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It’s Chrysler’s Turn to Save Fiat

Increasingly healthy, Amerian automaker offsets mounting losses in Europe.

by on Nov.16, 2012

Reporters catch the speech by Fiat/Chrysler CEO Sergio Marchionne at the Mack Engine Plant.

Chrysler Group LLC operations in the U.S. are profitable enough to support Fiat indefinitely during the unfolding European economic crunch, according to Sergio Marchonne, who serves as chief executive officer of both companies.

Fiat is sitting on more than $12 billion in cash, and “It has more resources in its industrial business,” Marchionne told reporters after announcing plans to invest $240 million as Chrysler creates 1,250 new job in the Detroit area over the next year by adding a third crew at its truck assembly plant in the suburb of Warren, and brings an engine plant in Detroit back online.

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Chrysler has rapidly expanded its operations – reviving several abandoned plants and adding thousands of new jobs – since Fiat effectively took control following the U.S. maker’s bankruptcy in 2009.  Now, it appears to be returning the favor as Fiat’s losses mount in the wake of the worst economic crisis Europe has faced in decades.

European automakers face definite challenges but Fiat isn’t entirely down-and-out.  There is its alliance with Chrysler, continuing success in Brazil and the contribution of healthy premium brands such as Alfa Romeo and Ferrari, which arein a stronger position that mass market European marques.

“Some of the other players in Europe don’t have the same resources we do,” Marchionne said.

The Canadian-educated executive also said he was distressed by the efforts of some European governments to prop up distressed automakers. “This is a violation of the treaty of Rome and the principle of a single market,” he said.

Consumer demand in the U.S. will remain stable, Marchonne forecast , adding the elimination of the “fiscal cliff” facing the federal government would bolster confidence in the American economy.

Marchionne said that, overall, Chrysler was bullish about the future. “These investments will help in building a strong and secure Chrysler,” Marchionne said.

The addition of the third crew at Warren Truck, employing 1,000 new workers, should be complete by March of 2013, Marchionne said, as he made the announcement of new investment at the company’s Mack Engine plant in Detroit.

“The new Ram 1500 built in Warren is already winning praise for its class-leading fuel economy, “we have the strongest pickup truck lineup in the industry,” he said. “Twenty-five miles per gallon is not inconsequential,” said Marchionne, adding the company is still short of its Pentastar engines.

Chrysler almost failed to survive its 2009 bankruptcy, even President Barack Obama initially hesitating to offer further bailout cash until Fiat agreed to come to the American maker’s rescue.

“Those who doubt we (would survive) only have to come here and see how seriously we have taken our responsibility. Today’s program is about investment and jobs,” Marchionne said during the announcement of the new investments.

Marchionne said Chrysler also was investing $198 million in the Mack plant to prepare it to build the new Pentstar V6 engine, beginning in early 2014. The investment will also keep in operation the engine Mack I plant, which was threatened with shutdown but which will now see the addition of 250 jobs.

Last month, Chrysler added a third shift at the company’s Jefferson North Assembly plant in Detroit. The plant builds the Jeep Grand Cherokee and Dodge Durango. The Jefferson plant also is slated to begin building a new sport utility vehicle for Maserati.

(Ironically, that expansion played into the final rundown to the U.S. presidential election when GOP challenger Mitt Romney incorrectly began claiming that Jeep was going to move all of its production to China. Some analysts contend that error, which the campaign refused to correct, cost enough votes to cede Ohio to the Democrats.)

“He has delivered on everything he has negotiated,” said UAW Vice President General Holifield, who praised Marchionne for rebuilding Chrysler into a viable enterprise. “Today it is the fastest rising domestic automaker,” Holifield said. “There are a lot of beautiful things we’re going to create together,” he said.

(Also ironically, Fiat and the UAW are battling in court over how much the Italian maker should pay to acquire a 3.3% stake in Chrysler from the union’s health care trust. Click Here for that story.)

“There are not a lot of people who believed in you,” said Detroit Mayor David Bing. However, Chrysler comeback can serve as a model for the rebirth of the City of Detroit. “He has done a masterful job,” Bing said of Marchionne. “But he hasn’t forgotten about you who do the hard work.”

 

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6 Responses to “It’s Chrysler’s Turn to Save Fiat”

  1. manousos1 says:

    “Some of the other players in Europe don’t have the same resources we do,” Marchionne said.
    The Canadian-educated executive also said he was distressed by the efforts of some European governments to prop up distressed automakers. “This is a violation of the treaty of Rome and the principle of a single market,” he said.”

    The REAL resource Marchionne and FIAT have is the MultiAir / UniAir /TwinAir Technology (DIGITAL innovation)

    It Doubles the mileage WHEN used the RIGHT WAY as the prototype at:
    http://www.pattakon.com/pattakonHydro.htm
    proves.

    ALSO, the ENGINEERS of Marchionne need not to drive the PROTOTYPE car, if they don’t want to or are afraid of or …
    BECAUSE, for an ENGINEER this is PURE mathematics:
    (It is the IMPACT of the Aerodynamics on the Thermodynamics of the Combustion, i.e. on the CYCLE and thereby on the fuel efficiency)
    The Father of this TECH is Rulf Miller.
    manousos.pattakos@pattakon.com

    Likely, Marchionne is right about Peugeot bail out.

  2. manousos1 says:

    Does it, under the photo, reads ????

    “Reporters catch the speech by Fiat/Chrysler CEO Sergio Marchionne at the Mack Engine Plant.” ????

    What is the business of Marchionne with Mack ????.
    What FIAT and Mack have in common ?????
    Do they BOTH know this:
    http://www.pattakon.com/pattakonHydro.htm

    manousos.pattakos@pattakon.com

    • Paul A. Eisenstein says:

      It’s a Chrysler plant Marchionne authorized reopening.

      Paul E.

  3. manousos1 says:

    Thank you for the info,
    I didn’t know, there are relations and connections between
    Mack and Chrysler.
    I appreciate your helping spirit and the quality of Detroit Bureau.
    I think, the world learns more, about Tech, through your Bureau than from any other source.
    It’s a pity, it’s only one.

    • Paul A. Eisenstein says:

      That is not Mack, as in the Mack truck company. The Chrysler-owned engine plant is named because it is on Mack Ave., in Detroit.

      Thank you, meanwhile, for the kind words.

      Paul E.

  4. manousos1 says:

    In its turn to save FIAT, Chrysler is recently installing, on Chrysler’s new models, the MultiAir (digital) engines made by FIAT and the German Giant Schaeffler-INA, as Detroit Bureau discloses at your earlier entries:

    http://www.thedetroitbureau.com/2012/10/dodge-introduces-high-mileage-version-of-dart/

    As you write there:
    ‘‘However, the Aero requires premium gasoline to achieve its lofty numbers, which negates its fuel economy advantage.’’

    Does it make sense, in the States, to solve a problem, like this
    (i.e. the overheating and knocking of an engine)
    by using premium gasoline
    (where regular is more than adequate)

    only because FIAT provides the engine with the WRONG (digital) CONTROL ?