The Chrysler Takeover – When the  mouse helped the trapped lion?

Dr  Vaidehi Nathan?

Mondo Agnelli – FIAT, CHRYSLER, and the Power of a Dynasty, Jennifer Clark,  John Wiley & Sons, Inc., Pp 360 (HB) , $ 29.95?

The taking over of the all-American Chrysler by the seemingly weak Fiat took the world of business by a surprise and storm. Both were dynasty companies and both had a lot of socio-cultural significance to their countries. The gripping story of the entire operation is narrated by Jennifer Clark in her Mondo Agnelli – FIAT, CHRYSLER, and the Power of a Dynasty.  Mondo in Italian means the world.

Starting with the history of the founding of both the companies, Clark follows their growth, successes and travails. Fiat went through one of the worst crisis around 2003 when it was incurring a loss of one million euro a day. From there, by hiring the best of brains from outside the family in the form of Sergio Marchionne, the fate of Fiat turned around under the sterling leadership of John Elkaan, grandson of Gianni Agnelli. Elkaan was a mere 28 when he became chairman of the Fiat board. In 2008, it was ready to take over one of the auto giants of the world. 

Chrysler, on the other hand, founded in 1925 received enormous aid totaling $12.5 billion, other than $1.5 billion credit given by the company’s credit affiliate during the economic downtown. The company’s products were heavy, unattractive and selling little. The management was in bad shape. One round of rescue of the company had been done and failed by German auto giant Daimler-Benz and America’s investment company Cerberus. The Fiat attempt was daring. 

“What could have been a Greek tragedy concluded with a Hollywood ending. Fiat’s unlikely turnaround gave it the resources, vision, and management know-how to make its bold swoop on Chrysler in 2008, which together with loans from the US and Canadian governments, positioned the company as a global trailblazer.”

Fiat stepped into the scene when all had washed their hands off and “left it for dead.” Newly elected Barack Obama had said that GM (General Motors) could rise again, but the case of Chrysler was “more challenging.” “Chrysler needs a partner to remain viable”,  he added. It had a choice — to come to an agreement with Fiat or face bankruptcy. The companies were given 30 days to thrash out the deal. 

Fiat drove a hard bargain and insisted on several clauses. One of them was to introduce World Class Manufacturing or WCM. It adopted Japan-inspired “continual improvement” waste-elimination and quality-control systems. “It broke down the union’s rigid job classification system with its strict hierarchy and boundaries about who could do what.” Till then, if something went wrong in Chrysler plants, the work on the entire line would be stopped till the ‘appointed person’ came and rectified it. WCM did away with that. 

Says Clark, “The negative dynamics of the US  auto market — with the Big Three forced to rely on discounts to move their product — guaranteed that.”

Clark analyses the reasons for the Fiat success. “The Agnelli clan has stayed true to its Piedmont roots, shaped by centuries of rule by the militaristic House of Savoy: get on with things, do your duty, and don’t make a big fuss about it… Above all, be courageous and don’t run from battle.” The man, the energy behind the whole deal John Elkaan never appeared in public or took the podium. 

Clark conducted over 150 interviews of the Agnelli family members, Fiat executives past and present, members of Chrysler’s management team, Fiat and Chrysler advisers among others.  It is obvious the Fiat side was more forthcoming than the American company.

Jennifer Clark was the Italian bureau chief for Dow Jones & Company from 2000 to 2010. Previously she was bureau chief at Variety.

(John Wiley & Sons, Inc., CWT Commodity Hub, 24, Penjuru Road, # 08-01, Singapore 609 128)