software/firmware programming, manufacturing, and, yes, dealership training and relations. You have to up your game on all those counts.
Sure, things are getting better, but you need to be in the top three for more than a year at a time, on more than one survey at a time, as a company and not just with single models. It does no good for the 300C to be tops if the Pacifica’s below average.
How will you handle all those people around you? I’m hoping you’ll listen to everyone and then make decisions. I’m hoping you’ll listen to people well below the executive ranks, and make your way through the building instead of staying with the other leaders. I’m also hoping you’ll do what’s right even if others disagree.
We all wish you success, because your success is our success. I suspect that your more stable management will help boost quality, because last-minute changes bring screwups, and stability yields more profit, which can be invested in quality, which brings more profit.
Well written (as expected) David.
I hope that Mr Manley also looks at some global coverage for Dodge and Chrysler (where possible).
It still annoys us that Ford can build a RHD Mustang, but FCA can’t build a Challenger or Charger, considering that they come from the same plant as the 300.